Continuous Improvement -- TPS Is Answer To Auto Industry's S.O.S.

Feb. 24, 2006
Ford, GM and their unions will go down together -- unless they agree to rebuild cooperatively.

Our magazine and Website have carried lots of features and columns recently regarding the use -- or rather, misuse -- of the Toyota Production System at U.S. companies, especially within the auto industry. It's become apparent that the TPS philosophy of running a business, when used properly, is becoming the No. 1 differentiator of large traditional manufacturing companies that will thrive long-term in a global economy and those that will not. Its proper use requires pervasive cooperation, communication, accountability, simplicity, flexibility and customer focus -- by all involved. Toyota and their key suppliers are doing this properly. Ford, GM and their supply chains are not.

Naturally, the new-found clarity on this topic is connected to the financial downstream Ford and GM find themselves in, heading toward a waterfall in a leaking boat. Meanwhile, the Toyota cruise is about to embark with an open bar and prime rib dinners galore.

While there's plenty of blame to go around at the U.S. auto companies and their similarly disadvantaged supplier companies, one target that has both taken and leveled much criticism is unions. Critics of unions say the groups have bred a lazy workforce, abolished cooperation among managers and hourly employees and are mostly responsible for their employers' financial quicksand because of greedy demands for outlandish compensation and benefits. Meanwhile, across the country union spokesmen have lambasted their employers for mismanaging their companies, designing unpopular products and trying to cut their way to prosperity instead of growing. It's all your fault, they say to company executives.

See Also...

Learning From Toyota -- Again

TPS' Guiding Principles

Excerpts From "The Toyota Way"

Partnership Pays Off

Continuous Improvement -- Auto Companies Must Change From Within

My, my. Quite a lot of energy going into this nasty debate considering those involved are in the same leaky boat, heading toward the same rushing waterfall. No one wins if the boat goes over.

Perhaps they should all start paddling together. But then again, they can't, because:

  1. Not everyone knows how to paddle. It would have been a good idea for everyone to have learned how to paddle before getting into the boat, but the training money was cut in order to make first-quarter earnings expectations. Besides, not everyone needs to know how to paddle -- some people have to be supervisors and managers.
  2. Actually, more people know how to paddle than one would think. They've been in the boat long enough. They've seen it. They know how it is done. They sometimes even have ideas how to do it better. But. . .it's not in their job descriptions. The last union contract listed 3,000 job descriptions and specific wording that employees would perform only the job duties listed in their descriptions. They don't have to paddle now anyway. It's break time.

Bummer. Perhaps they can fix the boat. Uh-oh. No can do, because:

  1. The engineer who was the lead designer on the boat quit the company last year. Even though there's a guy here who procured the materials and components, and another who planned the marketing campaign, and another who rolled out the operations plan -- none of them actually know anything about the boat or what the other people were doing during the product development, manufacture or roll-out. None of them, actually, have ever touched the boat before now. But don't blame them. They did their jobs.
  2. What about the hourly workers? They actually built the thing, can they fix it? Nope. It's not their job to ensure quality or fix problems. That's the job of the supervisors and managers. Besides, the hourly workers are taking all of their banked vacation, sick leave, personal days, sabbatical days, wash-the-car days, my mother-in-law's-coming-to-town-and-I-need-to-mow-the-grass-days -- before the boat goes over the falls and they lose them in the bankruptcy settlement. The hourly employees who have been here one to five years will be out two months; those that have been here five to 10 years will be out six months; and those here for more than 10 years have accumulated enough to take a year off. And, for those who have filed a time-off claim under the Americans With Disabilities Act, it's none of your damn business where they are. Read the contract.

I'm wondering if a new boat could be built -- quickly -- and delivered as soon as possible. That's doubtful, because:

  1. The boat designers need time to review the specs on the 1.5 million components that could potentially be part of the boat. Then the procurement person will have to line up new suppliers because the old ones went out of business because he beat them down on price so badly. Then they'd have to build a factory to produce the boat because the current plants -- although abundant with unused capacity -- aren't configured to take on a new design. In other words, they'll be over the falls long before the first piece of wood meets its first nail.
  2. The union employees will not talk about building the new boat anyway until they get an absolute guarantee that retirees will keep their current pension and health-care benefits and under absolutely no circumstances will current employees ever have to pay a cent for any kind of health care or retirement funding. And, they want to keep working with the wages they've become accustomed to.

It sounds to me as if just about everyone on the boat has some blame in this plight and that none are all that interested in saving themselves.

Let's face it, the union-management model that has dominated the U.S. auto industry must change completely if these companies are going to survive. There's a reason why Toyota has located most of its North American plants in non-union states and why its employees are productive and satisfied.

Toyota has said one of the reasons it is expanding in the United States is the valuable workforce. And, obviously, the company has a formula that engages that workforce and makes it an integral part of success.

And here's the best part: The formula is not a secret. Rarely is such a valuable piece of competitive advantage so well documented and publicly available.

Our boat of travelers would do well to agree to abandon the past and learn -- quickly --how to rebuild their boat based on TPS.

I don't expect nor do I purport that unions must be dissolved for U.S. manufacturing to rebound. To the contrary -- unions can be a key to re-engaging workers to participate in this "new" model of business. But for that to happen, everyone must first agree to get paddling.

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