Toyota under a year ago was considered an automotive juggernaut and the largest company in Japan. Toyota was overtaking GM to become the worlds largest auto manufacturer with its Toyota, Psion and Lexus brands. Last month Toyota announced last month that it was posting its first annual net loss in 59 years, which is anticipated to be a $5 billion dollar loss for the year end March 31 st versus $37 billion dollar profit for 2008.
Due to the economic tsunami, Toyota has applied to the Japanese government for a multi-billion dollar loan. The company is seeking government help to hold off private investors demanding as much as 50% interest on the companies debt.
Toyota last month began an unprecedented production slowdown that called for reduced shifts and a 10 day closure of its 12 Japanese based plants. Also, it has fired 9000 contract workers which accounts for more than 10% of its 85,000 employees, with warnings that more layoffs are probable.
This cascading economic slowdown has flowed to Toyota City, were 80% of the people are employed in the automobile industry. It has an equally negative effect on revenue for the city with corporate taxes estimated to be down by 96%. Toyota City use to the envy of Japan with the lowest unemployment rate but now has the highest unemployment rate in the country.
Similar to the United States, auto suppliers are also in a critical stage. Many say that Toyota's production cuts will force bankrupcies unless they can qualify for government loans.
The bottom line is that this economic crisis is the most severe that I have seen since the 1950's. The world wide economic carnige will be wide and deep.
Please see the LA Times article by John M. Glionna for more information.