Toyota chief full of surprises

Watanabe not ready to play caretaker

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November 30, 2006|By Micheline Maynard and Martin Fackler | Micheline Maynard and Martin Fackler,New York Times News Service

SAN ANTONIO -- When Toyota Motor Co. named Katsuaki Watanabe as its new president last year, many assumed he would be a caretaker chief executive, steering the giant automaker with a steady hand and a minimum of surprises until Akio Toyoda, the 50-year-old great-grandson of the company's founder, takes charge.

The low-key approach of Watanabe - who rose up through the ranks as a cost-cutting manager of suppliers - seemed the safest bet, particularly since the company already was becoming a political target because it had taken market share at the expense of other automakers such as Ford Motor Co. and General Motors Corp.

The board's choice of Watanabe was also widely seen as a move to put someone in charge who could streamline the company and eliminate waste after a decade of rapid expansion.

But Watanabe is proving that first impressions can be misleading.

"Many assumed he would be a weak transitional player," said Takaki Nakanishi, an analyst in Tokyo for JPMorgan Securities. "But he has surprised everyone."

Even so, Watanabe remains the least-known Toyota president in years. After a year on the job, he is still less well known than either of his two predecessors: Hiroshi Okuda, known for his political savvy, and Fujio Cho, whose manufacturing expertise and warm personality made him a legend in Kentucky, where he was the first manager of Toyota's first American plant in Georgetown.

And Watanabe has shown little interest in the kind of appearances required of other automotive chieftains. He skipped this year's Detroit auto show and attended only a reception at the Paris show in September.

But he has made his presence felt in other ways. Watanabe has bought stakes in two Toyota rivals, moves intended to help increase sales, for example.

He has directed an effort to rethink how the company develops its vehicles and, most dramatically, he has ordered the company to find and fix the reasons why Toyota suffered an unusual spate of recalls during the last year. Watanabe made international headlines when he bowed low at a news conference in July in an apology for the errors.

His actions have helped counter the conventional wisdom that Watanabe, 64, would serve as little more than a seat warmer until Toyoda's ascension. No one at Toyota would talk about when that might occur, but Toyoda, who has run Toyota's Web business as well as its operations in China, was promoted last year to executive vice president, a title from which he could easily move to the top rung.

In some quarters, Watanabe is still having trouble shaking his reputation as a placeholder chief executive.

"Watanabe is a transitional CEO, standing in before Toyoda can take the helm," said Hirofumi Yokoi, a former Toyota accountant who is now an analyst at CSM Worldwide, an auto market research company. "Watanabe will be easy to replace when the time comes."

Watanabe's biggest challenge will be to "keep Toyota from losing its soul" as a company focused on quality as it continues its breakneck expansion, said James P. Womack, an author and manufacturing expert.

Watanabe did not waste time this spring when its quality came under attack. His symbolic apology, accompanied by a vow to find the root cause for the defects, distressed Toyota sales executives in the United States, who felt it portrayed too groveling an image, said a senior official in Toyota's North American operations, who insisted on anonymity because he was second-guessing his company's decision.

Yet, Watanabe's lesser-noticed actions may turn out to be just as important. Over the last year, Toyota, which has fended off numerous merger suggestions through the years, has bought stakes in Fuji Heavy Industries, the parent of Subaru, and Isuzu, a maker of trucks and sport utilities.

In both cases, Toyota appeared to be lending a hand to GM, which has been selling off its ventures in a bid to raise cash.

But in the long term, the moves may help Toyota more. The Subaru deal gives Toyota more engineers, plus half a factory in Indiana, where it will begin building 100,000 Camrys a year next year.

In the case of Isuzu, Toyota gains expertise in diesel engines and four-wheel drive vehicles, enabling it to better compete with American and European companies, which are well ahead in both areas, Watanabe said.

What is attracting more attention at the moment, at least, is the Tundra, the biggest Toyota pickup yet.

Speaking to a throng of Japanese and American reporters here, Watanabe said the company's goal was not to cause grief for struggling Detroit companies but to win over customers who already own Toyota cars and trucks from GM or Ford.

A classical music enthusiast who sang in a men's choir in college, Watanabe never held the high-profile jobs in sales, finance or manufacturing that have propelled other Toyota executives to the top.

His first job, when he joined the company in 1964, was in the personnel division, where he was in charge of employee cafeterias.

Instead, his rise came on the administrative side, particularly in purchasing, which grew in importance as Toyota expanded in North America, Europe and Asia. In order to eliminate duplication with Japan, Toyota began a cost-cutting program called CCC21, which stands for Construction of Cost Competitiveness for the 21st Century.

As a result, the automaker has saved about $10 billion on parts purchases this decade by pushing its parts suppliers, many of which are Toyota subsidiaries or partners, to cut prices and reduce complexity.

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