Referred to as the "Toyota shock", the dramatic plunge in the profits of Toyota Motor Corp, the nation's largest manufacturer, is symbolic of the effect of the global financial crisis on Japan.

"I can't do anything if the company says I'm no longer needed. While I can say I understand it, there's a very tough side to it," said a 42-year-old man who has worked as a temporary worker for nine years in total at Toyota's Miyata Plant in Miyawaka, Fukuoka Prefecture.

The worker at the Kyushu unit said he began to feel anxious about the possibility of his contract being terminated when production started rapidly declining in August.

"Far from getting any overtime work, we don't even have any work to do during regular working hours. We end up killing time by cleaning the plant all day," he said, adding that the dread of being fired at anytime weighs down on him.

Toyota's consolidated annual results for the business year up to the end of March are predicted to see a huge fall in operating profits, with earnings from its main car manufacturing business predicted to plunge by 1.67 trillion yen (US$18.73 billion), or 74 per cent, to 600 billion yen.

The Toyota shock was triggered by the US financial crisis, which stopped an ever increasing number of Americans from getting car loans, leading to a spectacular dive in US car sales.

The North American market, in which Toyota sells one-third of its vehicles, is Toyota's main profit generator.

But the company has predicted that sales will fall by 530,000 units this fiscal year from last year's 2.95 million units.

Toyota's drastic cost-cutting efforts--which have been likened to squeezing moisture out of a crusty dusting cloth--have reduced expenses by 300 billion yen annually.

But this scale of cost-cutting no longer looks sufficient.

Meanwhile at home, new car sales in November hit a 39-year low. The slump in domestic sales has accelerated cuts in output and staffing levels, causing a chain reaction to spread through Toyota's small and midsize subcontractors.

One of them is Fukatsu Kinzoku Kogyo, a manufacturer of muffler parts sold to another Toyota-affiliated parts maker, based in Toyota, Aichi Prefecture.

Though the company invested in a large pressing machine and other equipment in March at a cost of 8 million yen, partly financed through a bank loan, utilisation of the equipment has fallen dramatically.

President Hirofumi Fukatsu, 60, said with a sigh: "Since October, orders have fallen 20 per cent from the previous year and from December they're going to fall even more. Demand for some parts has fallen to a third (of what it was)."

The company had increased its equipment and employment levels in line with Toyota's increase in production over recent years, employing 25 regular workers and 25 temporary workers.

But five of the temporary workers already have been fired and Fukatsu said he has no choice but to cut three more in December.

Toyota plans to cut the number of workers with limited-term contracts by 3,000 by the end of March.

According to the Health, Labour and Welfare Ministry, the number of non-regular workers who are likely to lose their jobs by March is very high in regions relying on Toyota.

Ministry figures already show 4,104 in Aichi Prefecture and 1,986 in Gifu Prefecture losing their jobs in this period.

The Toyota shock has spread beyond the Tokai region, adversely affecting regional economies.

Around the plants of Toyota Kyushu, which had already seen 800 temporary workers axed before August, the number of vacant apartment units has increased noticeably.

Ryoji Idemitsu, 59-year-old president of Idemitsu Fudosan, a real estate company dealing with rented housing for Toyota employees in Munakata, a city neighbouring Miyawaka, said, "Out of 66 rental contracts arranged (through our company), 23 have been canceled."

Takayuki Izumaru, the 47-year-old manager of an udon noodle shop in Munakata, said, "Every Friday evening, 20 to 30 temporary workers used to come to my shop. But I no longer see them around these days. That's sad."

Michiaki Irie, a 57-year-old taxi driver in the city, also said the number of Toyota workers using his services has drastically fallen.

"Toyota was on the rise and everything was going well until recently. I never dreamed the collapse of Lehman Brothers would have such a negative impact," he said.

The slowdown of Toyota, the world's leading automaker, indicates the disastrous extent of the worldwide financial crisis, and its shock waves will continue to spread through related industries and regions of Japan.