Toyota's Jim Press Discusses the Future

Toyota North America’s new head on moving the company forward, his role, the competition and alternative fuel

Jim Press was recently appointed president of Toyota Motor North America in New York, the first non-Japanese to hold the post. He previously was president and chief operating officer of Toyota Motor Sales, U.S.A. Press currently is chair of the Alliance for Automobile Manufacturers, the industry’s top trade group. He is the first international auto executive to be elected to the post. Press was recently in Detroit delivering a speech to a businesswomen’s group, InForum, on new roles for women in the auto industry. Here’s his take on Toyota moving forward, his role, the competition and alternative fuel.

MK: Can you explain your new job?

JP: It is primarily the face of Toyota in terms of the media, public affairs, government relationships, Japan-American cultural kinds of things and relations with states where we have plant site studies, philanthropy. It is the one place to go for the single consistent Toyota story. It is where the common interests of our operating affiliates come together. It’s where we can help the affiliates come together while retaining their independence but finding opportunities for better coordination and consolidation.

MK: What would you like to accomplish?

JP: My main goal is that is of Toyota being the most admired and respected company, continuing our growth in customer and dealer satisfaction, having as much success five years from now as we have today, and having the North American entities become more self reliant with the resources they need to make that happen. We can become self-reliant and support the global Toyota with our resources, with our direction and our guidance within (global Toyota’s) strategy. We’ll be more efficient, more effective, hopefully with more resources, more production capacity, continued contribution to the economy and continued investments here.

MK: Do you feel Toyota is wearing a target on its back since it recently surpassed Chrysler in the U.S. and is nearing No. 1 in the world?

JP: As opposed to a target, I’d say we’re operating more under a microscope or magnifying glass. The things we are doing have more meaning or more interest in the media than before. As you said, we established our reputation on quality so now if we have a minor quality issue, it is a major story. If a company that has had major quality issues has a minor quality issue, it’s not a story. So we realize that and actually relish it because, in a way, having that target on our back is a great motivator to make sure we continue moving forward, continue growing and doing the things that made us successful and not becoming complacent and not get arrogant. As we grow, we have to fight the big company disease. One of my goals in my new job at TMA is have TMA help police and assure that the target doesn’t get hit … we become the steward of our reputation.

MK: What’s your view on hybrid technology?

JP: We recognize more and more hybrid technology is going to be a key technology for the future success of this business. Hybrid is going to be hybrid diesel. Fuel cell cars are hybrids. The internal combustion engine cars we are selling today are hybrids. Flex fuel vehicles will be hybrids. Hybrid is the enabling technology that makes all of those more efficient. Diesel, gasoline, hydrogen and biodiesel are all fuels that feed through a common system, which is a hybrid. This is the thing we’re developing. Hybrid is the way you gain the synergy of combining stored energy that you store when you don’t need it and release when you do.

MK: You are chairman of the Alliance of Automobile Manufacturers, the industry’s top trade group, and you are the first international automotive executive to do so. How’s that going?

JP: It’s a time of turbulence and great interest in fuel. We’ve been dealing with a war of words over who is at fault with high gas prices. There are those who think the auto industry is at fault because their cars don’t get very good mileage. But the auto industry doesn’t bring the oil out of the ground and price it. OPEC does; oil companies do. The issue of gas prices is a consumer issue and becoming a political one. It’s really a great time to have all this stuff stirring around. Ten years ago, CAFE was an issue for us but the public wasn’t involved. Now they are engaged. So it is a great time for the industry to utilize its capability to educate through an ad campaign to consumers and thought leaders making decisions on future regulations. It’s a very stimulating opportunity

MK: Does Toyota have plans for ethanol vehicles?

JP: We have no flex fuel vehicles. We’re studying them.

MK: There’s suddenly great interest in it and in Brazil, which has 90 percent of its fleet using ethanol.

JP: As for Brazil, they use sugar to make ethanol. They have lots of it – too much. And sugar cane is more efficient than corn. Their total vehicle population is smaller and more concentrated. Also in Brazil, they have government policy that has driven them in that direction just Europe has one that has encouraged diesel. Here, we don’t have that. So it is really hard for the free market on its own to embrace a fuel that costs more to produce and is less efficient. It’s also a fuel that if we really did embrace it would require a tremendous amount of corn production. That would bring up other issues – land use issues, significant changes to our structure of tariffs on importation. Who is going to pay for ethanol gas stations? There are less than 600 in the country. There’s one in California, and it’s not open to the public. All those flex fuel vehicles sold in California provide a credit for CAFE but they are running on gasoline. We need to have more gas stations and more ethanol available. E10 we can run through regular gas station and today’s cars can use it. If we all went to E0 today, we’d get at least 10 percent more out of our gallon of gas, which may be a way to phase it. But now it doesn’t have the same CAFE credit. So there are obstacles. Ethanol definitely helps in the cause of dependence on foreign oil.

MK: Studies show people are more interested in that issue – dependence on foreign oil – than the environment. Do you find that’s true?

JP: People say customers will pay a premium for fuel that doesn’t rely on foreign oil but they won’t pay a premium if it cleans the air. Americans don’t want to pay a premium for anything.

MK: What’s the ultimate answer for our dependence on foreign oil, high gas prices, the environment?

JP: All of them – oil, nuclear, wind, renewable energy. It’s a total. There will be winners and losers. Right now, individual company interests and politics are pulling one way or another, but when we get done, we’ll have a whole menu. Some answers will be better suited to trucks and highways, certain geographic regions and where we have CO2 versus particulate or NOX issues. Other solutions will be better for small cars, cities. There’s a great menu of technology coming out. My interest from an industry standpoint is to get that menu established and help create a vision so we can begin to deploy all technologies for some kind of common unified vision to sustain the development of the industry and sustain the best interests of society and quality of life. We want to have vehicles that allow us to go where we want when we want but not compromise the quality of the air or availability of natural resources.

MK: In terms of Toyota specifically, many so-called experts have listed your challenges. What do you think Toyota’s biggest challenges are?

JP: That we believe our own headlines. We’re not as good as people say when we’re doing well, nor are the other companies as bad as they say they are when they’re not doing well. We may be in third place or second place – who knows or who cares. But we have to think like we’re in fourth place and focus on what we can do better. I got some sage advice from a wise old grandmother. She said green tomatoes always know their futures are still ahead of them while red tomatoes quit growing. So we want to be a green tomato. It gets harder as you grow and have some level of accomplishment. The reality is a lot of our (upward sales) movement and (increased market) share are not just about what we’ve done, but what other companies have done (the drop in share by Ford and General Motors.) Our biggest issue is to make sure as we grow that we remember what got us here. As we do grow, we don’t lose the attributes of what us a success and don’t let attributes that made us a success become attributes of failure. The things that got us here can’t be the things that take us down.

MK: Toyota has built its reputation on bulletproof quality. How do you address that as you grow?

JP: As we create more capacity, we’ve got to achieve better quality. The expectation is better quality, not less. So as we double the capacity and add more plants, they have to have better quality than when we had one plant or two or three. We have to design that into the cars. We have to have better value. Be able to contend with growth and maintain the value that got us where we are.

MK: What keeps you awake at night in this regard?

JP: The worry I have is that if you look at the education of our young people, areas like engineering and basic technology don’t have appeal. We’re producing those kinds of kids. If you go to top engineering schools, they are filled with international students. So what’s that do to our future competitiveness? I’ve seen statistics that should be a wake up call for us: for the first time in history, the forecast is that the next generation will have a lower standard of living than this one. We’d better take note of that. We need to look at what we need to do as a country. It starts with values education and focus on economic development. The U.S. has taken for granted our position on the globe. We held a trade exposition in Japan and struggled to get American companies interested in participating. Maybe, America can’t believe its own headlines. In contrast, look at young people in other countries, like China, where young women are coming out of school so ambitious, aggressive, dynamic and smart. We need to wake up.

MK: You said early in your interview that your goal in your new job was to make Toyota as successful five years from now as it is now. What is your vision for Toyota in North America in five years?

JP: In five years, we’ll continue to enjoy consistent slow and steady growth. We’ll have a more satisfied, loyal customer body. Dealers will have more valuable franchises. There’ll be bigger investments and bigger payoffs. We’ll have a broader portfolio of products. We’ve now filled many of the segments, but, within those segments, we could have more derivatives. We’ll have more capacity. We’ll make a bigger investment and have a bigger presence economically. We’ll have more local content. I saw an article today that the Ford Mustang has 65 percent local content while our U.S.-built Sienna minivan has 90 percent. More of that will occur. We’ll have more talented people overall. Toyota will be more of a global company where people will be moved around. Leadership will not be based on where someone was born but what they’ve done and what they’re capability is. We’ll have vehicles that help society in terms of making them healthier – things like the seat material in the new Camry that helps cure rashes. Cars may clean the air as they drive. We’ll extend the range of cars where they won’t have such a detrimental impact on our natural resources. We’ll make a contribution to the quality of life of customers and society. We’ll have a community philanthropic posture. We’ve been fortunate, and we want to make sure we give back to the community in which we’ve gained economic. For instance, at our San Antonio, Texas, supplier park (suppliers to the new Tundra plant), we have 26 major suppliers who have taken partners from the economically depressed south San Antonio. The economic benefit is not some company that comes from another state or another country but a high portion of the benefit resides in the local San Antonio business community and economy. The plant not only enhances the community economically but also environmentally. It has now smokestacks, no effluent. It is generating money for education, health care and training. It isn’t just about making cars and shipping them. Growing the company and business and delivering high quality and value takes us so far but being part of the community is the most important.

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