“Advice to Ford: Dump cars”

David Olive, writing in the Toronto Star on Aug 28th, tells us the “truth” of Toyota’s secret of success, in an article about Ford’s difficulties:

“Ford Motor Co., revealed last week to be in even worse shape than its ailing crosstown rival, General Motors Corp., really should think about dumping everything but its truck business. Almost everything else at the world’s third-largest automaker is a costly distraction — conspicuously its crowded stable of car brands, including Volvo, Mazda, Jaguar, Land Rover and Aston Martin. …

“What we do know is that Ford’s core North American operation has bled $3.8 billion (U.S.) in red ink over the past year and a half. That its U.S. business has been losing market share for 11 consecutive years. And that its credit rating has been downgraded ever deeper into junk territory, sapping profits at its Ford Motor Credit division — one of Ford’s few reliable cash cows. …

Even a cursory glance at Ford, with its revolving-door senior management woes and periodic crises dating from the 1940s, tells you it’s simply not a natural car maker, in the way that Toyota, Honda and BMW just naturally are. …”

Now, 50-odd years after starting the odyssey in which it invented its production system, we discover that Toyota is a born natural. God and destiny determined that they would succeed, and, sadly, that Ford would fail.

© Copyright 2006, Chauncey Bell and BABDI, LLC. All rights reserved worldwide.

You Can Waste a Lot of Money Eliminating Waste

Here is one reason that we think so many people have put so much effort into imitating the Toyota Production System and still we find Detroit in such a mess.

One of the cornerstones of the Toyota Production System is the commitment to eliminate waste. But “waste” in this context doesn’t mean what most people think it does.

Value and waste are interpretations, shaped by the concerns of the cultures and enterprises in which they appear. The most important wastes (and values) of the last 100+ years were shaped by industrial era concerns for conserving physical and economic resources, financial capital, and production capacity.

The most important values and wastes for the era we have entered are not the same.

Many of those hell-bent on eliminating waste are “looking for love in all the wrong places.”

The central wastes of the new era will be shaped by our concerns for building effective relationships to deal with the challenge of coordinating in this continuously changing, globally connected world.

Have you got examples? Can you see what we are pointing at?

 © Copyright 2006, Chauncey Bell and BABDI, LLC. All rights reserved worldwide.

Maybe the Great US Auto Industry is a Goner.

Greg Neil speculates that maybe the construction industry will be first to invent a 21st century version of what Toyota did, and the US will pass out of contention in the manufacture of automobiles over the coming decades. (Ps: Toyota is a major player in the housing industry in Japan ….)

In the 1950s, Japan was really listening. Life itself was at stake. For fifty years now, our executives in Detroit have had the opportunity to listen, and have not been listening. We have been copying Voltaire’s idiot, Candide, spouting “It’s all for the best in this best of all possible worlds.” I remember when my friend George Kuper returned from an early visit to a Toyota plant in Japan with a covey of US executives, who were puzzled, “What possessed those Japanese businessmen to try and convince us that they were running automobile plants without inventories and warehouses?”

Are essential qualities that have made this a great country disappearing? … no longer relevant? What were those of earlier eras in this country listening to? What are those running the automotive companies today listening to?

© Copyright 2006, Chauncey Bell and BABDI, LLC. All rights reserved worldwide.

Why Haven’t US Automakers Caught On?

While we are at it, let’s follow some other threads as well.

Why have GM and Ford, (and Daimler-Chrysler, and a host of others) not simply copied the successful practices of Toyota? Is what they are doing so unusual, mysterious, or hidden? Since the 1950’s Toyota has invited people to come and tour their plants. Later they sent some of their most senior engineers to Detroit to teach for a number of years in US schools. They said they were doing that to give honor to Henry Ford and others from whom they had learned.

For decades US automakers have picked up popular jargon that originated with the Toyota Production System – just-in-time, continuous improvement, eliminating waste, five why’s, root causes, and so forth – and used it in improvement programs and in describing to the press the things they were doing to improve their companies.

(Is this all marketing hype? Are the companies actually trying to do anything there? From a good deal of work inside the auto industry, I have the interpretation that a large number of people inside the companies are actually trying to improve what they are doing.)

Some claim that Japanese culture lends itself to the kind of operation that Toyota has, and the US culture does not lend itself to this. Taiichi Ohno, Continue reading

Why Toyota Dominates (part 2)

Shigeo Shingo, Chief of Industrial Engineering (who trained the company’s industrial engineers in the time that they built the Toyota Production System), explained that the key to the success of the production system was SMED – the Single Minute Exchange of Dies – which allowed them to run many different products on the same production line, and eliminated many kinds of waste.

Company executives ascribe their success to following the 14 principles of the Toyota Way (see http://en.wikipedia.org/wiki/The_Toyota_Way).

Why do you suppose that these might not be compelling answers for US Auto Industry Executives?

© Copyright 2006, Chauncey Bell and BABDI, LLC. All rights reserved worldwide.

Why Toyota Dominates.

Toyota continues to dominate the automotive industry, reporting for FY 2006 “… earnings of US$180.29 billion, an increase of 13.4% over 2005.  This was the fifth consecutive year of sales increases at Toyota Motor (and since 2001, sales have increased a total of 57%).” 

They claim that the single most important reason for their success is that they follow ‘the 14 principles of the Toyota Way.’

US auto makers have heard Toyota talking loudly about the Toyota Production System and the Toyota Way since the 1970s.

 Our question is this: Why is it that the major US auto makers say they practice ‘lean principles,’ and yet are unable to produce even a shadow of the kind of robust performance in difficult times that Toyota has demonstrated for decades?

Do you find the standard list of excuses satisfying?

  • Labor contracts that contribute $1,000 per car to the cost of GM automobiles.
  • Bad marketing intelligence, so that the company(ies) aren’t offering what the customers want.
  • Excess capacity.
  • Inefficient plants and unproductive workers.
  • Workforces that don’t want to work.
  • Incompetent management.
  • Greedy management.
  • Slow innovation.  
  • etc.

I think the problem runs deeper than this. What do you think?

Chauncey Bell (with Greg Neil)

© Copyright 2006, Chauncey Bell and BABDI, LLC. All rights reserved worldwide.