By September 16, 2006 8 Comments Read More →

Dark Outlook for Non-Lean Car Makers

WSJ.com – Ford and Chrysler Show Dark Outlook For U.S. Car Makers

I received an email from a blog reader, Jack, from Tampa FL. I assume he’s from outside the auto industry and he wrote:

In light of Mr. Womack’s e-mail re: Ford, today’s front page of the Wall Streetu Journal had another article on Ford. They also wrote that Chrysler was part of the “Dark Outlook For U.S. Car Makers.” My question is: Hasn’t Chrysler been successfully implementing lean philosophies for some time? While Chrysler did state that “noncompetitive legacy costs for employees and retirees” were one of the causes of their loss, they also stated some other conditions in their company that were far from the lean approach to business that I have come to learn about.
Am I incorrect in my understanding that Chrysler senior leadership had embraced the lean principles and beliefs? Or have they just implemented effectively some lean tools but never got the core principles and beliefs of lean into their culture?

I can’t say for Chrysler exactly, but I’d suspect the issue is that the old “Big 3” did more to try lean tools than they tried lean philosophies or lean management methods. It’s too difficult for management to look in the mirror and say “we need to change.” I actually had an amazing NUMMI-trained plant manager at GM who told the entire plant “It’s not the workers that we need to change, it’s the management system that needs to change. A new management system (TPS) will lead to better results. It’s been management’s fault.” Alas, he retired as a plant manager rather than moving higher up, maybe because he spoke the truth.

How much does it help Chrysler to have a CEO, Tom LaSorda, who is a manufacturing guy and a lean believer? I doubt LaSorda has been there long enough to really change the culture.

“Legacy costs” are a tired excuse in the auto industry. Toyota might have some lower labor costs ($47 vs. $65 an hour, including benefits), but they also command a higher price for their vehicles, signifying the value creation that comes from the Toyota Production system, developing the right cars for the right markets, etc.

As Womack claims in his article, he told Ford and Jac Nasser that they had to overhaul the whole business (not just the factories) and to adopt the Toyota management system, true TPS. That was “too hard.” So, you dabble with a few lean tools, you even create something called the “Ford Production System,” but did they really change the way they manage? Did they really get the most out of their employees’ ideas, to drive continuous improvement? Probably not.

What do folks in the auto industry think? How would you answer Jack’s question?

One other thing the WSJ article points out, there are still about 1 million auto workers in the U.S., same number as in 1990. It’s just fewer of them are employed in the Ford, GM, and Chrysler value chains and more are employed by Toyota, Honda, Nissan etc. and their supply chains/suppliers.

When the WSJ article says “U.S. car makers,” I think they really should have said “Non-Lean Car Makers.” Toyota is doing quite well in the U.S. They have American workers, they just said “no thanks” to the typical American management model.


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Mark Graban's passion is creating a better, safer, more cost effective healthcare system for patients and better workplaces for all. Mark is a consultant, author, and speaker in the "Lean healthcare" methodology. He is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, as well as The Executive Guide to Healthcare Kaizen. His most recent project is an eBook titled Practicing Lean that benefits the Louise H. Batz Patient Safety Foundation, where Mark is a board member. Mark is also the VP of Improvement & Innovation Services for the technology company KaiNexus.

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8 Comments on "Dark Outlook for Non-Lean Car Makers"

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  1. When Ford Was A Startup — Lean Blog | July 27, 2011
  1. Anonymous says:

    Chrysler has said they embrace lean, but you have to realize that the guy running Chrysler learned lean from General Motors.

  2. Mark Graban says:

    I’m encouraged by Tom LaSorda as CEO, eventhough he learned lean at GM. I think he’s more a “lean guy” through demonstrated action and his words than the other equivalents in the industry. But, is the company really that lean, even with his leadership?

    http://www.google.com/search?q=lean+blog+lasorda&start=0&ie=utf-8&oe=utf-8&client=firefox-a&rls=org.mozilla:en-US:official

  3. Matt Meyers says:

    I think Womack made an important point in at the end of his letter, but I think its more important than any of his other points.

    “Finally, rethink brand strategy to get rid of hopeless makes that can never make money.” A business can’t make money, no matter how lean, if people don’t want to buy the product.

    Womack, in response to “how can Ford become Toyota in four years?”: by “dramatically changing the supplier management system, dramatically changing the product development system, dramatically changing the production management system, dramatically changing what managers do”. Important, yes, but so very easy for a consultant to say.

    However, it all starts with sellable products, and I think Ford lags.

  4. Karthik Chandramouli says:

    People often translate the Japanese word “kaizen” as “continuous improvement” — but it’s better translated as “continuous incremental improvement” because that’s the reality of how companies like Toyota approach change.

    If you believe in the fundamental tenets of the Toyota Production System, the notion of dramatic change offers false promise. No company can make such a profound transition without violating the laws of organizational physics. The dramatic changes can all be made on PowerPoint slides, approved by the Board of Directors, and assigned to individuals as “stretch” performance targets, but the cultural change required takes years, if not decades to complete.

    Change management is, by far, the single most challenging aspect of a lean transformation. It is failure to win the hearts and minds of front-line employees and middle management that invariably derails any large-scale change. Organizations and people settle into a “dysfunctional equilibrium” and would rather remain dysfunctional rather than change for their own benefits. This idea has been validated by countless studies on cognitive dissonance, organizational psychology, and leadership.

    Why is the automotive industry any different?

    The recently popularized notion of “kaikaku” is a soothing premise — that we can break from the past entirely, and make DIScontinuous improvements. Make no mistake, short of starting with a clean sheet of paper (this is why people do startups), changing large corporate cultures from within is possible through sustained, incremental improvements.

    Individual, breakthrough improvements are certainly possible, but the culture of continuous, incremental improvement that is central to the Toyota Production System has inherent tension with the notion that a stable process or system can be drastically improved. It is the philosophical antithesis to the kaizen culture, and managing that tension successfully is what differentiates Toyota from other lean manufacturers.

  5. JWDT says:

    Matt makes an interesting & important point, Ford needs to build something that is sellable. Ford should take this form of logic: Wouldn’t it be great if they (Ford) actually developed a vehicle that excited consumers? Wait, doesn’t toyota do that? I wonder how? Maybe the Motor City could put aside their arrogance and truly understand what their counterpart has done, understand their customer base, then forge a vision based upon that fickle but important group called the consumer.

    And Mysteryshopper makes a great point as well about Kaizen being “incremental Conitnuous Improvement”, so the real question is how is Ford going to drive itself out of the rut it has spun in Four years, probably won’t be with Lean but with an Iaccoca.

  6. Anonymous says:

    In response to the original question, maybe Chrysler has embraced some of the tools, but not the philosophy. Anybody who reads the blog who works for a DCX supplier can probably speak volumes about the lack of a smooth pull from their standpoint. At the base of the TPS house is leveled production. If you don’t have the foundation down, the rest of it is window dressing. If anyone wants visual evidence of this, keep an eye out for how many DCX plants are going to be slowed or even stopped over the next weeks and months because of overproduction earlier in the year.

  7. Anonymous says:

    “Womack, in response to “how can Ford become Toyota in four years?”: by “dramatically changing the supplier management system, dramatically changing the product development system, dramatically changing the production management system, dramatically changing what managers do”. Important, yes, but so very easy for a consultant to say”.
    You are right and that is as it should be since the company presidents and CEO’s make millions. per year.

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