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As president of Toyota Motor Manufacturing Kentucky Inc., Steve St. Angelo oversees the 7.5 million-s.f. facility in Georgetown that assembles the company’s Camry, Camry hybrid, Avalon, and Venza models. In addition to his position as president, which he has held since 2006, St. Angelo serves as executive vice president of Toyota Motor Engineering & Manufacturing, North America Inc. and is a managing officer at Toyota Motor Corp. St. Angelo’s career in automobile manufacturing began with General Motors, where he began as a production team member. He later held leadership positions at several GM?assembly plants and the GM Tech Center, and was manufacturing director at General Motors de Mexico. St. Angelo earned a bachelor’s degree in computer engineering from Madonna University, an associate degree in industrial management and electrical technology from Henry Ford College and a master’s in manufacturing management from Kettering University.

Publisher’s Note at press deadline: Steve St. Angelo’s interview was conducted on January 6 in Georgetown. Recently, Toyota announced two safety recalls that cover some of its models. Both recall campaigns address conditions related to the accelerator pedal. The first recall, “Floor Mat Entrapment,” which was prior to this interview, regards the potential for an unsecured or incompatible driver’s floor mat to interfere with the pedal and cause it to get stuck in the wide-open position.

The second recall, “Pedal,” is being conducted because there is a possibility certain accelerator pedal mechanisms can mechanically stick in a partially depressed position or return slowly to the idle position.

As part of the recall campaign, new car sales of vehicles subject to the pedal recall have been temporarily suspended until the problem is remedied.

In addition, Toyota temporarily halted production at some of its North American plants to focus its resources on remedying the recalled vehicles.

Toyota released a statement to The Lane Report regarding the two recalls.  We are publishing a portion of the statement for our readers.

Because these issues are being frequently updated, we suggest that our readers visit toyota.com/recall for the latest information.

Toyota’s Statement
Nothing is more important to Toyota than doing the right thing for our customers – and restoring their confidence in the safety of our vehicles. We deeply regret the concern that our recalls are causing our loyal customers, and we are making an all-out effort to develop and implement effective remedies as quickly as we can.  

 Toyota’s highest priority is to fix the accelerator pedal problems for our existing customers. We want to reassure Toyota owners that instances of sticking pedals are rare and generally do not occur suddenly. Toyota is currently in the process of recalling vehicles to remedy the issue of pedal entrapment, and we have begun sending instructions to customers about how we will fix their vehicles.

Toyota has taken the unprecedented step of stopping production to help serve our customers quickly and ensure that all new Toyota vehicles going forward do not experience this problem. Toyota Motor Engineering & Manufacturing North America has also been working closely with our pedal supplier CTS on a revised design that effectively remedies the problem.

 We appreciate the comments Transportation Secretary Ray LaHood recently made about the way Toyota has stepped up to meet our responsibilities to our customers, and we are determined to continue fulfilling our commitment to put our customers first.
 

Ed Lane:?In April of 2005, you joined Toyota Motor Manufacturing, Kentucky Inc. (TMMK). In June 2006, you were named president of TMMK. In June 2007, you received two additional titles – senior vice president of Toyota Motor Engineering and Manufacturing, North America Inc. and managing officer at Toyota Motor Corp. How do you allocate your management time between these responsibilities?

Steve St. Angelo:?I don’t think much about it. I just go ahead and do it; I’m well organized. In my briefcase, I have colored folders. The blue folder is my new mail, the red folder is mail that requires a next step. A yellow folder contains items I need to read. I always take the yellow folder with me to the airport or dentist’s office. I also have a black folder for personal matters. 

So, I keep very well organized. I return all my phone calls as soon as I can and use my Blackberry to help prioritize my work. My wife is very, very understanding and supportive about my career; that helps a lot. 

I try during the daytime to be visible to the team. Not only the team members on the line, but also to my management team and suppliers. In the evening, I do my paperwork and e-mails. I use my Blackberry to capture any emergency emails, but I usually read e-mails when everyone has gone home. I just try to do things one-by-one and not let items get too old.

EL:?The global automotive industry and U.S. car manufacturers have had some tough financial times. To what factors do you attribute the recent downturn in the automotive industry?

SA:?It all started with gasoline prices skyrocketing to over $4 a gallon. Then mortgage loans went bad, the banking industry almost failed and people couldn’t get loans for cars. It was a perfect storm. Buyers also switched from high-profit vehicles like SUVs and trucks to high-mileage vehicles. Market factors made it very difficult for manufacturers to sustain profitability and volumes.

EL:?How did the “cash for clunkers” program impact Toyota’s sales?

SA:?The clunker program was successful for everyone. Nine of the 10 top vehicles sold in the United States are assembled in North America. Some have Asian name plates on them, but they were actually assembled in North America. This means Americans were working, auto suppliers were working and the profits on those vehicles were reinvested into the economy. Clunkers was a nice boost for the auto industry. 

The negative part of the program was the fast pace of sales, which rapidly used up existing inventory. When the promotion was over, sales declined because dealers didn’t have enough vehicles remaining in the showrooms. That affected all brands, not just Toyota.

EL:?What is the outlook for total U.S. auto sales and Toyota’s U.S. sales in 2010?

SA:?I don’t have a crystal ball, but here’s my current outlook. I don’t think the auto industry is going to rebound as quickly as it did in 2007 and 2008; however, I anticipate there is going to be a slow, steady growth. The auto downturn is over, at least I hope so. Auto manufacturers need to be as flexible as possible, so if there is an upswing in sales, they can react quickly to market demand. The key to being successful in the auto business, in this kind of market, is being responsive to consumer’s wants.

EL:?Has Toyota’s U.S. dealer network been affected by the auto recession?

SA:?Toyota has the same dealer network it had going into the recession. Our dealers, like all car dealers, struggled through the sales downturn – nobody got rich out of this recession. Toyota worked very closely with its dealers; they are partners in our success. I don’t know of any dealers that Toyota lost or went bankrupt; I will tell you we had a lot of communications with our dealers.
Toyota helped its dealers as much as it could, supported them, and listened to their needs. During the cash for clunkers promotion, I got a lot of calls from dealers because they wanted more cars. 

Toyota does not have nearly the number of dealerships other manufacturers have. Because Toyota is leaner, perhaps it is able to help dealers faster and more effectively.

EL:?What has been Toyota’s approach regarding the retention of its employees during the 2009 auto recession?

SA:?Toyota’s main policy is one of shared sacrifice. Traditional companies – when there’s a downturn – provide pink slips to their workers. That’s how they solve their economic problem. At Toyota, it’s shared sacrifice. That means that all employees, including myself, share in the pain. Bonuses for everybody in the company were discontinued. Overtime was eliminated. Some members throughout North America worked only 34 to 36 hours a week. The executives in North America took base pay cuts. In some cases, employees at closed plants in Indiana, Alabama and Texas were dispatched to Kentucky to help run this plant. The flexibility among our team members to live away from their families for up to six months and help other plants was unprecedented in our business. We all shared and helped each other. 

No layoffs is not a policy, but Toyota uses layoffs as a very, very last resort. No Toyota team member anywhere worldwide was laid off during this recession. It costs millions of dollars a day to do that. As a result of this policy, Toyota has even more loyalty to the company from its employees and customers. 

Toyota used downtime to do more education and increase the capabilities of our team members, to upgrade our plants, and to conduct equipment and tooling maintenance so we can produce better-quality vehicles in a more efficient and safe manner. As a result of this strategy, Toyota is coming out of this recession as a more capable, stronger and even smarter company and a better competitor.

Toyota has the best workers, and we’ve taken our best workers and made them better. At its North America production support center, Toyota took experienced team members, its all-stars, and retrained them in fundamental skills. If someone has been painting cars for over 20 years, we retrained them on how to paint, hold the gun, have better posture and improve the speed of the gun to ensure quality. 

We even taught our members how to pick the right quantity of bolts out of the box each and every time. So if a vehicle needs four bolts per vehicle, we taught them how to stick your hand in the box and grab four each and every time.

Most people think the only reason for efficiency is to become more cost efficient, but there is a hidden benefit. If a member grabs five bolts, typically what happens is one is dropped. If dropped in the carpet or in the door, guess what you get – a rattle later on. Loose parts are the No. 1 reason for rattles, so using the correct number of bolts is going to improve quality too.

EL:?Toyota has been a leader in fuel efficiency. It is my perception your company was forward-looking with its early focus on hybrids. Could you comment on Toyota’s leadership in this area?

SA:?Toyota probably spends more on research and development than any auto company in the world. Its focus on research and development translates into better quality, more reliable vehicles and improved safety. One of the benefits of the research and development effort is the continuous improvement in hybrid technology. 

Let it be known that Toyota is not just banking only on hybrid technology. We’re also doing research on electric vehicle technology and fuel cells, but we believe hybrid is the leading technology for the future of vehicles. 

The new Prius has been a homerun. Everybody loves that Prius; we still can’t build enough. Prius has a solar-panel roof, and it’s used to cool the car so you’re not using batteries or power. Think about how many times in the summer you want to take your pet with you but you don’t because the car will be too hot. The solar panel is going to keep the car cool. 

We don’t even know how powerful that solar panel can be. That technology may enable batteries to be recharged so maybe one day you don’t even need electric power. Toyota is very happy and proud that it’s still the leading company for hybrid technology and fuel efficiency. We do know our competitors are working very hard to catch up with us so we are just going to work harder to stay ahead.

Research is done basically in Japan, but we also have a tech center near Ann Arbor, Mich., that does a lot of research and development. Toyota’s headquarters in Erlanger, Ky., supports manufacturing.

EL:?The people of Kentucky rely on the manufacturing expertise of its automotive manufacturers for jobs. How is TMMK progressing as Toyota’s largest manufacturing facility outside of Japan?

SA:?We have hired approximately 1,000 temporary team members since October. I know it’s gone pretty much unnoticed, but those are 1,000 jobs where people are making money and paying taxes. The temporaries who left the company during the severe recession were offered the jobs first. But when they left Toyota, many went to work with our suppliers. Toyota just didn’t throw them out into the streets; we went to our suppliers and told them we have this person with good skills – can you use them? Georgetown had about 400 temporary employees before the recession, and now we’re up to 1,000. We have really been blessed: Of all the plants in North America, Toyota’s Georgetown plant was probably impacted the least. As I previously said, none of our team members were laid off.  

The key to success, not just for Georgetown but any plant, is being flexible and creative. How can we keep Toyota’s Georgetown plant fresh? It’s over 23 years old now. I met with Gov. Steve Beshear and Cabinet Secretary Larry Hayes (now secretary of the Cabinet for Economic Development) and pointed out we need to start focusing more on Georgetown because the plant is getting quite old. 

The auto buyer is unpredictable today. It’s not like years ago when Toyota could sell a lot of trucks or SUVs. One day customers want small cars, the next day they want hybrids, so we need to be flexible. Being a manufacturing plant doesn’t mean you just build cars; we might need or want to build components. The key points are profitability, keeping employment here and building the best quality vehicles that our customers expect from Toyota.

EL:?Do you anticipate requesting the state to provide incentives to modernize your plant?

SA:?I have been very open, and I really appreciate how open and candid the governor and Larry Hayes are. They want to make sure Kentucky stays competitive. In prior years, Toyota would go to the state and say, we need so much money. You can’t do that anymore; you have to develop these plans together because if we don’t do it together we won’t do it fast. There are other states that are very hungry to get these vehicles. Indiana is getting Think Car; it’s an electric made by one of the major automakers. Mississippi, too, is very aggressive for business. The state and Toyota have to strategize on how to get hybrid technology in Kentucky. How do we get a battery-assembly plant here?
How do we get Georgetown to build other types of vehicles in addition to just Camry, Venza and Avalon?

Somebody eventually is going to assemble batteries for hybrids in North America. Toyota is planning on having hybrid technology in most, if not all of its vehicles. Eventually, there will be a demand to build batteries in the United States for Toyota. GM announced that it will build batteries for the Chevy Volt in Brownstown Township, Mich. It’s expensive to ship those big heavy batteries from Japan to North America. 

The problem is that hybrid technology is changing fast. It doesn’t appear to be stabilized. Toyota wants to keep its engineers in Japan to stay on top of the technologies, but one day batteries will be manufactured in North American. Whoever is prepared will get the business. Toyota spends $2.3 billion annually with 90 suppliers in Kentucky.

Another story people don’t know: Subaru of Indiana builds up to 100,000 Camrys a year. Toyota’s suppliers who support the Subaru plant are all the same suppliers that supply the Georgetown plant except for two. The Kentucky plants that are supplying Toyota’s components now get up to another 100,000 units with Subaru Indiana.

EL:?How will production levels at TMMK impact employment in Kentucky?

SA:?Toyota Georgetown has 6,600 full-time employees, plus about 700 Erlanger team headquarters people stationed here. They are headquarters people who are stationed in Georgetown and support all of North America.

EL:?How many part-time employees does Toyota have at Georgetown?

SA:?About 1,000 variable workforce employees. The only way a person can get a full-time job is to come in through that program. That is our hiring workforce. The average annual compensation is $70-75,000 a year. 

EL:?What are the most important issues facing the auto industry in 2010?

SA:?The biggest concern is the economy as a whole. Nobody knows what is going to happen. I’ve talked to some people who think there is going to be another big dip in the economy and that the stock market is going to go down big-time one more time. The big issue is the uncertainty in the economy. If everyone knew the economy was in an upward trend and there was not going to be a dip, the improved confidence level would really help all industries, not just the automakers. 

EL:?Toyota is an exceptionally “green” manufacturing company. Could you briefly comment on Toyota’s environmental philosophy?

SA:?Toyota has a goal to recycle all trash generated at its plants. That was a big shift from where I was previously employed. Throughout the plant there are bins for cans, glass, paper, plastics and compostable items. Composed trash is spread around the plant to make the landscape look nice, but we also have a 15-acre garden in which we grow vegetables and fruit to give to God’s Pantry.
The only thing we keep for ourselves in the garden is pumpkins. We have a child-care facility and let the kids go to the pumpkin patch, pick their own pumpkin and decorate it. We use the pumpkins to decorate the plant.

We don’t have any trash cans in the plant. I don’t even have a trash can at my desk; you just take your stuff and go right to the recycling bin. We have a fund that uses revenue from the sale of recyclables to provide assistance to team members who have had some kind of hardship. Toyota’s vehicles are about 95 percent recyclable. All our plants are virtually landfill free. The Georgetown plant won the Energy Star award three years in a row. 

EL:?You have been in the automotive industry for 35 years and worked in different states around the country. How would you rank TMMK’s Kentucky work force in educational training, reliability, quality of work and general relationship with management when compared to other markets in which you have worked?

SA:?I’ve always worked with very good teams, but for some reason this Kentucky team feels like family. I am so proud of this team and honored to be their leader. I know that I can depend on each and every one of them. When I need help, they are always there, and when they need help I hope they know I’m always there for them. They are hardworking, well educated, very loyal to the company, the car and the customers. This team is obsessed with quality. 

EL:?How do you and your wife Michelle rate the bluegrass lifestyle compared to other areas in which you have lived?

SA:?Central Kentucky is our favorite place. I’m sincerely saying this. People are polite and the Lexington area is so clean. I’m very proud when people come to visit me and fly into Blue Grass Airport. You don’t have to wait for your baggage. People say “thank you” and are very helpful. Even when you go through security, the personnel are very professional and helpful. 

The whole region is phenomenal and has to be one of the best-kept secrets in the United States. I relocated 10 times over my career, and we are very proud to be Kentucky residents. We’re thinking this is where we want to spend the rest of our lives.