Toyota's UK manufacturing unit has told just-auto that it is cutting pay and hours at its UK manufacturing facilities in order to drive cost down 'in view of the current market situation'.

In a statement the company said that 'the best way to secure long term employment is to temporarily reduce working hours and base pay by 10%'.

The reduced hours 'work share' arrangement will take effect from 1st April, 2009, and will be in place for one year. The firm said that during this time it will 'continue to monitor the market and company situation closely' and that the measures 'give us a greater opportunity to maintain employment through this difficult period'.

A spokesman for Toyota Motor Manufacturing UK (TMUK) said that the working hours reduction would effectively account for two days each month and would be organised around blocks of half days to maximise operational efficiency depending on shift patterns.

The spokesman also stressed that the measures are cost-driven and that output won't be impacted beyond what the firm has already announced.

Toyota said that measures are being introduced following consultation with employee representatives and the local Unite union backed the measures as a way to protect employment.

Peter Tsouvallaris, Unite representative at the plant said: "Unite's priority is to secure jobs and give our members a fighting chance of coming through this economic turmoil with their jobs and livelihoods intact. Any decision to cut wages and working time is never taken lightly, but the agreement we have reached with Toyota will ensure none of our members' benefits are eroded and that these skilled workers will remain in place and at work ready for when the upturn comes."

Toyota employs 3,900 workers ar Burnaston, where the Auris and Avensis are made for the European market. Around 70% of production is exported to mainland Europe and around a further 15% is exported to other countries. The plant produced 213,000 cars in 2008 and it is Toyota's biggest European plant.

A further 570 workers are employed at Deeside, north Wales, where engines are manufactured.

Toyota, long seen as a classic auto industry success story, is hitting headwinds related to the economic crisis that are impacting all companies in the automotive business. In Europe, carmakers are reducing output in response to sharply lower sales. JD Power estimates that the excess stock of cars in Europe is in the region of 500,000 units and says there is no prospect of a recovery to output until that stock is wound down. 

Toyota is expected to post its first ever operating loss in the fiscal year to the end of March.

Dave Leggett