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Toyota in Valenciennes, France: Cultural Communication and the Fate of the Yaris

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Toyota in Valenciennes, France: Cultural Communication and the Fate of the Yaris

Claude Boulle, former Ministry of Labor official and current Vice President of
Administration at the Toyota Onnaing production facility, quietly sat at his desk among a
sea of executives in a collective, open work space. Despite having worked at Toyota's
Onnaing automotive factory in the suburbs of Valenciennes, France for several years,
Boulle felt uncomfortable at his desk; he still was not used to the Japanese style of shared
working space. He missed his private office. Sitting among the clamor and din of a half
dozen executives, Boulle began to daydream. The first Yaris, the company's most
popular and successful model, rolled off production floors less than three years ago.
Today, his facility produced upwards of 200,000 cars a year.
Restless, he stood up and headed out to the corporate cafeteria for a late breakfast.
Along the way, he passed several young French employees clad in blue and white jackets
emblazoned with the company's logo: dual, intersecting ovals that formed a sleek and
modern ‘T.' Below the logo, the jackets were personalized with the employees' first
names. In the cafeteria, Boulle dined with a number of floor workers having just returned
from morning exercises. He hadn't thought it possible…
Toyota had managed to construct a world class, state-of–the-art production
facility capable of producing 16,500 units a month utilizing the Toyota Way1 , a
comprehensive philosophy composed of 14 management principles for successful
automotive manufacturing. Given that Toyota established the Valenciennes plant just a
few years ago, Boulle was skeptical that a Japanese corporate environment and
management style was applicable in a French environment. He had good reason…the
cultures were so different.…Mixed feelings still existed on the work floor and in the
executive office, but the Japanese prepared well before arriving. Corporate offices in
Tokyo had researched long ago probable French reaction to the Toyota Way.2 Having
sent executives to live and study in France, as well as in French Canada, the firm felt
ready to select a site. Today, Toyota Onnaing still was not free from cultural
misunderstanding, but the Yaris retained its market share in Europe.
Boulle wondered, though, how long success would last, and if Toyota could
weather a longer storm. He returned to his desk, collected his employee evaluation sheets,
and prepared for a board meeting with plant President Hiroaki Watanabe and CGT, a
French labor union. One week earlier, several recently fired employees had filed a formal
complaint against management, charging harassment on the work floor3. Toyota claimed
that the workers were belligerently absent and routinely arrived for their shift up to thirty
minutes late. Boulle sighed…after all the company had accomplished and compromised,
this was the third similar occurrence in a month.
1 See exhibit 1 for a listing of all 14 Toyota Way principles.
2 Tagliabue, John. ‘At a French Factory, Culture is a Two-Way Street' New York Times. February 25,
2001. Page 4.
3 ‘CGT denounces trade union repression and harassment.' France Press Agency. November 26, 2003.
Had Toyota managed a cross cultural miracle, or would the Yaris fall victim to
unresolved cultural differences? Union challenges in Japan were uncommon, and
Japanese management in Valenciennes often responded slowly to labor complaints. This
was still one area of cultural management that had not been sufficiently addressed.
Historical background
Valenciennes: a recovering economically depressed region
Valenciennes is a medium-sized city of 350,000 inhabitants in the northeast of
France near the Belgium border. The region was severely struck by the steel crisis of the
1970s and the following constriction of the coal mining industry. With an unemployment
rate approaching 30% during the 1980s, the region suffered from economic depression.
Unemployment decreased steadily with the arrival of Jean-Louis Borloo as mayor
in 1989. For thirteen years, he reduced the jobless rate from 22% to 14% thanks to a
policy promoting industrial diversification. The installation of the Toyota factory in
Onnaing, in the industrial suburbs of Valenciennes, was a very important piece of this
regional revitalization process, as it promised the creation of more than 2,000 jobs. Given
the economic circumstances of the Valenciennes region, the Japanese plant was more
than welcome.
There were some concerns, however, about the company's willingness to remain
in the region for the long-term. To attract Toyota, national and local governments, as well
as the European Union, gave the firm a total of 51.5 million euros in subsidies and tax
incentives. Many feared Toyota might simply exploit the offer and close the plant a few
years later when the state subsidies expired. Other companies had already done so in the
past, such as the South Korean firm Daewoo.4
Employment and labor unions in France
Trade unions in France are rather weak in terms of membership numbers, but
nonetheless, can be surprisingly influential. Labor organizations are very strong in certain
industries and in the public sector, but not everywhere. France has the lowest
unionization rate of any OECD nation, with about 8% of skilled labor belonging to a
union5. This suggests that unions have both limited financial means and may not
necessarily represent a majority opinion among workers. Consequently, unions compete
among themselves to recruit membership. It can sometimes lead to outbidding and the
radicalization of some unions, which explains why French unions are often viewed as
aggressive. Nevertheless, the high unemployment rate in Valenciennes mitigated much
union power and influence before Toyota's arrival to the region in 1999.
Toyota's move is crucial for the company's growth in Europe
Toyota wanted to improve its image in Europe. Historically, Japanese carmakers
were seen as unfair exporters who wreaked havoc on European employment. The
popularity of Japanese vehicles cut into European manufacturers' market share. Also,
Japan prevented the importation of foreign cars into their domestic market altogether.
The EU, alarmed by the torrid pace of Japanese car manufacturers' advance into
European markets, won Tokyo's consent to place a ceiling on car exports.6 In 1993 a
quota system was therefore introduced to regulate Japanese car exports.
4 ‘Daewoo lâche la Lorraine.' 16 septembre 1999 Le Monde
5 ‘Mythes et réalités de la syndicalisation en France.' Dares octobre 2004 N°44.2
6 ‘EU/Japan – Car Export Quotas End With A Whimper.' January 6th 2000, (c) 2000 European Report.
The quota system ended on January 1st, 2000. However, Toyota had already opted
in 1997 to build a plant in Europe in order to circumvent the restrictive trade policy. The
quotas led Japanese manufacturers to focus on producing the most profitable cars. The
site selection of Toyota's factory in France coincided with the decision to launch a new
type of vehicle: a small car for urban dwellers dubbed ‘Yaris', available only for the
European market.
Toyota invested 570 million euros in the plant and still has much at stake in terms
of image: the firm has to convince the public that it no longer threatens French or
European jobs and the continent's economic stability. Conversely, Toyota now is in a
position to create employment and return wealth to the region. The company needs the
Yaris plant to be a success. Europe is a top priority for Toyota, as its market share is
roughly half of what the firm currently retains in the United States.
The first Toyota Yaris is produced in Valenciennes
The construction of the plant began in April 1999. It was built in record time
according to the industry standards.7 As scheduled, on Jan. 31, 2001, the first Yaris rolled
off the assembly line. By early 2001, the Valenciennes plant employed 2,000 French
workers, although the recruitment process reflected the Toyota Way philosophies.
Of the 30,000 applications received, Toyota hired only young candidates lacking
experience in the automotive industry. This allowed the company to minimize the
disparate cultural and management style employed by Toyota. Up to ten weeks of both
technical training and Toyota Way education were provided to all new employees. Still,
the two groups faced many differences in terms of workplace expectations.
7 ‘Toyota dans le Nord, ou le « management positif » expliqué aux Français.' Les Echos. 6 février 2001.
In spite of the fact that French labor was allowed to work in either their native
tongue or English, and that more than 30 interpreters were available to bridge linguistic
gaps, certain conflicts were settled over time. The following list details the major
compromises both groups made in order to ensure that the Yaris made it off the
production floor. Each compromise reflects a specific value as described in Hofstede's
Cultural Dimensional studies.8
Cross Cultural Compromises9
• The consumption of wine, normally permitted in French workplaces, was
prohibited to ensure safety and efficiency. This reflects a high Japanese future
orientation when compared with France.
• Employees were obligated to wear company attire and were encouraged to wear
nametags. While the jackets managed to be accepted, the nametags quickly
disappeared. The French sense of individualism was surprisingly stronger than
Toyota had anticipated.
• Four union members were accepted onto the Toyota Valenciennes labor board,
something that would not have been accepted in Japan. This can be viewed as a
testament to high French assertiveness as documented by the GLOBE study.10
• Group meetings are scheduled only as required per the Toyota Way, as opposed
to daily morning meetings in French corporations. This strategy synthesizes
Japanese sense of long term orientation with France's intolerance for uncertainty.
• To encourage an egalitarian and flat organizational structure, Toyota eliminated
private offices and exclusive dining halls. This addresses France's sense of high
power distance, and makes company wide communication easier.
• Toyota also minimized France's tendency for power distance by placing greater
control of the factory floor in the hands of labor. Employees are now empowered
to stop the assembly line when a defect is noticed.
• Group oriented discussion is encouraged in the factory via production line design.
As opposed to the competition's plants, lines converge in central hubs, making
cross functional communication easier. This also reduces French power distance
and reflects a high Japanese uncertainty avoidance rating.
The Struggle Continues
8 For a more detailed description, visit http://www.geert-hofstede.com
9 Compromises are based on a comparison of Japanese and French cultural dimensional factors as noted in
Exhibits 2-5.
10 The GLOBE study is an academic reinterpretation and extension of Hofstede's Cultural Dimension
analysis. More information is available at http://www.thunderbird.edu/wwwfiles/ms/globe/index.htm
Still, there are cultural difficulties between the factory's 2,000 French workers
and its management, composed of both Japanese and French executives. Since the
factory's groundbreaking, applying the famous Toyota Way methodology to the French
workforce has been an uphill battle, but ultimately successful. But
The Toyota Way had proven itself to be a valuable management tool in France,
but it did not consider the unwavering power and influence of the CGT. As the board
meeting began, Claude Boulle turned and whispered to the President. "Mr. Watanabe, do
you think, possibly, that the Toyota Way need a 15th Principle here in Valenciennes? You
understand, an adjustment to the manufacturing process design to deal with absent and
late workers. This will solve slow assembly rates when workers fail to show up on time."
Watanabe was shocked. The Toyota Way functioned well in Toyota's other global
factories…why shouldn't it work in France? "Out of the question," Watanabe responded,
"I will not modify Toyota's pillars to accomodate irresponsibility, laziness, and lack of
team spirit that some employees demonstrate. And I will not hire them back to the floor."
Mr. Boulle's mood turned dour. Toyota still did understand that it was not
meeting with a small minority of uncivil workers, but with the power of CGT. If
Valenciennes' Japanese management did not treat the matter with sensitivity and
understanding, Toyota's image in France could easily be jeopardized. Claude Boulle
chewed on his pencil, wondering if the situation would be resolved, or if individual acts
of a few, protected by CGT, could do serious and permanent damage to Toyota's
reputation in Europe.
He also began to wonder about Toyota's flexibility and dedication to
egalitarianism. Surely the company understood the risks of hiring inexperienced French
youth. Would President Watanabe refuse the employees' complaints, thereby risk
clashing with the union to preserve the Toyota Way? Or could Boulle convince Japanese
management that Toyota needed to reconsider its cultural approach and manufacturing
design in France?
Although it would compromise productivity, maybe all that was needed was an
adjustment to the assembly line to anticipate absent and late workers. How could the
problem be solved, and to what extent did cultural communication play in the solution?
Considering the fate of the Valenciennes plant and Toyota public opinion were at stake,
Boulle had to act carefully and decisively.

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