A Modern Parable

Lounge
1

Here’s something from years gone by, but is still relevant.

THE RACE

A Japanese company (Toyota) and an American company (General Motors)
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 8 people steering and 1 person
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, 3 area steering
superintendents and 1 assistant superintendent steering manager. They
also implemented a new performance system that would give the 1 person
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 rower. There was discussion of getting new paddles, canoes
and other equipment, extra vacation days for practices and bonuses.

The next year the Japanese won by two miles.

Humiliated, the American management laid off the rower for poor
performance, halted development of a new canoe, sold the paddles, and
canceled all capital investments for new equipment. The money saved was
distributed to the Senior Executives as bonuses and the next year’s
racing team was out-sourced to India.

Sad, but oh so true! Here’s something else to think about: GM has
spent the last thirty years moving all its factories out of the US,
claiming they can’t make money paying American wages. Toyota has spent
the last thirty years building more than a dozen plants inside the US.

The last quarter’s results:

Toyota made $4 billion in profits while GM racked up $9 billion in
losses.

The GM folks are still scratching their heads (and waiting for more
bailout money.)

If this wasn’t so sad, it might be funny! :roll_eyes:

2

This really is golden oldie.

I knew the rower.

He was time studied regularly and steadily advised as to how he could improve his efficiency. He participated in Statisitcal Process Control and Taguchi experiments. He was invited to sit in on the rowing Quality Circle disscussions. The senior executives instituted Total Quality Managment and Six Sigma Zero Defect quality control.

Incentive bonuses were paid down through the ranks all the way down to the level just above the rower. He never did get the extra vacation, but he was offered plenty of overtime to make up for it.

The last I heard, he was delivering potato chips.

OoohYahhh

3

Exactly. The Japanese auto industry has plants in the USA to actually increase their profits. If they imported their trucks, the taxes on them would be too high to be profitable and American-made trucks would outsell easily.

The problem is more than just the corporate executives though. It’s their whole manner of doing business. They’re more sales-oriented than service-oriented. I mean, go look at a new Ford Focus and sit in it. Then go sit in a new Honda Civic. You don’t even have to touch the steering wheel or buckle your seatbelt to notice the difference. The Honda has more of a genuine feel to it, where as the Focus’ only goal is to scare you into buying a bigger and more expensive Ford vehicle. And this is all ignoring the fact that the Ford dealership has already thrown 8 salespeople your direction while Honda is content with sending only one to see if you’re finding everything alright.

The Chevy Volt. This car had so much potential until it hit the budget sheets. The design got axxed and now it looks like a Malibu with extra plastic. And what of the Focus I mentioned earlier? Compare a Focus available in Europe to one available in the USA and you’ll notice something: there’s more quality in the European model. Strange?

Now, I do actually look forward to a bunch of new American offerings. Namely, the Ford Fiesta. But also the Camaro. Both of these cars are proof that American car companies can be successful, but only if they’re forced into a corner. (Ford’s not begging their head off though, so I respect them for that.)

Throwing money at other people to figure out why cheap cars they don’t have much pride in and aren’t selling very well is not a successful business strategy. Building good cars and having some pride in them is the way to be successful. Or something like that.:roll_eyes:

4

You are exactly right. Not to mention that the US CEO’s total pay is approximately 4,000 times the average worker’s while in Japan it’s 400 times.

5

Are you for real? Ugh that’s crazy. That’s wayyyy to out of proportion. I remember watching a TV show where they talked about the bullet train and were saying how Japanese culture basically makes it impossible to pinpoint a single person or small team of people responsible for making the whole system come about. Instead the credit is spread out on a larger scale.
Maybe that’s also what’s going on. Where a Japanese executive feels responsible for the quality of work a machine operator puts in, that same machine operator feels responsible for the decisions made by the executive.

6

Six Sigma makes my head want to explode… I hate dealing with clients who use that system…

So much overhead for a barely useful quality system

7

That story is not far off GM management style. The whole company is run that way (the union too).

The whole system is based on quarterly profits with too little long term planning. The only really profitable vehicles the big 3 had were SUVs and trucks along with some luxury brands. High executive pay and labour costs that were double the foreign automakers made making smaller cars at a profit impossible. When contract talks came along GM made bad deals to keep production rolling so they could get their quarterly bonus. When new models were planned they were mostly bigger vehicles that people wanted. Of course when oil prices spiked SUV sales tanked leaving sales of the smaller, unprofitable cars. A coherent government energy plan would go a long way to allowing better planning but I don’t see that happening any time soon.
I don’t blame the union for taking what they could get but it only hurt them in the end.
The union workers used to get bonuses when things were profitable and they make big dollars. My work is automotive related. About ten years ago I was sitting in a GM shipping/receiving room with a GM worker. He was sitting around reading a paper and we got to talking. He made over $100K with overtime and he was just a regular worker. I saw him at a different GM plant about a month ago except now he is actually doing something. The guys on the line are pretty busy though. Oh, the union stories I could tell.

I don’t think GM imports many cars. Their whole philosophy has been build it where you sell it and most of their foreign subsidiaries are profitable(in regular times anyway). They said they are going to import some smaller cars now because of cost/profitability issues to meet new CAFE standards(what a time to implement THOSE).

Ford is very profitable. They say they don’t make much but Ford Credit does. When Ford wants a capital outlay they go to Ford Credit and pay exhorbitant fees to make it look like Ford Motor isn’t making money.

I drove a Toyota Corolla once. I thought it was very cheaply made.

8

Yeah, I like Ford. They are playing a very sneaky ball game but I still like 'em.

A Corolla… yeah, I’ll give you that. It’s a cheap car. Same with the Yaris. The Matrix I’d also throw in there. The Camry, especially the new one, I’m not so sure about (it has a “high-end look” but I’ve never seen nor sat in the inside of one).

Heck, while I’m at it… the Civic is also kinda cheap. Sit in an Accord and there are worlds of difference. The kicker though is the engine… that little Honda engine is cheap, economical, and mind-bogglingly reliable.

I guess my problem is I don’t see any way to fix things without a big third party stepping in. And so far, the only third party to step in is the government, and I’ve yet to see something positive come about. (I’ve got family in the industry so I do genuinely hope something good does happen pretty soon.) I’m hoping that some of the new releases will help change things… such as the Camaro and Fiesta. Which brings me to another point… why does it seem to take American Auto companies so long to bring new models to consumers?

9

One reason is the Japanese use more cross platform parts. The big 3 will use a different part ( say a door hinge) for a different platform. Then all those parts will have to be tested and sourced. The Japanese will use the same part on different models and that saves time and improves quality( because it is a proven part).

There have also been massive cuts in the engineering departments, and management too.