Because a lot of this information is not on the Internet and not in most public libraries, this post is to fill in that gap. While searching the shelves of the Federal Depository Library on the second floor of the Northern Illinois University Library, I found this government publication which covers the development of Japanese industries:

Japan: The Government-Business Relationship
A Guide For The American Businessman
Eugene J. Kaplan
Director, Far East Division
Bureau of International Commerce
February 1972

Since Japan is now the single largest manufacturer of automobiles in the world, I found it important to learn how the Japanese did it.


Introduction and Summary

The conventional wisdom of economics argues that sustained protection of an industry will, by insulating domestic producers from the rigors of international competition, jeopardize its production efficiency and long run performance. The case of Japan's automobile industry challenges this thesis for two characteristics of its development from pre-war infancy to currently emerging maturity clearly stand out. One is its enormous growth and competitive success......The other characteristic is the comprehensive structure of protection from foreign imports and capital investment which was developed at an early stage and has only recently been fundamentally altered. Together, these facts confound the traditional logic.....

Prewar Role of Government

Origins of the industry. - The active role of the Japanese government in the automobile industry is not simply a recent phenomenon. The origins of the domestic auto industry actually lie in the government's response to the requirements for Japanese military strength and economic autonomy during the first four decades of the century. This obscure prewar history is important in understanding the more notable recent interaction - both cooperative and adversary - of the government and the manufacturers. For the prewar history introduces the major issues - the threatening presence of foreign capital, the viability of domestic producers, the problem of foreign exchange, and the appropriateness of fiscal incentives - which dominate the government - industry milieu during the postwar period.

Despite the dramatic growth in passenger car demand in the 1960's, activity did not occur until the first World War. The demonstrated maneuverability of automobiles in combat induced the government to directly subsidize the development and production of military vehicles, almost entirely trucks. Commercial use of trucks soon followed, and production continued after the war's end while passenger cars remained underdeveloped. In fact, trucks dominated Japanese automotive output until very recently. Despite the dramatic growth in passenger car demand in the 1960's, annual passenger car unit production surpassed combined truck and bus output in Japan for the first time in 1969.

Ironically, a natural disaster gave the first impetus to Japan's auto business, but domestic producers were unfortunately not in a position to take advantage. Tokyo's great earthquake of September 1923 crippled the city's railway and tramcar system. One thousand buses were shipped from Ford in the United States. The passenger vehicle opportunity had arrived in Japan, but only the American producers could respond. Domestic manufacturers were very small-scale, primitive in production technology, and severely under capitalized. Automobile production in 1923 is estimated at less than two hundred units.

Within two years, both Ford and General Motors established wholly-owned onshore assembly operations. Japan Ford corporation was formed in Yokohama in late 1924. Japan General Motors, headquartered in Osaka, followed in 1925. By 1929, the two companies combined produced nearly 30,000 automobiles. Parts and sub-assemblies were imported from the United States for domestic assembly. Each organized a finance company and introduced the installment purchase in Japan. Within five years of their coming, Ford and General Motors controlled 85% of the Japanese market with onshore production.

Throughout this same period, Japanese domestic production remained dormant. The Japanese government, despite its wartime subsidy of military vehicles, had not demonstrated serious interest in a domestic industry. Japanese manufacturers remained inferior in scale, technology, and capital. Their combined annual production never exceeded 500 units before 1930. Quite apart from Japan's early competitive disadvantage, automobile production was considered by both government and major industry to be speculative and of lower priority than steel, coal, and other heavy industry. The powerful and diversified zaibatsu of Mitsubishi, Mitsui, and Sumitomo separately considered and rejected entry into the automobile business. Each worked constructively with the Japanese government and undertook major investments in other areas where mutual interest was strong. Autos, then, residually fell to the strictly private, small-capital sector.

Japan: The Government-Business Relationship
A Guide For The American Businessman
Eugene J. Kaplan
Director, Far East Division
Bureau of International Commerce
February 1972
pp. 104-106


Steve

One thing this chart tells me, that I didnt know, and is pretty amazing, is that in 2007, China made almost twice as many cars as the USA.
Anybody who thinks its still a country of rural peasants living on a dollar a day has to sit up and take notice at that one- 6 Million cars? From what is basically a standing start, only 20 years ago?
Auto factories dont exist in a vacuum- they need a large web of sophisticated manufacturing to support them- primary metals, forging and stamping, plastics, glass, rubber, electronics, and much more.
China is moving so fast, and getting so advanced, manufacturing wise, while we are still arguing about how bad harbor freight tools are.
And of those 6 Million cars, the VAST majority are for internal, Chinese consumption.

This is reality, and it is gonna impact us in a huge way in the next 20 years.
If China becomes the kind of manufacturing, consuming country that the USA was in the late 50's, only 8 times as big, it is going to impact the whole world, and how.

The japanese, while smart, and a force to be reckoned with, have a declining, aging population, a pretty stagnant economy (for almost 20 years now) and few natural resources. They will hold their own, but the phenomonen of 1.4 Billion people transitioning to second world status is a much bigger, and more immediate phenomenon.

I understand your point, about how much we, as a nation, could learn about buttering our own bread from the japanese, and I think its a good one. But I also think that every chinese household getting an airconditioner and a fridge will affect us much more than the japanese automakers, in many many ways.

One question about the graph:

Did the source say how the breakdown of manufacturing by country was accomplished?
For example, if a Honda minivan was made in the US - as they all are - was that counted as a US-made car or a Japan-made car?

Also, it's staggering to note that Germany's volume is larger than the US, and South Korea (!) is about the same.

Good question, here is the source:

http://oica.net/category/production-statistics/

If these stats are accurate, then Japan with only 1.9% of the world's population is producing 18.7% of the world's cars.

Plus, Japan with only 42% of the population of the U.S. makes about 2.54 times as many cars as the U.S.


Steve

I'm confused by the numbers

I followed machinehead61's link.

Of the total production, the US produces 63% as "commercial vehicles" and Japan produces only 14 %. They're counting minivans or something as a commercial vehicle and not as a car as we think of it in North America..

There is something funny in the definitions

http://oica.net/wp-content/uploads/2...efinitions.pdf

I think the american pickup truck is considered a "commercial vehicle", and since for many years the Ford F150 was selling a million a year, with the GM 1500 close behind, that tends to skew the numbers.

We consider a pickup a car, and so the 4 million figure is actually low, for the USA- if you include the regularly driven full size pickups and vans that soccer moms drive here, as cars, that bumps US production up to something more equal to China.

However, it is confusing, as the "commercial vehicle" category for the USA lumps those half ton pickups together with semis and other real commercial vehicles.

So in the end, we probably still make as many consumer driven, as opposed to commercial delivery, vehicles as China, and more than Germany or Korea. But not for long- the Chinese will be passing us quite soon, I am sure.
GM is currently selling 1 Million cars a year in China, and they, alone, hope to double or triple that in a decade.

The overall trend is definitely towards the US becoming a smaller player in world car production, regardless of definitions of what is a passenger car.

Initial Efforts at Development

A change of attitude, at least by government, began to emerge around 1930. In that year, the Ministry of Commerce and Industry - the predecessor of the Ministry of International Trade and Industry (MITI) - instructed its Domestic Industries Promotion Committee to study the future of the automobile industry and the implications of domination by foreign capital. In the following year, a formal automobile industry committee was established. During the next five years, the Ministry's view of a domestic auto industry shifted from one of moderate desirability to strong necessity. Strategies for protection and development were formulated, and by 1936 major legislation aimed at forcing Ford and General Motors out of Japan was prepared.

Three major stimuli toward this new position are suggested by the events of this period. The first and obvious influence is Japan's growing territorial ambition in Asia. Domestic production of all vehicles in 1932 was still under one thousand units, hardly enough to support the military expansion. Production rose by a multiple of thirty-five over the next six years, a feat directly related to military needs. However, the preoccupation of the Ministry of Commerce and industry was not wholly military.

It was apparent that onshore foreign capital, if permitted unlimited production levels, would continue to dominate the domestic market and hence preclude the development of Japanese producers. The domestic manufacturer faced an uncompetitive scale of operation, an inadequate assembly technology, an absence of onshore parts supply, and an inability to finance automobile purchasers at competitive terms. the high failure rate of small domestic producers and the continued unwillingness of the zaibatsu to compete, even at later invitation of the government, convinced planners that protection from foreign capital was the prerequisite of a domestic industry.

This fundamental conclusion was never later seriously questioned in Japanese government or industry. While there was serious postwar debate within government over the necessity of a domestic automobile industry, the first requirement of development - protection from foreign capital - was uniformly confirmed. Similarly, the recent year's dialog within the Japanese economic policy community over capital liberalization of the industry was a debate over the domestic producers' stage of completed development, not a requisitioning of the necessity of protection for development.

A third stimulus to the government's reconsideration of autos was the foreign exchange problem. The international monetary crises and trade dislocations of the late 1920's and early 1930's dramatized Japan's precarious import position. Lack of a domestic automobile industry meant importing either finished vehicles or knock-down parts for assembly by onshore foreign capital. Both require foreign exchange.

The problem was not merely one of foreign exchange shortage, however, but rather the perverse cyclicality which import dependence forced on the Japanese economy. Japan has a high dependence on imported basic material, and until the past few years experienced a chronic deficit on current account in her balance of international payments. Throughout Japan's industrial history, this circumstance has meant a built-in macroeconomic instability: as income cyclically rose and combined basic material and manufactured imports rose in proportion, the resulting foreign exchange deficit required a deflationary countercyclical monetary policy. Japan's modern economic history fully documents this pattern. The implication for domestic industrial policy was that import-substitute manufacturing industries must be developed. A domestic automobile assembly and parts industry substantially reduces the net imports per automobile. This reduction is compounded by the secondary domestic production effects of autos on the steel, machinery, and tire industries. These implications were not lost on Japan's economic strategists, particularly as military production requirements rose.

The impact of this new government position on domestic automobile production was felt in the middle and late 1930's. It was felt most keenly by Ford and General Motors. In 1936, the government enacted the Automobile Manufacturing Enterprise Law, which literally and comprehensively aimed at closing down foreign producers onshore. Its provisions were of two varieties - advantages to domestic producers and disadvantages to foreign producers. Among the former, it exempted government-licensed manufacturers from income tax for five years, rebated import customs on machinery and materials for five years, and relaxed the legal requirements of recapitalization. These were consistent with earlier measures of the Ministry which lowered the automobile commodity tax and renewed the direct production subsidies of twenty years earlier.

The law's restrictions on foreign producers were severe. Annual production ceilings were imposed. Tariff rates on imported parts were raised. in 1937, a provisional law eliminated the import of strategic commodities. Japan Ford and Japan General Motors were soon closed down.

Japan: The Government-Business Relationship
A Guide For The American Businessman
Eugene J. Kaplan
Director, Far East Division
Bureau of International Commerce
February 1972
pp. 106-108


Steve

For additional information:

http://www.jama.org/about/industry2.htm

The Automobile Manufacturing Industries Act

Following the Japanese military occupation of Manchuria in 1931, the basis for war grew steadily stronger, and in 1936 the Ministry of Commerce and Industry and the Ministry of War jointly supported the establishment of the Automobile Manufacturing Industries Act. The aim of this legislation was ostensibly to stifle the monopolization of the automobile market by American manufacturers by fostering domestic mass production of motor vehicles to meet the needs of the public, but an additional goal was to ensure an uninterrupted supply of vehicles for the military.

The first companies operating under this law were Toyota and Nissan. While zaibatsu companies such as Mitsui were hesitating, these two new companies, prepared to take the risk, aggressively embarked upon the mass production of automobiles.


Withdrawal of the Big Three

The advance of America's Big Three (Ford, GM and Chrysler, known in Japan as Kyoritsu Motors) into the Japanese market beginning in 1925 meant that, by 1930, their annual production of automobiles totaled 19,684 units, about 43 times the production (458 units) of domestic cars.

However, they were forced to stop production with the passage of the Automobile Manufacturing Industries Act which, as previously explained, aimed to eliminate dependence on foreign manufacturers for reasons of national security. Moreover, when foreign exchange regulations were revised after the break-out of the Sino-Japanese War in 1937, import prices skyrocketed with the decline in the yen exchange rate. Feeling the mounting pressure, the Big Three finally discontinued production in 1939 and withdrew from Japan.

Between 1925 and 1935, the Big Three produced a cumulative total of 208,967 units. In contrast, domestic production for the same period totaled 12,127 units, just 5.8% that of American manufacturers.


Isn't it interesting how this information never makes it into U.S. history books nor the media. I never saw any TV news program cover any of this history even as the Japanese invasion of cars forced the closing down of American auto plants. Only free trade - free market forces at work.

Look at the Wikipedia article for this subject:

http://en.wikipedia.org/wiki/Japanes...otive_industry

" From 1935, increasingly restrictive import duties help protect new Japanese manufacturers, such as Nissan, Toyota, and Hino Motors. The demand for domestic trucks was greatly increased by the Japanese buildup to war before World War II."

That's it, the entire explanation from Wikipedia, which I think desperately needs an edit job.



Steve

Japanese Producers Emerge

Japan's currently dominant producers, Toyota and Nissan, began producing during this prewar period. Both entered under the available fiscal incentives of the government which were limited at the time. Neither was established at government initiative. The national government's industrial role is usually to protect and encourage the development of domestic firms, but not to actually start them. The origins of the auto industry bear out this pattern.

Nissan was organized in 1933 under the name Jidosha Seizo Co. and was an automobile producer from the start. Toyota began producing automobiles in the middle 1930's as a diversification venture of Toyoda, a leading manufacturer of textile weaving looms. By 1937, these two companies along with Isuzu dominated automotive production with an 80% combined share.

Production by Japanese manufacturers was nearly all truck and bus through the prewar period. Roughly half of truck output was for the military. Passenger car output was negligible, reaching a peak of approximately 2,000 units in 1938. Thereafter, auto makers turned increasingly to arms and military production.

Postwar Reconstruction and Protection of the Industry

Establishing the Industry's Financial Stability and Economic Priority

The years from the war's end to 1958 form the critical period in the history of Japan's automobile industry. The public policy commitments and the private decisions of auto producers made during this pivotal decade first resolved the question of whether the industry should be developed at all, then went on to determine the competitive environment and technological direction of its development. The achievements of this period, quite apart from the growth and prosperity which followed in the 1960's, are substantial. At war's end, Japanese manufacturers were largely destroyed, producing 7,500 military trucks annually. Passenger car production levels and technology were negligible. By 1958, Japan was producing one-third of a million automobiles and was designing and building her own passenger cars.

Three themes are prominent in the postwar narrative which follows.

The first is a policy debate within government over the economic wisdom of developing a domestic automobile industry. The differences between Ministries were serious but never reached a confrontation or crisis stage.

A second theme is the initially critical but eventually declining role MITI played in the postwar auto development. The bureaucracy's range of policy interests and levels of involvement were probably less than generally thought outside Japan.

A third theme is the progress of the producers themselves toward design and production autonomy, culminating in 1958 with the first all-Japanese designed and built passenger car.

The immediately postwar condition of the auto industry was understandably weak and confused. The Occupation established production limits on vehicles, rationed those available, and controlled prices. The Ministry of Commerce and Industry, looking ahead to normal economic conditions, recommended redevelopment of the industry using foreign passenger car technology and government financial assistance. Toyota, Nissan and Isuzu - major wartime truck suppliers - responded with an ambitious five-year plan. The Restoration Loan Corporation, established in 1947, agreed to finance new production facilities. The manufacturers sought relaxation of the production limits. Toyota innovated installment purchases of passenger cars. The will to reconstruct was obvious.

The industry faced serious problems however. Most immediate of these was the occupation's deflationary policy, instituted in early 1949, which forced Nissan and Toyota to cut back expansion and lay off thousands of employees. The restoration loan was reduced and severe labor strikes followed. Despite these temporary setbacks, production continued to rise, and in 1949 total four-wheeled vehicle production achieved the 1941 wartime peak of 50,000 units.

Another problem was Japan's inferior passenger car technology. The accumulated production volume of all passenger cars by domestic producers through 1950 was less than 12,000 units. Critical emphasis had always been on trucks, with the result that Japanese passenger cars were uncompetitive. Moreover, domestic production was officially limited. The Occupation had increased the demand for cars, and despite the opposition of MITI and its predecessor ministry, passenger car imports increased sharply during the period.

Powerful voices within government favored liberal imports. When auto producers petitioned MITI and the Ministry of Transportation to limit imports in 1950, the latter appropriately recognized the interests of passenger car users and supported continued imports. The Transportation Ministry further contended that importing large cars would not damage the market for small Japanese cars. This argument, probably valid today, was dubious in postwar Japan particularly as domestic auto production controls were just being relaxed, and this argument alarmed MITI. Nevertheless, the two Ministries jointly approved continued imports for a limited period.

Japan: The Government-Business Relationship
A Guide For The American Businessman
Eugene J. Kaplan
Director, Far East Division
Bureau of International Commerce
February 1972
pp. 108-110


Steve

From the JAMA site:

http://www.jama.org/about/industry3.htm

Emergence of a Japanese Manufacturing System

"With the mass production of motor vehicles expanding steadily from 1935 on, the development of the parts manufacturing industries became a priority. Close cooperation between automobile manufacturers and parts makers was essential in order to improve production technology, quality control, and delivery systems.

As a result, automobile manufacturers during this period began to systematically foster the relatively underdeveloped parts industry, a move which foreshadowed the characteristically Japanese approach to manufacturing, based on mutual trust between maker and supplier, that was to flourish after the war and attract so much attention around the world in recent years."

THIS IS STRAIGHT OUT OF DR. EDWARDS DEMING'S TEACHINGS ON QUALITY


This cooperation is also seen in the Japanese machine tool industry:

http://www.econ.yale.edu/growth_pdf/cdp837.pdf

SOURCES OF MACHINE-TOOL INDUSTRY
LEADERSHIP IN THE 1990s:
OVERLOOKED INTRAFIRM FACTORS

"...attention was paid to the significant roles of “intrafirm factors” such as:

(a) the simultaneous and cross-functional information sharing system at an early stage of new product development processes;

(b) the positive and early participation of frontline skilled workers in assembly or machining shops; and

(c) the existence of highly skilled assemblymen or machinists.

The significant roles of these intrafirm factors were robustly validated by the statistical analysis of the questionnaire survey as well as by the results of our field research. The results showed striking similarities between the Japanese and the German machine-tool makers and notable dissimilarities between the two and the US makers."


"We note here that most of these skilled workers are not conventional “craft-types” but “problem-solving-types” of people. Based on relevant systematic as well as experimental knowledge, the problem-solving types can promptly discover the causes and effects of various kinds of actual and potential machine troubles and properly prevent or alleviate them."

"Lippert (2000) also reported that, except for the German maker of standard low-cost MCs, the lead-time for machine development was 24 months for the US maker of standard low-cost MCs, 30 months for the US maker of customized high-tech CNC milling machines and 33 months for the German maker of customized high-tech CNC lathes. In contrast, according to our field research of 12 machine-tool makers, the corresponding lead-time for their (Japanese) top machines was 10 to 12 months without exception."


"Concerning this point, the survey asked another question: With which in-house department do your D&D (Design and Development) engineers tend to meet most frequently? Hence, a cross- tabulation between the previous question and this question leads to the desired information. The result is striking. Among the US makers that have DR (Design Review) processes even at a very early stage, only 26% of them answered “Assembly shops” and 4% “Machining shops.” The “Sales department” was the most frequent: 44%. In contrast, the corresponding numbers were 72%, 51%, and 52% respectively for the Japanese makers, and 73%, 53%, and 53% for the Germans. American DR processes are quite different from those of the Japanese or the Germans."

Important lessons to be learned here if the United States is going to remain a high tech manufacturing power.


Steve

The reason the Japanese are doing so well is very simple.

HARD WORK!

LOTS OF HARD WORK!

A HELL OF A LOT OF HARD WORK!

Was is Edison that said

"I am a lucky man, and the harder I work the luckier I am."

Americans, mostly, don't like to work that hard anymore.

PRODUCTIVITY OF AMERICAN LABOR AND JAPANESE LABOR


"On the subject of labor and productivity, Marvin Runyon has a unique viewpoint. He spent nearly thirty years running Ford Motor Company plants before taking on the task of establishing Nissan's first assembly plant in the United States, in Smyrna, Tennessee. A slight man with a shock of white hair and a low-key manner, Runyon is steeped in the lore of the auto business. He has seen everything from both the U.S. and Japanese sides. On a recent tour of the Smyrna plant, he was obviously proud that it is equaling the quality and productivity levels of the home company, proving - as he said - that American workers are as good as any in the world, when properly organized and managed."

Clyde V. Prestowitz, Jr.
"Trading Places: How We Are Giving Our Future To Japan And How To Reclaim It"
pp. 366-367


"Early in the 1980's, while U.S. industry was searching for excellence, along came Honda. In late 1982, just three years after the company started manufacturing motorcycles in the United States, Honda became the first Japanese company to manufacture automobiles on American soil.
When the auto plant officially opened its doors in Marysville, Ohio, the world's leading motorcycle manufacturer was well on its way to becoming recognized as a front-runner in the automobile industry, which was quite a feat for a company that didn't produce a single car until the early 1960's.
By the time the plant debuted, Honda motorcycles and automobiles had become accepted products in America. During this same period, the quality of U.S. automobiles was deteriorating at an alarming rate and consumers expressed their concern about buying an American-made Honda. The message voiced across much of the nation was: "U.S. labor isn't capable of making cars of the same quality as the Japanese." Many said they would only buy those Hondas made in Japan. Even dealers complained that the anticipated inferior quality of workmanship at the new plant would ruin their businesses.
In spite of these protests, the new plant went into production using a labor pool from small, rural communities in central Ohio. Most of the workers had farming backgrounds; only a few had worked in manufacturing. When the first Accords rolled off the assembly line, industry analysts eagerly gathered to inspect these early models.

The overwhelming consensus was that the Ohio-produced automobiles had, indeed, equaled the quality of those cars produced in Japan. Today the quality workmanship of Honda's American-made cars is widely accepted as the epitome of excellence.

The Honda of America Manufacturing, Inc. (HAM) plant has become a showcase for all U.S. manufacturing companies, and today testifies that American workers are fully capable of producing outstanding workmanship. To the surprise of many who have visited the HAM plant, the levels of automation and technology are not so different from what exists at other modern automotive factories. It is not the machines but the people who make the difference in quality and productivity. The plant's performance serves as a reminder that America's work force does have the ability to excel in a world marketplace....It is the Honda Way that has created a working environment in which people take pride in their jobs. There are no adversarial us-them relationships between management and labor. Instead, there is an atmosphere in which people become involved in their work, and teamwork thrives. People care about the welfare of the company because they know the company cares about them"


Robert L. Shook
"Honda: An American Success Story"



"Tony DeJesus, head of the UAW local at General Motors' Toyota plant in Fremont, addressed the management issue more bluntly in an interview with "Business Week": "Here we find the executives make sacrifices before asking concessions from the workers. We had no confidence of this under previous management."

Clyde V. Prestowitz, Jr.
"Trading Places: How We Are Giving Our Future To Japan And How To Reclaim It"
p. 367


"In Japan, when a company has to absorb a sudden economic hardship, such as a 25 percent decline in sales, the sacrificial pecking order is firmly set. First the corporate dividends are cut. Then the salaries and the bonuses of top management are reduced. Next, management salaries are trimmed from the top to the middle of the hierarchy. Lastly, the rank and file are asked to accept pay cuts or a reduction in the work force through attrition or voluntary discharge. In the United States, a typical firm would probably do the opposite under similar circumstances....As long as management is quick to take credit for a firm's success but equally swift to blame its workers for its failures, no surefire remedy for low productivity can be expected in American manufacturing and service industries."

Yoshi Tsurumi
American Management Has Missed the Point - The Point Is Management Itself
The Dial, September 1981


Tsurumi quotes "one Japanese plant manager who turned an unproductive U.S. factory into a profitable venture in less than three months" as saying: "' It is simple. You treat American workers as human beings with ordinary human needs and values. They react like human beings.' Once the superficial, adversarial relationship between managers and workers is eliminated, they are more likely to pull together during difficult times and to defend their common interest in the firm's health."

Rafael Aguayo
"Dr. Deming: The American Who Taught The Japanese About Quality"
Carol Publishing Group. Copyright 1990
p. 46


"The Japanese themselves are already demonstrating that Japanese-style management can bring results even in America. A prime example is the San Diego branch of Sony, which, with American employees, has been able to achieve a 200-day record of producing defect-free television sets - even better than the quality record of the Japan-based operation."

Constance Holden
"Innovation:Japan Races Ahead as U.S. Falters"
Science, VOL 210, 14 November 1980
p. 753


"General Motors, anxious to learn the Japanese secret, invited Toyota into a joint venture to produce cars in one of GM's most troublesome plants in California. GM had assumed that automation and high technology were the Japanese secret and would be the company's route to higher productivity and higher quality. They had spent a fortune publicizing and preparing for their highly automated and technologically advanced Saturn subsidiary.
GM was not disappointed with their joint venture with Toyota. When the Toyota plant began operating, the quality was the best in the whole GM system. When it reached full production, productivity was 50 percent higher than at a comparable plant producing the same car.

But when GM executives visited the plant, they were shocked.

There was no new equipment. In fact, some of the new automated equipment that GM had installed had been ripped out in favor of older technology. The same plant with the same workers and the same equipment was producing 50 percent more and with much higher quality than before.
The whole difference was five Toyota managers and the knowledge they brought with them. The senior member of Toyota's staff had studied with Deming."

Rafael Aguayo
"Dr. Deming: The American Who Taught The Japanese About Quality"
Carol Publishing Group. Copyright 1990
pp. 47-48


http://www.aflcio.org/corporatewatch/paywatch/

"The chief executive of a Standard & Poor's 500 company made, on average, $14.2 million in total compensation in 2007, according to preliminary data from The Corporate Library."

http://www.law.ucla.edu/docs/execcom..._ramseyer_.pdf

"Conclusions
Japanese executives earn substantially less than U.S. executives. We find that the
median president at the largest 500 firms earned about $420,000. The median president
at the largest 100 earned about $530,000."


Any more - "Blame Lazy American Labor" - comments?



Steve

Nice bit of research, I look forward to reading your posts, they are a change from the party policical crap that often crops up here.

I noticed that foreign exchange concerns were a key factor driving the import replacement policy, funny how many of the current economic mantras neglect that and seem to concentrate on exports with little regard to the domestic market or controlling imports.

The time to market figures are a stark contrast to Germany and the US though having spent time in Japan I can attest to the minor differences betwwen previous and new models in many instances. making time to market a bit misleading. Also their domestic market is often used as a test bed for new models, I taught some Japanese friends the wisdom of never buying the first model of a major product revision.


Not just blind hard work, knowing what they wanted to achieve and taking an interest in doing it helped.

A guy in the US Ed Craig http://weldreality.com/ has written plenty canning the mentality of the US auto makers, while he appears evangilistic there is plenty of valid criticism amongst the evangilism. While it is difficult to get independant reports of what he claims, his claims are technical and specific in their nature not the usual managment waffle.

The engineering culture, at least at Toyota, puts an emphasis upon saving information from any project, successes and failures.

This information is carefully archived and each member of the team is expected to draw upon it and to contribute to it.


Second, senior engineers are veterans of many development cycles, in some cases up to twenty or more cycles. Engineers with that much time "in grade" in the US are generally in management and rarely are actively involved in engineering.

Each car is awarded to a team at Toyota. The team has a lead engineer who has much experience with both engineering and stewarding the car through the design process. The car is the lead engineer's responsibility, it is "their" car.


Toyota puts a huge premium on customer feedback. Ask any owner of a new Toyota how much feedback they are asked for from the company. This is textbook Deming, who preached "Listen to the customer".


Lastly, there isn't the antagonism between labor and management at most Japanese auto manufacturers that there is in US auto manufacturers. You don't simply don't see the kind of militant sense of entitlement with either management or labor in Japan. They are expected to work as a team, and yes, it's not as equals but as partners.


Gene

Thank you. I got tired of the same opinion throwing also. It takes a bit longer to document what I've learned but what I have to say has already been written and written better than I could have. These authors speak from experience.

Good link also:

"Jan 2007: Ed I wanted to send update about that E-Town plant that you visited a few years ago: As you know on your first visit to this plant, our robot lines were producing less than 40 Ford F-150 truck frames per-hour and the majority required extensive weld rework. Thanks to your weld process and consumable recommendations, the results from our employees are today staggering. Yesterday this plant hit very close to a record of 76 frames per hour. We daily attain our average goal of one frame per-minute. We had two recent weld audits. One weld audit had a total of two failures, and the 2nd weld audit was the first 100% pass weld audit in the history of the Ford F-150 line."

100% Deming.

Manage the process and remove the barriers that labor hits. Stop managing labor so much - labor will be motivated when it sees management caring and removing barriers.



Steve

We see the same thing over here in our motor industry,
For years building cars (and motorcyles) has been in decline, low quality , workforce always on strike etc etc etc.

Along comes Nissan cars of Japan and says "Give us some cash and we'll build a brand new factory in an unemployment blackspot to make our cars"
So the government chucked them some cash, and lo the factory was built in Sunderland.

After it had been running for a couple of years, the number of cars produced per person employed was one of the highest in Europe and close to the native Japanese factories.
So whats the difference?
Is it the people? no, same old British folks as employed by the other car makers
Automation... well that helps, but other car makers had that too
Must way the plant is managed and run

Perhaps if the CEO's did not take such huge bonuses when times are good, then sack 1/3rd of the workforce when times are bad just to make it look as though the company is doing good so they get their huge bonuses again*, then perhaps the workers might be tempted to work harder instead of developing a rather cynical attitude to the employers

Boris

*Just how do you spend an income of 14 million dollars in ONE year?

MH61 - I too agree that this is a good thread that points in a positive direction by looking back at what has worked well and not encumbered with decidedly political slants . . .

As for our culture - it is self evident that our culture is one that values relaxation and "the good life" more than callouses and hard work. That is not to say that there isn't a significant contingent of the US citizenry that know how to work hard and work smart . . . they are just becoming a smaller and smaller percentage of our population every year.

That simply isn't the case with most Asian cultures - they value work (or more accurately - the outcome of work which is wealth and status).

I just spent a week in Germany - it is amazing that a country as small as Germany can lead the world in exports. I toured several factories in Germany and watched teams of well managed workers assemble electronics products for Siemens - not much automation! But extremely well managed with a high level of quality control and pride of workmanship.

US Industry is not nearly as well managed - and with the corporate mandates to make the quarterly analysts happy on wall street . . . a very short term mindset prevails. Not conducive to long term success at all.

Thanks Motion, I do respect your opinion. I have learned a lot since coming to this forum and I've learned from this post. As I dig into these topics I come across things I never knew
before and hope to keep learning.

I hope we never make hard work a higher priority than time with our families though.

We have way too many latch key kids.

As we become more efficient and productive , it seems a lot of us aren't able to cut back on our work hours. Americans work more hours than the Japanese and have less vacation time than the Europeans.

I'm digging more into Dr. Deming, I have an inter-library loan request out on a biography on him. I'm starting to spread a little Deming around where I work because we sure need it, but our management doesn't seem too interested.

Why the Japanese listen but Americans don't seems to be a control thing.

American management wants to control labor, not concentrate on improving processes.

We may control ourselves into a second-rate nation.

As for the short term profit motive, the Japanese have that to some degree but not nearly as bad as here.


Steve

"The other characteristic is the comprehensive structure of protection from foreign imports and capital investment which was developed at an early stage and has only recently been fundamentally altered. Together, these facts confound the traditional logic....."

They got to play both games they were protected internally but found international competition by going into the toughest markets abroad. The US doesn't have that opportunity. GM and Ford can't be protected domestically (which they are) while trying to punch their way into a market 4 times larger than their domestic market and richer to boot.

I think though, only Americans, who don't travel much, learn foreign languages, live abroad (of base), etc... in large numbers could believe that their market isn't domestically protected. The US defence budget is almost as large as Canadian GDP, not exactly an open invitation for all to come and participate, yet. You have barriers of language, side of road you drive on, absurd preferences for enormous boat cars, business culture, racist attitude towards Japanese, etc... that wouldn't have immediately been like a welcome sign to a Japanese company considering expansion. Even american cars built for, or in Canada (hell think california) can't be sold or driven elsewhere.

I think the biggest single factor was that Americans didn't think they should have to compete for the Japanese market, while it would be obvious to Japan that US markets were important for all their products. Same thing with China, but this time it is obvious that the US needs to be there, so GM has a plant that is 4 miles long and uses 1960s tech, as one person asured me (?).

ThomD, I know this thread is long but would you read the whole thing? Even the JAMA site admits the Americans - Ford, GM, Chrysler at one point controlled 95% of the Japanese market until 1936 when this happened:

"The impact of this new government position on domestic automobile production was felt in the middle and late 1930's. It was felt most keenly by Ford and General Motors. In 1936, the government enacted the Automobile Manufacturing Enterprise Law, which literally and comprehensively aimed at closing down foreign producers onshore. Its provisions were of two varieties - advantages to domestic producers and disadvantages to foreign producers. Among the former, it exempted government-licensed manufacturers from income tax for five years, rebated import customs on machinery and materials for five years, and relaxed the legal requirements of recapitalization. These were consistent with earlier measures of the Ministry which lowered the automobile commodity tax and renewed the direct production subsidies of twenty years earlier.

The law's restrictions on foreign producers were severe. Annual production ceilings were imposed. Tariff rates on imported parts were raised. in 1937, a provisional law eliminated the import of strategic commodities. Japan Ford and Japan General Motors were soon closed down."

Does this sound like "Americans didn't think they should have to compete for the Japanese market" ?

I wonder why I even bother to research this stuff if people aren't interested in the truth or don't make the time to read the WHOLE STORY.

Does every topic have to be compressed into 2-second sound bites to be of interest ?


Steve