In May 2021, Toyota Motor Vietnam and the Department of Industry – Ministry of Industry and Trade signed a Memorandum of Understanding to support domestic enterprises, specifically to enhance their capabilities and strengthen cooperation between domestic enterprises and automakers. This signing marks the second year the two signatories joined a collaboration to support Vietnamese firms. The project will be implemented in 2021 and 2022.
For Toyota Vietnam, promoting localization is not only about increasing the number of Vietnamese suppliers, but also improving the capability and quality of suppliers, thereby reducing production costs and increasing competition capability. For example, with Toyota’s support, Hanoi Plastic Factory has cut costs by an estimated VND 2.8 billion (USD 121,510) with mold improvement. Its labor productivity increased by 10% on average. Toyota has supported another local enterprise, LeGroup, to set-up flow-based production, leading to the mold changing time being reduced from 30 minutes to 10 minutes, and labor efficiency increasing from 80% to 93%, reducing the need for 8 press machines and saving about 500 sqm of factory area.
Currently, the list of Toyota suppliers has reached 46, including 6 Vietnamese suppliers, and the total number of localized products has reached over 720.
In addition to direct support to suppliers, Toyota Vietnam also cooperates with Hanoi University Science and Technology to organize the “Monozukuri” program on lean production methods, based on Toyota’s philosophy. To date, after 15 years of implementation, the “Monozukuri” program has received positive feedback, with nearly 60 courses held for 1,180 students from 219 enterprises and universities.
Toyota Vietnam and the Department of Industry will also cooperate to seek potential foreign suppliers and connect them with businesses operating in Vietnam, share the experience of supplier development, build up the supply chain in the supporting industry, and improve the capabilities of domestic suppliers.
The government of Vietnam has set the goal for Vietnamese industrial enterprises to be able to produce highly competitive support products for the automotive industry, meeting 45% of domestic consumption and accounting for 11% of industrial production value by 2025.
Currently, about 1,000 local enterprises are said to be capable of supplying to multinational automotive corporations. Some Vietnamese enterprises have achieved relatively good capacity in producing molds, motorbike components, electrical cables, plastic and rubber components, and tires. However, the government targets to have 2,000 local enterprises capable of supplying to multinational corporations by 2030.
(Sources: VietnamPlus; Toyota)