Feature Article From
Kelly Allan Associates, Ltd.
 

THIS AMERICAN LIFE from NPR: 
The 25-Year Joint Venture between GM and TOYOTA at NUMMI
(New United Motors Manufacturing, Inc.)

NUMMI: A car plant in Fremont California that might have saved the U.S. car industry. In 1984, General Motors and Toyota opened NUMMI as a joint venture. Toyota showed GM the secrets of its production system: how it made cars of much higher quality and much lower cost than GM achieved. Frank Langfitt explains why GM didn't learn the lessons – until it was too late.

Click here and then click on "Stream Episode" to listen now (free) to this VERY engaging 60-minute radio broadcast. It is an excellent summary of the difference between Deming-based thinking at Toyota versus the hodge-podge of so-called American management practices at General Motors. (You can also click on the Download or Buy CD links to purchase and save this audio).

I quibble with only two things:

  1. There is a mention that Toyota pays a worker a bonus for each improvement the worker makes --that is implemented. My understanding from Jeffrey Liker is that Toyota did NOT provide such incentives in Japan –and had not wanted to do this in the USA. However, consultants insisted that Toyota could not make NUMMI work without such incentives. The radio program itself provides more than ample evidence that such incentives would not have been required even in the USA. GM’s workers who became NUMMI workers were inspired by the Deming-based management approach and by the opportunity of producing quality cars. They would not have needed bribes to offer suggestions to improve production or cars.
  2. The section on the shutdown of NUMMI near the end could mislead some listeners into thinking that Toyota pulled the plug on NUMMI. In fact, what happened was that when GM failed (and sought bankruptcy protection), GM pulled out of NUMMI, leaving Toyota holding the entire NUMMI bag. Given that Toyota had more than enough production capacity at other plants, it didn’t make sense for Toyota to try to keep NUMMI running without GM as a partner.


There are so many excellent points in this broadcast. Some of the best came near the end.

  • GM took 30 years to figure it out even though NUMMI was right in front of us. If you take 30 years you’re going to get run over.
  • In the end, GM did become more like Toyota, and Toyota became more like GM. 
    • GM did start to adopt many of the NUMMI ways of work, but too late to save it from bankruptcy and a $50BB bailout.
    • Starting in about 2002 Toyota began placing higher emphasis on quantity and on being the biggest car company. By 2010, Toyota’s quality issues (caused by management going off track from their values and management system) brought the company great shame and financial losses.
  • Without having the management system and honest values in place, just installing the tools and processes will only get you so far.

Here are some clips and quips:

 

SUCCESS AT THE NUMMI PLANT

 

 

 

General Motors View

Toyota View

Comments

NEVER stop the line.

ALWAYS stop the line whenever there is a problem to be fixed.

Little “workarounds” cause mistakes and get you “into a hole.”

“You want better tools? What makes you so special?”

“Tell me what you need to make sure that quality is continually improved.”

“At Toyota I would say, well, I could use this type of modified tool. They would be back in an hour with a prototype.

 

It is amazing what trust can do to improve quality and productivity.

“You want a part improved? Not my problem. Go through channels.”

“Any parts that aren’t right must be rejected. Do not install faulty parts. Period.”

“At GM you just try to throw your problems over the wall to the next guy or the next department.

“Go take pictures of every square inch of the NUMMI plant and then use the photos as a basis for making changes in our plants.

Continually examine all the inputs to your processes, rooting out problems as they come up.

“Nobody in charge at GM could see the Toyota management system behind everything that happened at NUMMI. All our questions about what made NUMMI work were about the daily work, the 15%. 85% of what mattered came from the system of management, the philosophy.

 

 

 

Failure at GM Van Nuys Plant and other plants.

(Van Nuys was shut down.)

 

 

 

The GM Way at Van Nuys + elsewhere

 

Contrast with Toyota Way

Comments

“Unions and management don’t work together. Each blames the other. We are enemies. Workers should not be doing anything that would cause management to blame another worker.

Workers and management work together to help every worker succeed. There is no blame. The system is mostly in control. Improve the system, help the people.

The Toyota system “failed” at the Van Nuys plant because the GM tried to install NUMMI there –without the management system to back it up.

Managers: we must protect the privileges of managers. Example: if we don’t get preferred parking spaces and other perks, we will walk out en mass.

Managers and workers are on the same team.

We share the same goals.

Everyone enjoys many perks.

Layoffs are to be avoided.

Why would you want to work in the same place as your enemies?

Why did workers and managers become enemies?

Trust is a key to sustainable success.

Union: we must protect the privileges of the Union and workers. Ex ample: file more grievances. Cut the andon cord.

Figure out how to make sure everyone wins, including customers and suppliers.

Win/Win thinking starts at the top and is continually re-enforced by word and actions throughout the organization.

Bonuses are paid on quantity, not quality.

Quality is what matters. Do quality first, quantity will follow.

 

Just put up a bunch of andon cords so workers can stop the line.

Train people in the thinking and the system, not just the tools.

It’s the management philosophy and practice that makes the andon cord effective.

“I was sent by GM headquarters to help a GM plant become more like NUMMI. The plant manager told me to leave.”

 

“The most productive GM plants are the newer ones which were more receptive to the NUMMI way of doing things.

The will of one individual is not enough to change a system. 

 

Senior management has a responsibility to improve the overall system and to educate everyone in the need for transformation. Senior management must remove the systemic barriers to continual improvement.

A leader with a systems view would never send an expert to help a plant install the NUMMI model when everything else at the plant –from bonuses and working conditions to attitudes and behaviors—are barriers to the new way of work.

“You can’t teach me anything.”

 

“We reject outsiders.”

Learning is the foundation of our success.

Find the people who can teach us.

Deming said a person can know everything about his/her job, except how to improve it. For that you need outside knowledge.

“We’re doing fine.”

What can we improve next?

Many of the most important losses accrue over time –and only then does the devastation become visible.



 

 

 

 

 

 

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