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Toyota City, named after Japan's - and the world's - top automaker (Koji Sasahara)
Toyota City, named after Japan's - and the world's - top automaker (Koji Sasahara)

Automotive

Toyota City: How it became Japan's Detroit Add to ...

There are many ways to measure how important the car maker Toyota is to the Japanese economy, and how hard its lost year has hit both the country as a whole and this once-booming city that bears its name.

You could look at Japan's plummeting export numbers - with automobile sales leading the way down - and the sagging gross domestic product figures that have resulted. You could spend an afternoon in the Hello Work job centre in Toyota City, which once helped recruit workers from as far away as Brazil for the company's bustling assembly lines but which is now a quietly desperate place with five applicants for every available job.

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Or you could drop by Machiko Sakakibara's hair salon just a few minutes' walk from Toyota Motor Corp.'s gleaming corporate headquarters here. A few years ago, she and her husband's scissors were flying in an effort to keep up with the steady stream of clients from both Toyota and its supplier companies who strolled over to keep their hair short, neat and professional.

But on a recent Friday afternoon, during what should have been her busiest hours of the week, Ms. Sakakibara stood alone in her gaily decorated salon with not a customer in sight. Instead of the regular seven or eight customers a day, she and her husband often now serve just two or three.

"Because of the recession, people who used to come in every month now come in only every 50 days. It just means more work for me when they do come," the sprightly 65-year-old said with a grandmotherly giggle. "People have also cut back on eating out, and drinking."

The pinch is being felt all across Japan, one of the world's richest countries.

The island nation finds itself in the grip of its worst economic downturn on record. In releasing another gloomy report this week, the Bank of Japan tried to put a silver lining on things by highlighting that the economy - which it forecast would contract by 3.4 per cent in the year ending next March - had "stopped worsening."

Talk of a recovery, at Toyota and in the wider Japanese economy, is usually cast into the future, 2010 at the earliest. Some expect that it will take far longer.

In a country only recently recovered from its "lost decade" of the 1990s, the prospect of another prolonged and painful economic downturn is a dismal one. Japan is expected to be slower pulling out of its recession than other advanced economies. The slump has devastated Japan's export sectors, driven by powerhouses such as Toyota and its rival auto makers, and the electronics giants like Sony.

Exports account for just 15 per cent of Japan's economic output, but the work is high-value, and ripples through the economy. Domestic demand, which fuels a huge service sector, is also hurting badly.

Nowhere is the manufacturing slump - and its impact on the wider economy - more visible and visceral than in Toyota City.

Toyota directly accounts for billions of dollars in annual sales and tens of thousands of Japanese jobs. If you include the hundreds of companies across the country that supply it - 400 of them in the Toyota City region alone - the company's importance multiplies.

Even General Motors doesn't mean as much to the U.S. economy as Toyota does to Japan's. Sales at department stores in the nearby city of Nagoya have fallen almost in lockstep with Toyota's fortunes.

In Toyota City, 80 per cent of the 410,000 residents owe their livelihoods to Toyota. By the start of this year, as the number of job seekers here leapt 130 per cent from January, 2008, the city had won unwanted fame as Japan's most out-of-work town.

The Sakakibaras' hair salon is still doing better business than many in Toyota City. Across the street from their still-swirling barber pole, a row of grey metal shutters covers what used to be a thriving little commercial district consisting of a convenience store, vegetable market and small clothing retailer.

"If Toyota catches a cold, everybody gets pneumonia," Ms. Sakakibara explained.

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