Over the past year, automakers have struggled to deal with the tough economic conditions in North America, especially the United States. One of the companies that has been able to handle the slowdown better than its peers has been Toyota (NYSE: TM). But the effects are being felt even by the Japanese automaker, as made clear today in the news that the company is laying off 800 workers in one of its Japanese plants.

The 800 workers that are being laid off represent about 10% of the workforce at the company's plant in southwestern Japan. So far, the company has been able to sidestep the steep losses that its American rivals have been forced to deal with, but this year is proving to be a bit tougher, as the company is now predicting a first annual drop in profit, which would be the first time in the past seven years that the company has seen profit fall.

Toyota has been more fortunate than many automakers, mostly due the fact that the company has a long history of building smaller, more fuel efficient cars. This fact alone has helped it weather the slowdown that record high gasoline prices in the U.S. have helped create. Last Friday, however, the company stated that sales dropped 18.7% in July from the same period last year.

But even as strong as Toyota has been, this year is going to be hard on the Japanese automaker, and the predicted drop in profit has led the company to reduce the number of vehicles that it plans to produce, thus leading to these 800 layoffs. Of the 800 layoffs, 350 were cut in June, and another 450 got the news last month.

Toyota did state that it plans to increase the number of jobs again towards the end of this year, as the company tries to figure out a new production level to fit the current market. The plant where these current layoffs took place produced around 430,000 vehicles, including models such as the Lexus RX and Highlander sport utility vehicles.

When the company raises employees levels later this year, expect the added resources to be used more in factories that produce the company's most fuel efficient cars. This is an area where Toyota excels but has been having a hard time keeping up with the fierce demand for these cars.

Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor's Observer.