Toyota Motor Corporation, founded 72 years ago, takes on an almost mythic quality in its native Japan. It is a symbol of the nation’s economic prowess. The company has taken a beating in the financial crisis, however, and its fiscal woes are threatening to destroy the economy of an entire region of the country.

For the fiscal year 2008-2009, the world’s premier auto manufacturer suffered losses of 3.3 billion euros.  It was the first annual loss since 1941, when the company started publishing public records of its financial earnings.

3,000 layoffs in November

The Aichi province, in the western part of the country near Nagoya, was the first casualty of the company’s stagnation. For decades it has been intimately dependent on the Toyota plant. Prior to the crisis, Toyota employed 80% of local labourers. The locals have coined a term for the phenomenon resulting from Toyota’s losses: “Toyota shock”.

Toyota is a Japanese icon, and the company's home town in Aichi even took on the name in 1959. But as Toyota fell, so fell the town.

The repercussions on the local economy and its 400,000 inhabitants of Toyota City were immediate: 3,000 employees were laid off in November, representing half of the contracted labour force of the company. Temporary workers and foreign employees have been particularly hard hit, finding themselves suddenly without a home, sometimes reduced to eating in charity soup kitchens.