Page 3 - TWIMS Posters 2023

TOYOTA SOUTH AFRICA SYNOPSIS
On April 12, 2022, a devastating mudslide covered
MOTORS: 87 hectares of the Toyota South Africa Motors
(TSAM) factory located in Durban, South Africa.
TSAM’s president and chief executive officer,
Andrew Kirby, was facing various immediate issues
including mud flooding of the plant, employees
FLOOD DEVASTATION AND electrical shorting and possible electrocution due
stranded within the plant, growing concerns over
to rising water levels, and the plant’s closure in
response to the flooding. As a result of the flooding,
the plant had to shut down for five months, which
A PLANT IN CRISIS LEARNING OBJECTIVES
This is a three-part case which details the importance
of strategic partnerships within an operating
environment, effective leadership practices in crisis
management, and the importance of leadership and
organizational resilience. This has become especially
crucial in the volatile world of crisis events that are
A TEACHING CASE STUDY caused by issues such as climate change, geopolitical
inequality, and socio-economic instability.
At the end of each part of the case, TSAM leaders
face various dilemmas and must make some
decisions to recover from a crisis. Their response
indicates practical grappling with organizational
resilience and associated integrated financial, social,
and environmental impact to their business.
PART 1: THE CRISIS HITS
AUTHORS:
Dr Lisa Kinnear and
Professor Margie Sutherland
Figure 1: Toyota South Africa Motors Plant, Prospecton covered
in 1.5m of mud on 12th April 2022, provided by TSAM.
Part one recounts the events that began on 11 April
2022 when Andrew Kirby, CEO and President of
TSAM, waiting for his flight back from Johannesburg
to Durban, began receiving worrying messages
PUBLISHED: about the heavy rainfall and flooding in Durban and
the surrounding areas. On 12th April Bradley Fell
and Jan Els went to the plant to check on the
by Ivey Publishing situation. At 5.30 am they sent CEO, Andrew Kirby,
videos from their phones showing that there was
no damage to the plant. At 6.20 am, less than half
an hour after the reassuring messages, Kirby
July 2023
PART 2: CRISIS CONTAINMENT
Ontario, Canada
Part 2 describes the first few days after the crisis
and the response of the TSAM leadership team.
After reality had sunk in, Kirby and his executive
team accepted that it was crucial to act quickly.
They had adopted three guiding principles that
were aligned with TMC’s response to crisis. These
principles were to focus first on the well-being of
employees; second on the community; and third
on operational recovery.
The first step was to communicate with TSAM
employees to verify that they were all safe and to
inform them of the situation. Knowing that the
site had no operational communication system
available, Kirby contacted William Mzimba, the
chief officer of Vodacom, to help set up a mobile
communication base station at the TSAM plant
that could connect 8,000 employees.
The next round of communication would focus
on getting information out to the Toyota dealers
and suppliers who formed an integral part of
their supply chain. The greatest challenge in
for staff members. Kirby knew it wouldn’t be a six
deeply impacted the entire supply chain of original
equipment manufacturers and dealers who
depended on TSAM for their sustainability. The
affect multiple stakeholders, including 8,000
consequences of a prolonged plant closure could
employees and the larger South African economy.
vehicles per year for the local market and for global
TSAM contributed approximately 130,000 Toyota
export. Kirby needed to contain the immediate
substantial recovery from the disaster.
crisis and work with TSAM stakeholders to lead a
In grappling with the case questions, students will
achieve the following learning objectives:
§ Understand the role of leadership and organi-
zational resilience in strategic management.
§ Understand the role of stakeholder engagement
in crisis management and as a strategic imper-
ative for organizational sustainability.
§ Identify the leadership competencies required to
effectively manage a large-scale crisis.
§ Identify the principles and implementation
strategies for effectively leading large scale crisis
management.
received a call to tell him that the 87ha site was
flooded by 1.5m of mud. It was hard to understand
what had happened in such a short space of time.
What had actually happened was that the
Shongweni Dam, located near Pinetown had filled
rapidly and two of the safety fuse gates had burst,
releasing excess water which surged down the
Umlazi river, broke through a berm, breached the
riverbanks and collided with a high tide from the
sea, causing a colossal wave to rush down the
roads of the South Basin and into the TSAM plant.
Kirby and many of his team members couldn’t get
to the plant on the 12th April, but were able to get
a video message to Akio Toyoda, the President of
TMC at the time, describing what had happened.
TMC immediately dispatched the respected
Masachi Asakura, chief officer for global disaster
management and a team to South Africa to help.
Kirby recalls in his first online meeting with
executives from TMC on Saturday April 16th, where
no questions were asked about how or why the
disaster happened, all they wanted to know was
how they could help.
QUESTION: How should Kirby respond to this
disaster in the next 48 hours?
communication was that Kirby and his team were
not yet able to assess the full impact of the
damage to provide firm answers to questions
from employees and supply chain partners. All
they could do was be transparent in their
communication of all available facts.
The team then turned their focus to the clean-up
operation. Nigel Ward, TSAM's executive vice-
president of manufacturing and Brett Van Zyl,
TSAM’s vice-president of manufacturing inno-
vation, set up tables and chairs in an open space
on a higher ground that had not been affected
by the flooding. This became the command centre
for managing the recovery effort. Production
managers and executives started planning and
assigning the various responsibilities for the
clean-up operation.
Everyone at the TSAM plant had to forgo their
typical job titles and roles and help wherever they
could, whether it meant taking a mop and bucket
and cleaning a floor or packaging food hampers
day clean up recovery as it had been in the 2017
flooding, but he said they underestimated the
impact of the mud. Kirby and his leadership team
had to keep everyone at TSAM focused on recovery
and optimistic about a very uncertain future.
QUESTIONS:
What attitudes and behaviours did the TSAM
leadership team display in the first few days that
What should Kirby focus on during the next three
helped shape the path for TSAM’s road to recovery?
months, as a strategic response to this crisis to
ensure a sustainable recovery. Give a detailed plan
for recovery and stakeholder engagement.
PART 3: THE ROAD TO RECOVERY
Part 3 describes the road to recovery and highlights
the importance of the frameworks used to guide the
recovery. The overarching themes of “Rebuilding
Better Together” and looking for “silver linings” in the
crisis provided a common purpose to mobilise
around and the purposeful engagement and
transparency with stakeholders solicited the support
that was needed to succeed.
Masachi Asakura, the TMC chief officer for global
disaster management, arrived at TSAM with his
disaster management team from Japan on April 18,
2022. When he saw the plant for himself he
PRIORITIES
PRIORITY ONE: EMPLOYEES
Suben Moodley, TSAM’s senior vice-president of
corporate services and his HR team were
responsible for ensuring the safety and wellbeing
of employees and their family members. The needs
of employees were categorised; financial support
packages were arranged; and emotional support
was provided through counselling services.
Securing income for employees was a complex
process which involved the HR and finance team,
under the leadership of Bronwyn Kilpatrick and
engagement with the unions. Innovative solutions
ensured that despite losing 104 days of production,
TSAM employees earned an average of 84 per cent
of their normal pay between April and July 2022.
PRIORITY TWO: THE COMMUNITY
The multitude of stakeholders impacted by the
crisis was immense. However one resolute voice
was needed from TSAM and Kirby unified his team
and the community of stakeholders around one
theme – to “rebuild better together” and find silver
linings in the destruction.
Critical to the TSAM ecosystem, were the dealers
and suppliers, many of whom had been impacted
by the flood. While many depended on TSAM for
their livelihood, some stakeholders were hesitant to
understand TSAM’s motives as they tried to devise
temporary business plans for a broken model. Kirby
decided to invite dealers and suppliers onto site to
show them exactly what had happened and how
the company was tackling the crisis. These visits
were invaluable in building the spirit of a
community that was invested in seeing the TSAM
recovery efforts succeed.
The South African Government had to be engaged
at local and national levels. At the national level
there was a need to review the legislation
pertaining to the Automotive Production and
Development Plan and its impact on business
continuity. At a local level, they needed to work
with government to address some of the
infrastructure issues that contributed to the
disaster.
Customers who were waiting for the delivery of
their vehicles were reassured of
commitment to safety and quality in publicising the
decision to destroy all vehicles that were affected
by the flooding. The message to market was that
TSAM would recover and the advertising caption
“Rebuilding Better Together” became the mantra
for the recovery effort.
Figure 2: Clearing the mud in the TSAM plant April 2022,
provided by TSAM.
commented that he had, “never seen anything like
this, not even after the Japanese tsunami of 2011.”
The TMC hands-on practical help encouraged
TSAM executives and their purpose-driven,
long-term focused leadership philosophy gave
them hope. Understanding the immense
economy and to the 8,000 livelihoods that
contribution that TSAM made to the South African
depended on it meant that TMC would not
abandon its subsidiary in Africa. This commitment
gave the TSAM team the drive to manage the
situation methodically, calmly and with confidence
that the challenges would be overcome.
PRIORITY THREE: OPERATIONAL RECOVERY
The operational recovery rested largely on the
shoulders of Ward, Van Zyl and Dave Finch, senior
vice-president of manufacturing. The idea was to
use this opportunity, with the support of TMC, to
reimagine the scope of the operation after
completion of the recovery. The recovery followed
eight logical phases, using Toyota’s “thinking way”
to ensure deliberate and thorough production
restoration:
Emergency control; Clean, secure and safe; Power
up; Equipment check and assessment; Repairs and
order placement; Equipment delivery lead time;
Equipment verification and Start up.
Finch explained that without any clear goal in sight,
it was critical to give people small tasks to focus on to
keep them motivated and engaged. Every milestone
was celebrated, no matter how small, and team
members on the shop floor were encouraged to
come up with innovative ways to clean and repair
parts. Business continuity plans were not helpful, but
resourcefulness and a positive spirit were key.
As the team started making headway with the
cleaning efforts, progress meetings were moved to
each shop on site. The Japanese principle, Genchi
Gembutsu (going to see for yourself) was built into
TSAM’s culture and applied to the recovery.
Invaluable help was provided by TMC in sourcing
parts from every corner of the globe through speedy
sharing of information across the group.
The work of Kilpatrick and her finance team on
ensuring a smooth insurance claim, one of the
biggest in South Africa, was integral in the production
recovery and restoration of a broken business model.
QUESTION:
What lessons can be drawn from the TSAM case
regarding organisational resilience as a strategic
advantage?
TSAM’s
Figure 3 On August 15, 2022, TSAM was back in
production at 85 per cent capacity.