Toyota Motor Company’s Toyota Technical Training Institute in India

In August 2007, one of the world’s leading automobile manufacturers, Toyota Motor Corporation (TMC), announced that its joint venture in India, Toyota Kirloskar Motor Private Limited (TKM) had set up a technical school called Toyota Technical Training Institute (TTTI), on the outskirts of Bangalore, India. The company said that TTTI was meant for those who had passed out of middle school (Class 10) but could not continue their education due to financial or other constraints.

TMC projected the setting up of this institute as a corporate social responsibility initiative that was aimed at benefiting a disadvantaged section of Indian society by increasing their employability. At the institute’s opening ceremony held on August 1, 2007, TMC’s Executive Vice President, Mitsuo Kinoshita, said, “I am confident that the establishment of TTTI will contribute to the betterment of Indian society by cultivating the power of the nation’s youth.”

The seeds of this institution were reportedly sown in the year 2005, when Atsushi Toyoshima (Toyoshima), Managing Director, TKM, visited a number of technical institutes in India. He felt that the curriculum in these institutions was outdated and not in sync with the requirements of the industry. Analyst noted that despite the 4,500-odd technical institutes in the country, the kind of products they were churning out were not of much use to the manufacturing companies.

For a company like Toyota, which had aggressive growth plans in the rapidly growing Indian automobile market, this was a major hindrance as the company had little talent to choose from. This prompted Toyoshima to ask the management at Japan to set up a technical institute in India on the lines of Toyota Technical Skills Academy (TTSA).

The company’s decision to start the TTTI in India was first announced in March 2007. “In addition to making automobiles, we believe in proactively contributing to society by consolidating the knowledge and know-how within Toyota to develop capable human resources and thus contribute to the development of a prosperous society,” said Toyoshima. The company placed advertisements for a three-year technical skills program in the local newspapers and started accepting applications from the next month for the selection of the first batch of 60 students.

The institute would provide the courses, boarding, and lodging free-of-cost, and also pay each trainee a stipend in the range of Rs. 1,800-2,200 per month. Promising trainees would also be provided with fellowships (US$180 AND US$230) and a chance to join the company after successfully completing the course. Around 5,000 applicants applied for the program. Subsequently in June 2007, an admission test was held and 64 trainees were selected for the first batch.

The TTTI was established at a cost of Rs. 220 million (US$5.6 million). The institute was spread across a 48,726 square meter area within the premises of the TKM facility at Bidadi, Bangalore. It initially started its operations with a total staff strength of 25, including 17 teaching staff, headed by V Ramamurthy and T Somanath (Somanath) as Dean and Principal respectively. Through the three-year residential program, the company sought to provide the trainees with the skills of Monozukuri.

The institute offered four practical-oriented courses in painting, welding, automobile assembly, and mechatronics. The courseware was similar to that of TTSA, but was adapted keeping the Indian market in mind. The students were also provided lessons in subjects such as English, and History, self-improvement courses such as Yoga and Home Science, and lessons in cleanliness, grooming and discipline.

In addition to academic sessions, the trainees would gain significant exposure to the company’s famous Toyota Production System and the Toyota Way. Toyoshima said, “We hope the students will be able to appreciate various aspects of Monozukuri or skilled manufacturing in the Toyota Way. They will not just learn but also practice Monozukuri.

Though the company hoped to employ all the trainees once they had completed the program, the trainees were not under any compulsion to join the company. Somanath said, “It is a corporate social responsibility initiative for us. Analysts too agreed that the company was indeed making a positive difference in the life of the trainees. They were not only getting a taste of a better life and had a better future to look forward to, but were also in a position to send home a part of their stipend.

According to the company, TTTI was still in the testing phase and the first batch would be like a test case for the future. The institute would train approximately 180 trainees across three academic years. The management at the company felt that keeping the future growth of the Indian market in mind, setting up the TTTI in India made good business sense. India was one of the world’s fastest growing car markets and was poised to grow at an astounding 14.9 percent through 2010, according to Frost & Sullivan.

According to some estimates, by 2010, the number of cars sold in India annually would double to 3 million, compared to 2007. In such a scenario, TKM had to quickly ramp up its presence in the market. As of 2007, TKM had a mere 4 percent market share in India.

Analyst noted the company was lagging far behind its competitors and felt that this initiative would TKM become more competitive in the future. They expected TTTI to play a key role in the development of human resources at the company and to help bolster the company’s production operations in India in the future. Some industry watchers also pointed out that between 2002 and 8 Monozukuri is a Japanese word consisting of two words mono (products) and zukuri (process of making).

But the meaning of the word goes beyond the combined meaning of the two words to encompass ‘excellence, skill, spirit, zest, and pride in the ability to make things very well.’ (Source: Kozo Saito, “Development of the University of Kentucky – Toyota Research Partnership: Monozukuri: PART I,” Energia, Vol.17.No.4, 2006.)

2007, TKM had suffered due to labor unrest in its facilities in India, and viewed this initiative as an attempt by the company to breed loyalty on the shop floor. Business Week noted, “Another, ulterior motive was ensuring labor loyalty. For the past five years, Toyota India has suffered a series of strikes and a lockout, with labor unions protesting in support of better wages and against the dismissal of two of their members. Training youth in-house helps build loyalty for Toyota on the assembly line.

Questions

1.Describe the probable reasons for the setting up of the TTTI in India. Describe the direct and indirect benefits accruing to TKM by running the TTTI. What, according to you, are the short-term and long-term benefits to the company? 2.The TTTI trainees were not under any compulsion to join the company (TKM) once they had completed the training program. What are the possible advantage(s) and disadvantage(s) of such a policy? 3.In your opinion, will similar training initiative be successful in the service sector? Explain in the context of a few service industries that you are familiar with.