BusinessWeek Logo
Toyota

Getty Images

By Ian Rowley, with Hiroko Tashiro

Toyota

Location: Aichi, Japan
Industry: Automobiles
Annual Sales: $283 billion

Forget for a minute that To­yota (TM) will soon beat General Motors in vehicle sales to become the world’s largest automaker. With the Big Three turning to Washington for life support, that milestone comes at a time when Toyota’s own earnings are slumping.

Instead, head to Georgetown Community Hospital in Georgetown, Ky., and ask executives how they were able to trim 30 minutes off treatment times for emergency room patients. The answer: by working with a Toyota affiliate to adopt its fabled production system. No wonder University of Michigan professor Jeffrey Liker calls Toyota “the most influential [and] probably the most imitated company in the world.”

Few companies have proven as influential beyond their industry as Toyota. Thousands of companies have studied its lean production methods to cut waste and increase efficiency. The impact is felt in industries from mining to retail. Veteran United Technologies Chairman George David is among the fans.

And since 1992 Toyota has consulted on its best practices through the Toyota Supplier Support Center. The goal is less to generate revenue than to foster goodwill. Toyota often sells services at cost or gives away materials for free. That’s probably wise, given continued sensitivities over its impact on U.S. manufacturing.

Ahead Of The Curve
Although not immune to the downturn, Toyota continues to change the game in the auto industry. When it brought the hybrid Prius to the U.S. seven years ago, rivals said the technology would never catch on. Today, GM and Ford are producing their own gas-electric vehicles. And Toyota, which has more than 1,000 hybrid-related patents and expects to sell 1 million hybrid vehicles annually within five years, has become synonymous with greener motoring. “There might be an occasional surprise” from competitors, argues UBS analyst Tatsuo Yoshida, “but Toyota will continue to lead.”

While Toyota’s influence arguably has increased during the financial crisis, the company is suffering. Sales are down, and it got into dubious practices like 0% financing to cut swelling inventory. Like U.S. rivals, it’s paying for a rush to build and sell big vehicles. As pickup sales slowed recently, Toyota halted production in a Texas assembly plant.

As Detroit teeters, Toyota has another tool: some $40 billion in cash and securities it can invest in new vehicles and plants. And its expected $5.9 billion profit this year could leave it well-­positioned to have even more sway once the economy recovers.