Facing its first loss in 70 years, Toyota is trying to squeeze out an extra $1.4 billion in savings, and it looks as if nothing is sacred.

Toyota Motor (TM) is no stranger to cost-cutting. In recent years the automaker has slashed expenses by as much as $3.3 billion annually by implementing thousands of changes suggested by employees and keeping a tight rein on spending. But now, with global auto sales in a tailspin and Toyota expecting its first loss in 70 years, the push for frugality is entering overdrive: Last fall, the company formed an "Emergency Profit Improvement Committee" to ferret out an extra $1.4 billion in savings this year.

When the need for profit improvement reaches emergency status, apparently nothing is sacred. In Japan, the company is shedding 5,000 temporary workers and is likely to cut production by as much as 40%—450,000 cars—over the next three months. According to reports in the Japanese media, Toyota is considering shedding 1,000 permanent workers in the U.S. and Britain. Toyota says nothing has been decided and that it does its utmost to preserve employment, but, if it happens, it will be only the second time since 1950 that it has trimmed permanent staffers.

No saving, it seems, is too small. Workers are being encouraged to take the stairs rather than elevators, to save electricity. The heat in factories has been turned down, so workers are now wearing extra sweaters to stay warm. And on Jan. 19, Lexus engineer Takayuki Katsuda and two colleagues drove from headquarters in Toyota City to Tokyo for the Japan launch of the Lexus RX sport-utility vehicle. Though the trip took four hours, vs. 90 minutes on the Shinkansen bullet train, they saved about $300 in train fares. "We're facing a once-in-a-hundred-years crisis," Akio Toyoda, a scion of the founding family, who will become president in June, told reporters on Jan. 20.

Even the announcement of Toyoda's promotion got hit by the cost-cutting drive. When he was introduced to the media, the company didn't rent a hotel ballroom as it normally does for such events. Instead, Toyota simply cleared a few Priuses and Corollas from a Tokyo auto showroom on the ground floor of its offices and brought out folding chairs.

Read More [businessweek]