American Auto Makers – Not Lean Enough
I’m a bit late with this post, but I wanted to make sure to get this article link out nonetheless. Womack wrote a column published in the Washington Post Sunday December 11 in direct response to the speech that was delivered by Bill Ford at the National Press Club on November 22. Ford’s statement that his company “can compete with Toyota, but we can’t compete with Japan” was the focus of Womack’s commentary.
In his discussion, Womack dismantles Ford’s position by pointing to the increasing North American capacity and investment being made by Toyota. These investments come complete with the competitive wages and benefits to UAW counterparts in the Big 3. He also illustrates very well the fact that Japan is still largely an industrial failure, noting the decline of most Japanese automotive firms which have either fallen into foreign hands (Nissan & Mazda) or dramatically lost market share (Mitsubishi & Isuzu). More recent firms to loose competitive advantage have been in the electronics industry where Japanese companies are being beaten by Korean, Taiwanese & Chinese rivals. All this despite government subsidization of health care, pensions and technology development cited by Bill Ford as competitive advantages for the competition.
Womack then comes to the conclusion we would all expect – leading Japanese car companies are making more money than US competitors because their lean design, production and purchasing system is creating vehicles that demand higher prices in the market. The average $2500 / vehicle revenue difference for comparable models in Womack’s view, lies at the heart of Detroit’s problems, more so than the production cost issue.
There’s really nothing new hear for anyone who has followed the Auto industry over the last few years. Bottom line is Toyota’s lean system is better, and while they have put effort towards learning and becoming lean, US manufacturers have not done enough. This column is a good read. It serves as a great summary of industry in North America over the last century, and it gives an alternative perspective to many ‘myths’ (or excuses) that continue to prevail.