Toyota cut output and now takes aim at pay

Toyota Motor Corp. said Thursday it is negotiating with its workers in Japan to slash salaries as it stops production to adjust to slumping global demand.

Toyota spokeswoman Ririko Takeuchi said the size of the cut is still undecided. She said talks are under way after the company decided this week to idle production at all 12 of its Japanese plants for 11 days over February and March — a stoppage of unprecedented scale for Toyota, the nation's top automaker.

Under Japanese law, companies must pay at least 60 percent of the average regular wages during such stoppages, she said.

In a stunning reversal of its previously booming fortunes, Toyota projects that it will sink into its first yearly operating loss in 70 years for the fiscal year ending March 31. And fears are growing about the ripple effects of the U.S. financial crisis to this nation's export-reliant auto industry, including parts makers.

Toyota is shedding 3,000 temporary workers in Japan — about half its domestic temporary workforce — by the end of March.

The job cuts have not affected the nearly 70,000 full-time Japanese staff, who like workers at major firms here are generally protected with lifetime employment. Toyota employs 316,000 people globally.

Toyota officials have said they are trying to ease the transition for its laid-off workers, allowing them to stay in company dormitories for a month, instead of just a week, as in previous cases.

"Protecting employment is of utmost importance for us," Toyota President Katsuaki Watanabe told reporters last month. "But tough market conditions are likely to continue, and they could get worse."

Sales of imported vehicles in Japan, including Japanese cars manufactured abroad, dropped 17.3 percent in 2008 from the previous year to a 15-year low of 219,231 units due to the financial crisis, an industry body said Thursday.

The figure was the lowest since 1993, when imported vehicle sales stood at 201,481 units, and is about half its level in 1996, when it peaked at 427,525, according to the Japan Automobile Importers Association.

Sales of imported foreign-brand vehicles dropped 16.3 percent to 193,902 units, while those of imported vehicles manufactured by Japanese automakers overseas fell 24.4 percent to 25,329 units.