Thursday, December 11, 2008

Cartoon of the Day


At 12/11/2008 1:28 PM, Blogger Marko said...

Saw this quote in a news article today that says what is really going on here:

"In the compromise measure that emerged from negotiations with the White House, House Democrats agreed to drop a provision to force the automakers to end their legal challenges to state emissions standards, including a lawsuit in California."

They really do want to run these companies!!

At 12/11/2008 4:59 PM, Anonymous Anonymous said...

How about the government drop all of the emissions and crash standards that don't apply for the millions of vehicles that ALL auto companies sell outside of the US?

If Congress wants the CEOs to be fired or take a $1 pay salary, then how about the congressmen stop taking the hundreds of thousands of dollars from the Lobbyists...including the automotive Lobbyists.

No job banks? Ok, sounds good! Then how about if these elected officials give up the right to vote themselves raises and have lifetime benefits for themselves and families?

Car Czar for the Big 3? Ok. How about a government Czar? Last time I looked, the government hasn't been very efficient in quite some time.

At 12/11/2008 9:09 PM, Blogger the buggy professor said...

1) Your ongoing stories about the Big-3's failures, Mark, have been consistently illuminating.

What's been missing, I think --- even in the recent post you started about Toyota and its lack of huge legacy costs since 1936 --- is the specific pig-headed nature of the top management and boards at Ford, GM, and Chrysler.

Reinforced by

*Arrogance and an Old-Boy's Network

*A huge Top-Down Management Strategy and Instinctive Style. In effect, it treats the line- and other workers in their car-plants as semi-dumb employees --- partially compensated for their workers by mutual log-rolling between the management and UAW bosses until recently.

*And Consistent Attention in US Manufacturing to Short-Term Profits, aggravated by the demands of the US stock-market for quarterly results . . . all at the expense of constant process-improvements and managerial-worker interaction of the sort that characterizes Toyota, Honda, and Nissan.


2) Focus now, to clarify these three points, on GM:

Arrogance, Old-Boy networking, and Indifference to a different managerial style

Contrast this style with Toyota, the pioneer of lean-production, has also been a pioneer in a bottom-up strategy of having top- and middle-management work closely with line-workers, their (smaller number) of supervisors, engineers, designers, and marketing specialists. With, to boot, university graduates hired for managerial positions obligated, for the first few years, to work directly on the floor of line-assembly and interact with all the relevant line-workers and others.


Indifference, largely, to what their lower-level employees think or do. What has traditionally mattered for GM --- hardly alone among US manufacturers, by the way --- has been first and foremost catering to their stock holders; then their customers; then their workers. Toyota and the other giant Japanese export-oriented conglomerates --- 7 or 8 only --- reverse that order. They pay far more attention to their workers and input; and to their customers; and only lastly to their stock-holders --- for reasons to emerge later here.

• The key piece of evidence here is what happened when Toyota took over, with GM's approval, the Fremont Plant in California in the early 1980s.

It was just about the worst plant in GM's assembly lines in this country: morale was bad, workers would sabotage some production, they regarded managers as distant and high-handed, and so on.

Within two or three years, Toyota employed its very different kind of management strategy, including more bottom-up flow of information and far more interaction between management at all levels and workers at all levels.

And within three years or so, Fremont became and remains one of the very best plants in GM's global network.


• And yet GM's hierarchical management style --- and cold-shouldering of simple-minded workers (so-called) --- has never been fazed much despite the Fremont success-story.

It’s nothing new.

In 1943, Peter Drucker --- a management guru of the 20th century --- found after several months of first-hand interviews with hundreds of GM employees at numerous plants that the company's hierarchical organization was self-defeating and should be reorganized along lines that the Japanese would later implement after WWII.


• For that matter, W. Edward Deming --- an even more important managerial consultant, the man for whom the annual Japanese productivity award is named; and a specialist in relating quality-improvements to productivity improvement by means of statistical control --- was ignored in the US after WWII for decades, only to become a monument in Japan since the early 1950s.

Only in the late 1980s and early 1990s did Deming even become known widely in this country --- not that it made any difference to the Big-3's management style very much (it made some difference0.

Click here for his impact on Toyota, decades old by now:


• And finally, the impact of the stock market and its pressures --- as the main source of Big-3 capital (at one time, that also included retained profits --- in forcing management to focus on short-term profits.

In Japan, the huge 7 or 8 export-oriented conglomerates like Toyota or Sony have not traditionally depended on stock-market capital. Instead, each has been closely tied to a giant bank and drew and draw on bank-loans. In fact, there is traditionally cross-ownership: the banks own most of, say, Toyota's stock, and Toyota owns most of its allied big bank. And the two managerial teams at the top sit on one another's boards.

The upshot? In Japan, the managers of manufacturing giants are able to focus much more on long-term planning than their American counterparts. And that includes constant day-to-day improvements in quality and production.


3) Only fair to point out that such cozy reliance on banks and cross-cutting ownership has been a big handicap when it comes to financing new start-up companies in Japan, contrasted with the ways venture-capital allowed new giants here like Microsoft and Intel and Sun and Amazon and most others in ICT to force their way into the market and thrive.

The result: In the US, ¾ of the Fortune 500 companies by 1997 hadn’t existed in 1975. In Japan, since 1975, there have been no changes whatever (aside from a few in the financial sectors) right down to now. The same thing, by the way, is true of German giant exporters and middle-level suppliers tied to them.

Still, in process manufacturing where technological change isn’t constantly in flux, it’s pretty clear: a much more patient long-term focus is beneficial . . . especially if married to the other concerns that have motivated Japanese manufacturing giants.


4) So where are we?

To single out Detroit-3’s problems as being derived from excessive concessions to the UAW isn’t so much wrong as, it seems, one-sided. As Toyota showed at the unionized Fremont plant in California --- remember, full of alienated and unhappy workers until the mid-1980s --- it’s management that gets the work-force that it deserves.


Michael Gordon, AKA, the Buggy Professor

At 12/12/2008 4:59 PM, Blogger misterjosh said...

Assumption: There is going to be a bailout.

Question arises: who should be making concessions? Executive management, shareholders, banks having made loans, AND the labor monopolists (aka Unions) Anybody else?


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