Vertical integration has become almost a vulgar term in the auto industry, with OEMs and even upper-level suppliers seemingly approaching the point where they do little more than screw together parts procured from outside vendors. It's a far cry from the hey-day of the domestic auto industry, where Ford went so far as to run its own forestry operations to fuel its steel smelting plants. Toyota, though, generally seems to be bucking this trend, and is said to show the same level of vertical integration that was present at GM 30 years ago. One of the oft-cited reasons for moving away from the vertical models is the additional wage cost of performing work in-house, but Toyota seems to have been successful at using its lean production systems to overcome that disadvantage. Overall, I think Toyota's performance vis-a-vis the rest of the industry speaks for the suitability of its approach, and it'll be interesting to see if the pendulum starts to swing the other way for the rest of the industry.



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