Liberal Critique of Detroit Based on False Assumptions and Moribund 'Narrative.'

I follow the auto industry pretty closely, being both a fan and a critic (my book “Horsepower War” is a collection of essays, some of which are critical about Detroit) of American cars. After reading Tom Friedman’s “How to Fix a Flat” column in the NY Times November 13th, I had to get something off of my chest – something that’s really been bothering me about the ‘liberal’ critique of Detroit.

To wit: “GM-has-feet-of-clay-and-didn’t-make-the-small-cars-everyone-wanted.” And while liberals in the ‘60’s might have argued the quasi-monopolist GM (with 50% market share) made too much money, now neo-liberals – at least Tom Friedman, are exhorting GM’s foolish executives (they have feet of clay after all) to “innovate” so they will be profitable in the neo-liberal global capitalist order.

The first problem is that this story is nearly forty years old now – and even forty years ago, it wasn’t strictly true. In fact, it was in late 1968 that GM, worried about increasing foreign competition, announced their “XP 887” project – the car that would become the sub-compact Chevrolet Vega of 1971. The Vega was a bad car, but it did actually sell decently for a while. The problem was, as it is now with cheap small cars – it just didn’t make money.

GM instituted a wholesale downsizing of its fleet from 1977 to 1989. Yet in the 1989-1991 period, Honda created its luxury “Acura” division Nissan created the “Infiniti” luxury division and Toyota created the prestige “Lexus” line. Ironically, these more powerful, bigger cars filled a void in the market GM had mostly abandoned in order to meet CAFE rules. And during the 1980’s, as GM cars were shrinking, Toyotas Hondas and Nissans were getting bigger and bigger.

So already, by 1990 the “GM has feet of clay and doesn’t make small cars people want” narrative was already defunct. Now, eighteen years after that, Toyota’s product lineup in the US pretty much mirrors GMs – mostly SUVs – and the SUVs they make now tower over their “Land Cruiser” 4x4s of the ‘70’s.

The second part of the problem is the liberal assumption that “Detroit is not profitable because it doesn’t make small, cheap cars that everyone wants.” This prescription is simply a concept at war with itself. Would liberals suggest to Mercedes or BMW that their problem is that they “don’t make the small cheap cars everyone wants” (?) In fact, a Mercedes subsidiary does make a car that “Jesus would drive,” – the “SMART.” If you’ve been to Europe recently you notice the streets teeming with them, and now the phone booth shaped, two passenger cars are popping up all over big US cities like New York and Chicago. Here’s the problem with the SMART though: despite its popularity, it has never made money.

Mercedes makes money not by packaging a set of commodities like steel, rubber and glass in the most efficient and optimized way. They make money on prestige. People don’t buy BMWs to maximize their transportation utility either. The profit margin comes in when BMW is delivering roughly the same amount of steel, rubber and glass, but people pay more for it than they would for the same amount of steel, rubber and glass with, say, a Pontiac label on it.

By the way, BMW and Mercedes both regularly choose to pay ‘gas guzzler’ fines to the NHTSA rather than conform to the CAFE corporate gas mileage requirement. The cars are so expensive to begin with that the extra $2000 or so they tack onto the sticker is barely noticed by their prosperous buyers. Where’s the outrage about that Tom?

Lately auto commenters of all stripes have been posing the question of why GM is so different than healthier companies – but the thing is they’re not really that different. GM’s fortunes in Europe and China are significantly better than in North America. In fact TATA motors, most recently in the news for its NANO people’s car, recently purchased Jaguar from Ford. Why? Because they think the Jaguar name will allow them to sell expensive luxury cars no one would have taken seriously with a TATA nameplate. Tata knows it: the prestige market is where the money is. Even the NANO is an attempt to get people to move out of cheap motorcycles and into a more expensive car. Similarly, another ‘people’s car’ maker, Hyundai, once ridiculed for its econo-boxes, is launching a new luxury car with a 370hp V8 engine and $45K+ pricetag – because that’s where the money is.

So the bottom line is that if Americans are going to take an ownership stake in GM and also demand it be profitable, the first priority of this new “People’s Car Company” should be to shore up Cadillac with a $75,000 flagship prestige car that could make the kind of profit margin Mercedes gets from the S Class or BMW gets from its Seven series.

There is a powerful but unspoken assumption that the domestic makers should be shouldering the role of some kind of People’s National Transportation Collective, but these assumptions don’t apply to luxury makers (‘limousine liberal’ anyone?), or even to the companies exploiting “right to work” anti-labor states where liberally-loved Honda and Toyota work their magic. Some of that false “collective” assumption can be traced to GM’s P.R. efforts. For decades they’ve paraded various socially responsible cars at auto shows. In 1990 they were showing a super sedan that got 70mpg. Then in the 1990’s under Clinton/Gore there was the “Project for a New Generation of Vehicles.” It was a public private partnership that was supposed to lead to 80mpg cars. When the political winds shifted in 2001, the project was tossed in the garbage by the Bush administration.

In 2008, we have the Chevy “Volt.” It’s an ‘economy car’ that will cost $40,000 to build at current estimates. But its real mission has already been accomplished – Chevy got some sweet liberal ink in a few Tom Freidman columns. That was what the Volt and its many GM ‘idea car’ predecessors have always been about – good press. They’re a fig leaf meant to cover ugly SUV genitalia.

“What is to be done, then?”

Before liberals make their car industry prescriptions, at least they need to join the “reality based” community in their basic assumptions.

Liberal critiques are wrapped up in two super-sized unacknowledged assumptions:

1. “GM should make cheap small cars - the cars ‘people’ want”
2. “Companies lose money on big expensive ‘guzzlers’ (the cars ‘people’ don’t want).”

These are demonstrably false – and not just for GM either. Even in Europe, rich people pay a huge premium for big Mercedes and BMWs. It’s just that working class consumers buy small(er) cheap(er) cars because that’s all they can afford.

If liberals are supposed to be the masters of nuance as opposed to those Manichean ol’ conservatives, it’s time to acknowledge that our simple minded story about the US car industry stopped being true twenty years ago, and that our assumption about the pious, thrifty US auto consumer is probably one part wishful thinking and nine parts denial. Maybe US consumers really are obsessed with prestige and luxury – maybe they are really ‘shallow’ and ‘vain’ and ‘conformist’ and try to buy the biggest most prestigious car they can possibly afford.

Forcing GM to be a “good” automaker who makes $40,000 economy cars that get 80mpg, while allowing Mercedes and BMW to be “bad” (even blowing off CAFE, our only real attempt at increasing auto efficiency) - will only make Mercedes and BMW even more profitable and speed GM’s demise. Whatever we do with the bail-out or energy policy, we’ve got to have simple and consistent rules that apply to all, rather than demanding piety and poverty of domestic makes and allowing Mercedes to go on being ‘sinister’ and profitable.

The problem with American liberals is our American-ness. We want to offer painless ‘can-do’ solutions that deny the simplest truth there is: We can’t have everything. We can’t have cheap fuel then expect everyone to conserve it. We can’t expect domestic carmakers to enforce our view of consumer piety while the “shallow” vanity obsessed consumer flocks to luxury brands.

I don’t want to see GM or Chrysler die – maybe for sentimental, nostalgic reasons I can’t really rationalize. It’s probably best to see them through this tough period just to avoid a whirling vortex of unemployment and depression. But the thing not to do is saddle these makers with ‘pious’ conditions that will make them go broke. We might be able to make GM “The National People’s Transportation Collective” and have it make cheap economy cars, and we might be able to get GM in the black again – by making expensive prestige cars, but I would humbly suggest that we can’t have it both ways.

KingElvis November 20, 2008 - 1:52pm

KingElvis's diary | printer friendly version |

( categories: Analysis | Economics: USA )

The markets for cars have changed significantly.

And quickly, in recent months.

When gas was over $4 a gallon, people really did want quality fuel efficient small cars, and the American car makers really didn't have them. Now, gas is $1.66 a gallon (my last fill up anyway) and most people aren't buying cars because they aren't buying anything - they are too afraid re: the economy.

I hear what you are saying about which cars are most profitable, but GM isn't going to be Mercedes or BMW. They are going to have to find their own way to profitability - and I don't see that as going much beyond the Cadillac CTS in the luxury area.

What I see as being the biggest misconception about the big three is that the unions haven' given anything back - the last round of bargaining was a huge departure from previous deals. I review auto workers' wages on a regular basis, and they have gone down substantially. The U.S. automakers' costs of production are much more in line with the rest of the World, depending, of course, on the relative value of the U.S. dollar.

What the Big Three have as insoluable problem is the historical anomaly, started in WWII, where U.S. companies by-passed wage controls by offering medical insurance. That practice left the U.S. as the only industrialized country without universal health care, and the cost of providing private insurance in a for-profit healthcare environment leaves Detroit at a competitive disadvantage with the rest of the World.

We can still make cars profitably, but we can't make cars profitably when there is a three year lead time for model changes while gas prices are changing the car market every four months. And now - for some period - there is almost no market for cars. Survival is going to be very, very tough for the Big Three without some help. And that is going to involve a lot of pain.

AMC November 20, 2008 - 7:42pm

sidenote:Port of Long Beach car lot

Foreign Cars Pile Up at Port

It's not just the Big 3 U.S. automakers that are struggling. Foreign cars aren't selling as well either and that's turning the Port of Long Beach into a massive parking lot.

video at link

Tina November 20, 2008 - 7:58pm

"Just Law, Not Just

"Just Law, Not Just Money"

Congress is at its worst when giving away candy and 'picking winners' - I think we're at our most noble when imitating the founders. We need to revise laws so that Detroit has a fighting chance rather than hand out money. The same is true of the finance and agriculture sectors.

KingElvis November 21, 2008 - 10:31am

thank you

A little bit of common sense enters this "debate".

Here's what i was thinking about today, driving my '87 Toyota Pickup through a snowstorm: with all the technological improvements since 1987, why hasn't there been much advance in fuel economy?

I looked up my truck and compared it to 2007 model year vehicles of a comparable class. The Chevy Colorado has a slightly larger engine, but mine has a fricken carburetor and 31" tires (not my addition); they're both rated for the same payload, etc. And i should note that my mileage is better than the EPA's revised estimate for my vehicle, even at 176,000 miles. So why are the economy numbers almost identical? Are all the computers and injectors and fancy engineering a waste of time and money?

Hell, i can actually fix my vehicle with a set of wrenches and some common sense...i wouldn't dream of monkeying around in a 2007's engine compartment.

I just don't get it. (i do understand that you probably don't have to down shift a 2007 Colorado going up a steep hill and it goes faster but still...)

Lex November 20, 2008 - 10:15pm

Physics & Thermodynamics

What is is. Cars are mechnical, limited by physics.

Compression ratio, weight, Cd (Coefficient of Drag), and frontal area. These are the components of efficiency.

And these have not chamged much in 70 years. The VW Beetle has a CD of 0.33. Two seated adults require just so much frontal area. Compression ratio was attacked by Rudolph Deisel, and Deisel was scuppered by GM.

The problem is, quite simply, suburbs.

Synoia November 21, 2008 - 12:00am

Generally, cars today weigh more.

The greater engine efficiencies, and aerodynamic designs, are out weighed because today's cars outweigh the cars of the late 70s and early 80s.

I drove a '79 diesel Rabbit, and got 50-55 MPG. But it weighed about 1,800 pounds (IIRC). Randomly picking a fuel efficient car today - the 2009 Toyota Yaris - I see it weighs 2,340 pounds.

http://www.toyota.com/yaris/specs.html

The Yaris would be a MUCH safer vehicle in a crash - much of that additional weight is probably airbags - but there is a fuel cost for moving all that weight.

AMC November 21, 2008 - 10:11am

Weight Doesn't Explain It.

Even if we scale down linearly for weight (which favors the heavier car) the Rabbit is still getting better fuel economy....

Based on the following calculation:
Yaris HP * MPG = 3500
Rabbit HP * MPG = 3500
I would guess that the two cars have similar wind resistance.

NateTG November 21, 2008 - 11:00am

The MPG rating system

The MPG rating system changed.

In the 1980's, and then in 2006, the EPA revised the figures downward to be more realistic.

One big change from the '80's is that most cars have air conditioning standard. You wouldn't think it, but the AC pump takes lots of power to twirl. Then you have the air-bag requirement and the insurance lobby encourages more and more crash-worthiness with its well publicized crash tests.

KingElvis November 21, 2008 - 11:11am

Well, diesel has more energy per gallon than gas.

In that sense, my 50 mpg is apples to oranges.

Still, my main point remains - even the fuel efficient cars of today weigh substantially more than small cars in the late 70s and 80s.

AMC November 21, 2008 - 6:17pm

"Progress" = 1985In 1985

"Progress" = 1985

In 1985 Honda gave us the CRX. It was a two seater, but garnered something like 50mpg - and also had sports car like handling performance. Thank the 1700lb curb weight. Now we talk about 50mpg as something "innovation" and Rube Goldberg machine-like hybrid technology will deliver.

In the last ten years we've seen a big change in engine technology with variable valve timing - this allows 'economy' valve timing at light throttle and 'hot rod' timing at full throttle. A peculiar Detroit innovation (though also used by Honda) is "Cylinder Shutdown" where half of the cylinders shut off at low throttle.

The short answer is that these technologies are being used to increase performance more than boost economy.

Cylinder shutdown is already flawed though, because it starts with the presumption that you'll have a big engine with lots of cylinders and displacement that you really don't need most of the time. So when cylinder shutdown is 'working' it drags four of eight pistons along for the ride.

Why not just have a smaller engine? Well then it wouldn't be a "Hemi" it wouldn't be a V8 and the thing is, people will pay big money for a V8. Actually, Detroit charges more for a V8 now than they did in the '60's, because now a V8 is tied to the fancy interior and big wheels (in the "She's so fine my 409" era, you could get a 'stripper' Chevy with the biggest 409 cubic inch engine - perfect for drag racing), so if you want a V8 you pay for $6,000 worth of leather seats and heated mirrors you might not really want - but that's what people do to get the big engine.

Did you hear that Tom Friedman? People pay $6000 to get worse economy.

Thorstein Veblen (who coined "Conspicuous Consumption") would say that the "conspicuous waste" of the V8 engine is actually a *virtue* to consumers. They view their choice of the "Hemi" or V8 as an "invidious distinction" that distinguishes them from hoi poloi.

This is an essential lesson that liberals like Tom Friedman need to learn. (Correction, "How to Fix a Flat" was in the Nov. 11th NYT) Tom believes if GM just had an "I-car" that used "innovation" to deliver 50mpg, people would flock to GM showrooms.

100 years of Auto history suggests otherwise.

With respect to US regulation, Cylinder shutdown is uniquely suited to "fool" the EPA economy testing regime, because the performance parameters are so low that the engine can run on 4 cylinders much more often than it would in real life. Car magazine tests have rated the Chrsler Hemi V8 as low as 11mpg, even though it rates 24mpg highway in the EPA test.

KingElvis November 21, 2008 - 11:03am

GM's Problem

Is that they specalize in ugly cars. Not all of them, just the majority.

Synoia November 21, 2008 - 12:01am

Agreed. I look at something

Agreed.

I look at something as voluptuous (and wasteful of space, materials and energy) like the Mercedes CLS and think that in GM's heyday, they would be offering something like this and making a mint on it.

It was because GM decided back in the '70's that it would adhere to the CAFE laws that you got these boring front drive sedans. The thing is, if you visit your Grandma and are forced to drive her front drive Buick or Oldsmobile from the '90's you'll notice amazing economy, especially on the highway, combined with a capacious interior. But this economy was never intended to attract consumers, but instead to conform to NHTSA CAFE regulations.

KingElvis November 21, 2008 - 11:35am

We should have progressive registration fees

enforced at the Federal level, so that there are incentives to drive vehicles that make the best use of material and fuel resources. If it is deemed feasible from an engineering perspective to make a 1200 pound car, then let cars weighing 1200 pounds go with a minimal registration fee, perhaps nothing at all. Make it $500/yr for a 2500 pound car, and $5000/yr for a 4000 pound car, and $50,000/yr for a 6000 pound car.

Make it hurt. Make people want the small, efficient car. Let them have the road hog if they are willing and able to pay the price. The social benefits would not just be in the form of lower energy consumption and pollution-- there would be huge dividends in traffic safety if almost all cars were light and slow.

If people really do want the biggest, most powerful car they can afford, their vanity should at least be harnessed to generate revenue for the public good. Use the proceeds to subsidize non-automotive transportation infrastructure.

chalo November 21, 2008 - 1:54am

I hold a different critique of US automakers

and it really applies to the Germans, too.

I say this because I have taught and consulted on the Toyota Production System, often called lean methods and strategy, in a variety of industries. I went on study missions to Toyota and Honda in 1990, and have been trying to apply this for some time.

All US automakers now *make* their vehicles in a lean fashion, but they don't design, sell, or manage their vehicles in the lean manner that Toyota and Honda do. It's a failure of each organization. GM actually co-produced vehicles with Toyota at NUMMI in California, but did not take full Toyota lessons to hear. And Alan Mulally at Ford learned a ton about Toyota while at Boeing, but apparently has had difficulty implementing at Ford.

One of the tough lessons of adapting a full lean strategy (and this is WAY beyond Six Sigma) is that it requires lots of study. Lean approaches are counter-intuitive and require disciplined reading, examination, and "learning to see." Detroit executives have not taken that time to be humble students, and to understand that lean work is a journey not a destination. I don't know how many presentations I've been in, or made, where people make assumptions about lean methods and strategy without doing the reading and the inquiry.

The Toyota or lean critique seems to be independent of political stripe. I know a variety of lean consultants and managers, and they run the gamut from Trotskyites to Limbaugh dittoheads. So this is not about liberals or conservatives. In my own consulting I am delighted to help implement lean approaches, unless they're used to cut jobs.

Full disclosure: I drive a Pilot and my wife has a Prius. I take the bus to work about half the time.

Tom Robinson

trob November 21, 2008 - 9:48am

can you expand

on lean methods and strategy? yep, I'm asking you to give away your expertise for free. thanks in advance

dk November 21, 2008 - 10:06am

whatever expertise I might have re lean is available in

lots of other people's books and blogs. A response in this topic farther down at "It's not nutty to be satisfied with a Ford Focus" tries to offer some pieces of the lean approach.

Tom Robinson

trob November 23, 2008 - 5:34pm

A draconian fuel tax would

A draconian fuel tax would be simpler.

Gore has suggested a 'tax shift' from income to carbon.

The delusional rhetoric of exhorting consumers to be more "moral" (consumption is inherently hedonic) is only outstripped by the liberal presumption that we can consume our way out of the problems of consumption.

I'm as big a car nut as you'll ever find, but I think liberals should countenance the bracing fact that cars are the problem, not the solution.

KingElvis November 21, 2008 - 11:18am

A fuel tax

can only be proportional to fuel consumption. That is not enough. The person who chooses a double-sized car should pay ten times as much; the person who chooses a quadruple-sized car should pay a hundred times as much.

It can't be a reasonably affordable possibility for a person of ordinary means to use a big vehicle when a small one will do the job. People will always be talked into buying more car than is appropriate if the added expense is small. That imposes needless risks on others without their consent, and it implies reckless consumption of finite resources that are the rightful property of the whole world, not just those people doing the extraction and selling.

chalo November 22, 2008 - 5:23am

"small" cars only marginally smaller.

I drive a "full size" car. It is just under 17 feet in length at 200 inches - weight is 3800lbs. A "mid size" car like, say a Nissan Altima, is roughly 16 feet long with a weight around 3200lbs. A "compact" car - like a Honda Civic is roughly 15 feet long (180") and the weight is about 2800lbs.

When you get into the SUV realm, you finally double the weight of contemporary compacts (5600 - 6000lbs) yet the length is only about 18 feet - 216."

The point is that there really is no 'quadruple' sized car. Even my Dodge Charger is only 1.36 times the weight of a compact Honda Civic and only 1.2 times longer.

I think it needs to be said that 'people' happily pay more for a larger, more prestigious vehicle. This might not be a virtue, but it is always how the car market has worked.

KingElvis November 25, 2008 - 6:21pm

missing a huge factor

From my experience the thing that really killed Detroit was low QUALITY. I've never once considered buying an American car in 20 years of adulthood because I don't want the damn thing breaking down all the time. Ford isn't as bad as GM and Chrysler, but let's face it, Toyota owns the quality brand reputation.
Detroit has been passing of shitty cars for decades. Poor design. Ugly stylings. No reliability. What's it going to take to turn our domestic auto industry around?

Nat Wilson Turner November 21, 2008 - 2:48pm

Bingo.

There's the elephant in the living room. They built *shit*; lots and lots of shit. A friend's Taurus went through three transmissions before my Honda needed a clutch, and that's hardly a one-off anecdote.

Buy a copy of Used Car Buyer's Guide and look at the maintenance ratings if you want to see what killed Detroit.

"The best-informed man is not necessarily the wisest. Indeed there is a danger that precisely in the multiplicity of his knowledge he will lose sight of what is essential."

- Dietrich Bonhoeffer

Escher Sketch November 21, 2008 - 5:06pm

the age of the disposable car,

how can they make money if you keep the same car for years :) I have friends who only got rid of their toyotas and hondas because the exteriors finally rusted away...they still ran

_{"Go confidently in the direction of your dreams! Live the life you've imagined." -Henry David Thoreau}

Tina November 21, 2008 - 5:18pm

Precisely.

Planned obsolescence was a deliberate business choice.

It made them a lot of money. And then it killed them.

"The best-informed man is not necessarily the wisest. Indeed there is a danger that precisely in the multiplicity of his knowledge he will lose sight of what is essential."

- Dietrich Bonhoeffer

Escher Sketch November 21, 2008 - 5:30pm

"Dynamic Obsolescence"

This was a term coined by the father of the Tail-fin, Harley Earl. The idea was not to have the car suddenly fall apart, but that the new models would have such a 'wow' factor that people would want to trade in.

Compare a '54 GM car to a '59 - amazing difference in just a few years.

From 50's through to the '70's GM was pilloried for changing styling too much from year to year - so they adopted the "sheer look" in 1977 and applied it to nearly everything. It was a 'form follows function' move anyway since they were downsizing all their cars but needed to retain interior room.

Then by 1990, everyone was criticizing GM for it's "cookie cutter" styling. You could understand why GM bigwigs must be thinking "jeez, make up your MIND."

Social commenters in the '50's immediately siezed on the term and changed it to "planned obsolescence." Now that has become a chestnut ("meme"?) of consumer culture - that engineers can somehow make something fall apart right after the warrantee is up.

A similar thing happened when Charlie 'Engine' Wilson said "We at General Motors have always believed what is good for the Country is good for General Motors as well," during a Senate confirmation hearing.

This was transposed and the meaning changed 180 degrees to "What's good for GM is good for America."

I would remind you that both of the quotes are from the '50's.

If you just add ten years, you could complain that Mercedes is sinister because they helped Hitler, or that Toyoda was sinister in making Japanese fighter planes.

I would respectfully suggest that these liberal beefs against GM have become threadbare and worn. Ignore the fact that they are, strictly speaking, false (they were 'jokes' that changed the meaning - in Wilson's case reversing the meaning) - it's just that liberals seem unable to bury the hatchet regarding grievances that will soon qualify for Social Security.

KingElvis November 21, 2008 - 5:54pm

Is this

ALL just 'liberal' beefs? ;)

_{"Go confidently in the direction of your dreams! Live the life you've imagined." -Henry David Thoreau}

Tina November 21, 2008 - 6:07pm

I guess this is going to sound nutty after reading

the previous posts, but I'm very happy with my Ford Focus station wagon (just over 30 mpg). I'd be happier if able to replace it with a Ford Escort station wagon (37 mpg) that got better mileage, abut for some unfathomable reason, Ford stopped making the Escort--one of their top sellers. I do have to consider that the Focus has a bigger engine making giving it faster acceleration, providing a margin of safety when passing, and has more bells and whistles, like heated seats and mirrors. Given that in the last 24 hours, we've had 50 centimeters (19.7 inches) of snow, those heated seats and mirrors are very appealing options! The wagon is needed for transporting large items like sheets of plywood and we use it for our longer trips. For us, it's a very good utility vehicle.

Hubby drives a 4 cylinder BMW Convertible that's a far superior automobile.

canuck November 21, 2008 - 5:09pm

It's not nutty to be satisfied with a Ford Focus

I believe Ford's overseas versions are selling fine and are considered competitive in other markets. The quality of the Focus is a good example of the improved quality in how we *make* vehicles in North America. Detroit's problems now, though, are about cumbersome design, sales, and management processes, plus rising pension costs from not pooling health insurance risks across the industry and/or the country (a thesis stolen from Malcolm Gladwell).

Long ago Toyota started to attack the cost and complication in how it designed and built vehicles, and became the world model of humane efficiency. They found they needed to *design for manufacturability" when they designed for what they saw customers wanted. Toyota, soon followed by Honda, became nit-pickers at unheardof levels in manufacturing. Toyota and Honda put engineers with clipboards in malls and showrooms to watch customers get in and out of cars, or even ride with them on test drives. Those engineers came up with "customer requirements" that customers had never articulated: things like a) coin pockets for parking or tolls, b) a door that closed tight and helped you feel more secure even though the car was as light as a VW bug, or c) halogen headlights [developed by Toyota's supplier Nippondenso] to see better on dark, rainy nights. The revolution in design, then, was to *watch* customers, not just question them. Screw focus groups -- their revolution was hyper-detailed observation, in effect, customer ethnography. And they've never stopped doing it.

That same attention to detail about driver needs also focused on how best to *manufacture* the car the driver wanted, in a less costly and simpler manner. Three pieces of that ongoing revolution, often termed continuous improvement, are 1) standard work, 2) daily management, and 3) visual display. Standard work is often the tough one for North Americans trying to adapt Toyota methods to healthcare or other industries. "Doesn't standard work wreck creativity?" I was often asked at Starbucks. Not at all, because standard work becomes the platform for creativity. Standard work is why Toyotas and Hondas last so long. But so is the daily management of standard work, so that managers are constantly focused on *how* employees are doing, on the *method* of work, not the what or the goals of work. For example, what is the best method for making the windshield fit into the car frame during manufacture (now answered by robots), or what is the best method for assuring the same warmth and freshness of latte across every Starbucks location (the ten-second rule), or what is the best method for making sure patients aren't forgotten in a waiting area (a managing nurse sweeps the waiting area every fifteen minutes). The daily management of those methods means daily huddles to assess whether that method is working, engaging everyone working that process in their observations and feedback about how it's working, or not working. Visual display can be applied to a pile of work issues, but to assure full engagement in standard work, graphs of how well the process is working are posted daily, set up by those working that process. These approaches will amp up quality, and engage everyone in assuring quality, also helping to avoid passing bad quality forward, which was a root problem in all the bad cars and trucks Detroit built in the 70s and 80s.

For me the best initial resource on this is Jeff Liker's very accessible The Toyota Way, and then perhaps Womack and Jones' Lean Solutions. Womack also heads a free-subscription website called www.lean.org with plenty of material.

Tom Robinson

trob November 22, 2008 - 7:46pm

Auto Bailout Designed as Rebates for Buyers?

from The Left Coaster

_{"Go confidently in the direction of your dreams! Live the life you've imagined." -Henry David Thoreau}

Tina November 27, 2008 - 7:55am

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Liberal Critique of Detroit Based on False Assumptions and Moribund 'Narrative.'

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