Toyota vs. Ford: A Modern Manufacturing Parable 19 comments
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Sometimes being on the outside allows one to see the inside a lot clearer. A good friend/client in Hong Kong recently emailed me the following parable that makes a comparative analysis of American management vs. the Japanese. In this parable, the Japanese are a metaphor for any sensible country that has maintained and preserved its manufacturing base.
I tend to agree with this parable as it highlights a key problem with modern American work ethics and business culture, i.e. too many people want to manage or not work while being paid the highest wages possible even if the management strategy under which they operate is unsustainable and inevitably cannabilizes their respective industry and jobs.
Contrary to Gordon Gekko, greed is not good…
A Modern Parable:
A Japanese company (Toyota (TM)) and an American company (Ford Motors (F)) decided to have a canoe race on the Missouri River. Both teams practiced long and hard to reach their peak performance before the race.
On the big day, the Japanese won by a mile.
The Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat. A management team made up of senior management was formed to investigate and recommend appropriate action.
Their conclusion was the Japanese had 8 people rowing and 1 person steering, while the American team had 7 people steering and 2 people rowing.
Feeling a deeper study was in order; American management hired a consulting company and paid them a large amount of money for a second opinion.
They advised, of course, that too many people were steering the boat, while not enough people were rowing.
Not sure of how to utilize that information, but wanting to prevent another loss to the Japanese, the rowing team’s management structure was totally reorganized to 4 steering supervisors, 2 area steering superintendents and 1 assistant superintendent steering manager.
They also implemented a new performance system that would give the 2 people rowing the boat greater incentive to work harder. It was called the ‘Rowing Team Quality First Program,’ with meetings, dinners and free pens for the rowers. There was discussion of getting new paddles, canoes and other equipment, extra vacation days for practices and bonuses. The pension program was trimmed to ‘equal the competition’ and some of the resultant savings were channeled into morale boosting programs and teamwork posters.
The next year the Japanese won by two miles.
Humiliated, the American management laid-off one rower, halted development of a new canoe, sold all the paddles, and canceled all capital investments for new equipment. The money saved was distributed to the Senior Executives as bonuses.
The next year, try as he might, the lone designated rower was unable to even finish the race (having no paddles), so he was laid off for unacceptable performance, all canoe equipment was sold and the next year’s racing team was out-sourced to India.
Sadly, the End.
Here’s something else to think about: Ford has spent the last thirty years moving all its factories out of the U.S., claiming they can’t make money paying American wages.
Toyota has spent the last thirty years building more than a dozen plants inside the U.S. The last quarter’s results:
Toyota makes 4 billion in profits while Ford racked up 9 billion in losses.
Ford folks are still scratching their heads, and collecting bonuses…
If this weren't so true it might be funny.
Disclosures: None
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On Dec 17 07:14 AM User 321136 wrote:
> Very old joke. I think I hear Jack Benny tell It
Something else to chew on:
The fastest growing automobile market on earth is China.
There are currently 30 some odd car manufacturers in China.
The average market share of most of these companies is less than 2%.
The car company that is far and away viewed by the average Chinese car buyer as having the highest quality is.......General Motors.
The car company with the largest market share, 30 percent, yes that is NOT a typo, 30 percent of the Chinese market is......GM.
And who is American car companies greatest competition? The Japanese. Why don't the Japanese have the biggest share of the Chinese market? Well, they inconveniently invaded China in the 1930's, created a holocaust that the Nazis would have been impressed with, (anybody here remember Nanking?) and no adult Chinese in his right mind will buy a Toyota, no way, no how. Who was the only company that came to their rescue? The good old US of A, flying Curtiss P-40 Warhawks powered by GM Allison engines firing Oldsmobile built cannons.
And America, dumb asses that we are, is going to allow this industry to go down when we could simply loan them some cash and MAKE MONEY DOING SO LIKE WE DID WITH CHRYSLER IN THE 1980's. Pitiful. Just pitiful. We will save investment banks but not our largest and most American industrial base. Morons.
Something else to think about:
The country with the healthiest industrial base has won pretty much all the major armed conflicts in history. Those countries that let their base erode have a name: Losers.
One last thing:
One of the main gripes quoted in the major media these days (and we all know how diligent and accurate they are) is that GM got where it is by making cars people don't want.
If this is so, then why is it that GM vehicles in aggregate have consistently sold more volume than any other car manufacturer in the world EVERY SINGLE YEAR since they took over the lead from Ford somewhere in the 1940's ? INCLUDING THIS YEAR!!!
I guess that all Americans are not created equal, if you are from Detroit, then your wage deserves the backing of the American taxpayer. Many of whom are lower paid autoworkers in the south.
When auto industry raised the standard of America every one was happy.
Now we look upon them because Japanese can bring in cars at cheaper prices and without union jobes.
We should not forget that the unions are another reason why Americans are not poor. They are the ones who brought in Health Insurance, pensions etc.
The rich and Republicans want to destroy the unions by using this as a pretext so that they can have cheap US labor from top to bottom.
On Dec 17 07:14 AM User 321136 wrote:
> Very old joke. I think I hear Jack Benny tell It
On Dec 17 11:19 AM jack kreg wrote:
> can someone tell me, why an auto worker in Detroit should require
> compensation well in excess of that required by auto workers in Kentucky?
>
> I guess that all Americans are not created equal, if you are from
> Detroit, then your wage deserves the backing of the American taxpayer.
> Many of whom are lower paid autoworkers in the south.
this is not about ford, gm, or chrysler.... the editor's modification of the title " to "toyota vs. ford" and reformatting the article distorts the spirit of my intentions... everything below "a modern parable" belongs to the author of the parable story itself...
fyi... the sender of the parable is a native Detroiter (like myself) and has lived in China for more than 25 years. 7 of my 10 years at Morgan Stanley were spent covering senior level executives in Asia... whether you corporate jingoists like it or not, the parable represents a general international perception of American style management. ...a lot of Fortune 100 & 500 list foreigners that I personally and professionally know believe that it was a strategic mistake for America to jettison its manufacturing bases.
the whole point of the post was to convey that not all Americans should be or want to be or are qualified to be white collar workers... yet many still have potential to add economic value to our society and therefore it is in our national security and economic interests to preserve our manufacturing jobs. america consumes disproportionately more than it produces and this explains our unsustainable trade deficits and ever growing national debt....
while it is true that some of our foreign competitors receive subsidies that place our manufacturers at a disadvantage, it also reflects the lack of intelligent collaboration between our government and manufacturing private sector as America no longer prioritizes this part of its economy.
perhaps 90% of GDP comes from services which tend to have higher margins than manufacturing, so our govt tends to allow trade deals that favor the highest return on our capital... on the surface this appears good, but if we are importing more tangible goods than we are exporting services, then maybe we need to rethink this situation...
some of you guys need to lighten up and enjoy the holidays... or better yet, if you are even half the successful market mavens you project yourselves to be, then take time off and hop on a plane and invest some time living abroad and learning the nuances of different business cultures, i.e. their strengths and weaknesses...
if none of the above applies to you, disregard the above comments...
otherwise, happy holidays!!!
Given these severe limitations and a genetic predisposition to be aggressive and hostile, we need some cultural rules to make a marginally decent society viable. We may not be there yet, but let's try.
There is not time to further evolve biologically to eliminate self righteousness and lame brains. Cultures can evolve much more rapidly.
The US rightfully came to the rescue of Japan and Germany after World War 2 with Marshall plan and avoided the mistakes made by the victors of World War 1.
After World War, England, France, Italy and other victors imposed oppressive reparation payments on Germany that created hyper inflation and widespread German animosity. This gave rise to Adolph Hitler and led to the slaughter of millions of people.
The US learned well from this mistake by doing the opposite of WW1 victors. By propping up the economies of its former enemies; it created two loyal allies and prevented Japan and Germany from becoming communist satellites which helped erode the Soviet Union's influence in end.
Yes, this came at a cost. But the benefits are more than justified; communism is dead and World War 3 was prevented.