Toyota Faces a Problem: No One to Work at Its Factories

Toyota is preparing to build its first new factory in Japan since 2012, but the project is already facing a major obstacle: a shortage of workers. The automaker increasingly believes that maintaining production levels will be difficult without hiring more foreign employees.

The new plant is expected to open in the early 2030s and will play a key role in the company’s strategy to keep more vehicle manufacturing inside Japan.

Japan’s shrinking workforce is creating serious challenges for the country’s auto industry. Roughly one million people currently work in the sector, but only about 9% of them are foreign nationals—far below what analysts say will be required in the coming decades.

Projections suggest that by 2040, nearly one-third of workers in the automotive industry may need to come from overseas to sustain current production capacity. In regions surrounding Toyota’s existing facilities, the number of foreign workers has already been increasing, particularly in parts manufacturing and supply chain operations.

A significant drop in vehicle output could have broader consequences beyond the company itself. Economists estimate that if auto production in Japan were to decline by 10%, the country’s overall GDP could shrink by nearly 1%.

Alongside its workforce challenges, Toyota is also rethinking certain manufacturing standards. The company is considering easing some of its traditionally strict quality requirements—standards that can raise production costs but may not always matter to consumers.

The shift reflects growing competitive pressure from Chinese automakers, many of which are introducing technologically advanced vehicles at lower prices. Toyota hopes that adjusting its production strategy will help it stay competitive in a rapidly changing global auto market.