Vehicles are produced at Toyota's plant in Valenciennes, France. The factory is Toyota's only one in recent history to run three shifts.
TOKYO -- Toyota Motor Corp. is rethinking its longtime resistance to three-shift factories as it seeks to build more vehicles amid a self-imposed freeze on building more plants.
The world's biggest automaker will begin dabbling with three-shift vehicle assembly in North America for the first time in April at its small plant in Baja California, Mexico, that produces Tacoma pickups.
The move is unusual for Japanese automakers, which typically run plants on two shifts. If widely adopted by Toyota, it could make the carmaker's already lean production system even more potent. But an overhaul could take years and complicate the company's rollout of its modular Toyota New Global Architecture platform.
"Toyota has not had much experience with three shifts. So they want to test it out and see if it's really good for Toyota or not," Steve St. Angelo, CEO of Toyota's Latin America and Caribbean operations, said.
"They have to be successful on this three shifts," he said of the experiment at the Baja plant. "This could open up an opportunity for some plants to do three shifts where it makes sense.
"It's very difficult to do, but it's a good way to get volume and cars to your customer in a short time frame."
The philosophy, now being challenged, has long held that output gains from three shifts were offset by other lost efficiencies.
A third shift, for instance, eats into maintenance time, making machine breakdown a bigger threat. And a third shift can add fixed costs. In contrast, adding or dropping workers on a two-shift plus overtime-as-needed schedule gives an automaker more flexibility while restraining costs.
In recent history, Toyota has operated only one assembly plant on three shifts: its factory in Valenciennes, France.
It ran three shifts in fits and starts in 2004, from 2006 to 2010, and then again in 2012. It resumed three shifts in June 2014.
Nissan Motor Corp. operates three shifts at its Smyrna, Tenn., plant and at its Sunderland, England, plant. But no plants in Japan work a three-shift schedule. At Honda Motor Co., no assembly plants operate around the clock, though its first factory in India was temporarily on three shifts until a second plant there came online in February.
Turning to three shifts comes as Toyota President Akio Toyoda orders his production gurus to wring every last vehicle from existing lines. In 2013, Toyoda, the grandson of the carmaker's founder, ordered a freeze on new plants through 2016, hoping to maximize efficiencies to better withstand the next downturn.
That hold on investment also comes as Toyota builds its nest egg for what is expected to be the considerable cost of retooling plants worldwide to accommodate the company's new modular product platform, which debuts next year.
The company has dozens of plants that need to have their lines improved, and the pricey overhaul is expected to take years.
Maxing out existing plants helps buy time and save money.
"Akio is very firm on us growing in a sustainable way," St. Angelo said. "So we are fully utilizing our existing plants."
The practice was not so common before the global financial crisis, but it is increasingly the cost-conscious norm.
At the industry's peak before the crisis, about 10 percent of North America's assembly plants ran on three shifts. Now, about half do, estimates Ron Harbour, senior partner for global automotive manufacturing at the Oliver Wyman Group.
"We're at the same production levels we were in 2007, around 16 million, and we're doing it with 18 fewer assembly plants than we had back then because there is this push for asset utilization," Harbour said.
Many automakers have found creative work-arounds to make three shifts feasible, including ways to maintain equipment while it's running or during break times and lunches, Harbour said.
"Toyota knows how to do it," he said. "They would be the best of anybody, because they wrote the book on production systems."
Toyota said last month that adding the third shift at its Baja plant will boost annual capacity 41 percent to 89,000 vehicles. The change, which will add 300 jobs, follows an 11 percent capacity increase this year that raised annual capacity to 63,000 vehicles.
The move comes as Toyota weighs sites in Mexico for its first full assembly plant, one that might handle passenger cars. The company has been considering a new plant for at least two years.
St. Angelo, who before joining Toyota worked at General Motors' three-shift Lords-town, Ohio, plant, said he is under pressure to maximize output at Toyota's assembly plants in South America. Toyota has studied the introduction of three shifts there, but local labor laws don't readily allow it, he said.
Instead, the company has ramped up Saturday work hours to achieve output rates of up to 85,000 vehicles a year from two factories, each with straight-time capacity of 70,000 units.
"Unfortunately, the labor laws in Latin America really prohibit doing three shifts," he said. "It's not economically feasible. But I would love to try to do three shifts down there."