The Japanese Fair Trade Commission
16:09 JST, June 30, 2024
The Japan Fair Trade Commission has decided to warn a body builder affiliated with Toyota Motor Corp. not to repeat its practice of forcing subcontractors to stockpile molds needed for mass production of auto parts without compensation, in violation of the Subcontracting Law, sources said.
Metal molds are used in the mass production of cars, home appliances and other products, and large ones can be more than a meter high and weigh several tons. Delivery time and costs can be reduced with molds because they allow continuous production of thousands to tens of thousands of parts per day.
The admonition will be issued to Yokohama-based Toyota Customizing & Development Co., which is believed to have engaged in the unlawful practice against about 50 subcontractors across the country. The company produces and develops body parts for passenger cars, ambulances and racing cars, among others.
Toyota acknowledged the mistake and promised to fully reimburse the subcontractors’ losses.
Toyota Motor owns more than 90% of the shares of Toyota Customizing.
The JFTC increased its scrutiny of transactions between large companies and their subcontractors to ensure they were carried out correctly, while the operations of small and medium-sized companies are becoming increasingly difficult due to problems such as high prices. The JFTC believes the approximately 50 subcontractors could not ask Toyota Customizing to pay for mold management and other items out of concern that the company would terminate its contracts with them.
According to the sources, Toyota Customizing has ordered the subcontractors to store at least 650 sets of the molds they use for the production of bumpers, wheels and other items, as well as inspection equipment, in warehouses and other places for at least two years, despite the fact that no new orders were expected for which the molds are used.
It is believed that the subcontractors were required to use a large space to store the molds and bear all storage and other costs. The damages are estimated at tens of millions of yen for the period of the violation alone. The unlawful practice usually lasted for a long time. Since in at least one of the cases the practice lasted for almost 30 years, the actual total amount of damages may be hundreds of millions of yen.
In addition, the company is believed to have wrongly returned more than ยฅ50 million worth of auto parts to more than 60 subcontractors. Because some subcontractors were affected by both the improper storage and returns, Toyota Customizing is expected to provide financial compensation to approximately 90 companies.
Both Toyota Customizing and its parent company told The Yomiuri Shimbun they had no comment.
