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How Toyota Trained GM

Work Together, or Fail Together

19Feb

Teamwork is essential for any business venture to operate efficiently. This principle is inclusive of athletics, engineering, and any professional or volunteer organization. Players and/or workers may be talented, but if work ethic is poor, production diminishes, leading to a number of unwanted consequences. Teams lose big. Businesses and organizations close their doors. 

Two major players in the automotive industry learned this lesson the hard way in the 1980’s through the year 2010. The New United Motor Manufacturing Inc. (NUMMI), in Fremont, CA, closed its doors in 2010 after a history of producing over 6,000 vehicles per week, and nearly 8 million since the plant’s opening in 1984.

The Unlikely Collaboration of Competitors

NUMMI was a collaboration of General Motors (GM) and Toyota. The GM Company founded in 1908 by William C. Durant has produced manufacturers such as Buick, Oldsmobile, Cadillac, and Oakland, now known as Pontiac. Toyota was founded in Japan by Kiichiro Toyoda in 1937. The first passenger car, the Sedan AA was produced in 1936. Toyota now owns quality auto brands such as Lexus and Scion. Both GM and Toyota have been known to produce quality vehicles over the years. This has led to driver loyalty for both. Customers and car insurance companies (depending on driver age, and what model vehicle is purchased of course) may establish a case for quality cars, trucks and SUV’s from both companies.

As in most joint ventures, NUMMI was formed to help each auto producer take advantage of the other’s strengths. GM produced vehicles for customers who preferred smaller cars. But GM cars were of poor quality, and many were money-losing ventures. Toyota produced quality vehicles. However, U.S. restrictions on foreign imports facilitated the need for Toyota to start building its own factories in America. Needing someone to help acclimatize the growing company with potential American buyers, Toyota reached out to the GM group in Fremont, CA.

Toyota Assembly Workers Teach GM Executives

The GM group in Fremont was one of the worst auto manufacturers in the U.S. There was a myriad of problems that would sink most companies quickly. People would often not show up for work. Alcohol was often consumed while employees worked on the assembly line. Supervisors would sometimes not fix a problem in the production line for fear of getting fired. Drugs and sexual promiscuity were rampant as well. Employees felt free to do whatever they pleased at GM, due to the backing of union laws. Some vehicles came out of production with engines installed backward, missing steering wheels, missing brakes, and other issues. Workers tried to fix the defected cars in the back yard of the plant. However, this often led to further vehicle damage. As a result, GM quality felt a sharp decline in the Fremont, CA plant.

The Toyota model was vastly different than GM’s. GM employees were sent to Japan to see what the secret sauce was. The Americans from CA witnessed the Japanese employees working as a team. Toyota employees labored together in groups of four or five. Teammates would sometimes change jobs with each other to keep the work experience fresh. Supervisors would involve themselves if there was a problem workers couldn’t solve. The biggest difference that set the Toyota factory in Japan apart from its American counterpart is the attention to detail. Toyota had a system where a cord was pulled to summon management if a problem was taking too long to fix. No problem appeared too small, even down to the smallest nut and bolt. No doubt, GM workers left the Toyota dealership impressed.

GM Learns Valuable Lessons at NUMMI’s Expense

Fired up from the trip to Japan, GM engaged with Toyota at the Fremont plant and NUMMI started production of cars in 1984. Ready to change the world, the NUMMI plant was an immediate success, as the plant started producing quality cars with very few defects. The Japanese teamwork concept was paying off. However, different GM plants were unaccepting of NUMMI’s new business model. After years of growth in production, GM leaders gradually accepted the change and the NUMMI model became the standard at every GM plant by the early 2000s.

GM never reached the standards of the Toyota makers, but the plant improvements were very evident. GM eventually went bankrupt in 2009. The recession was a large contributor to GM’s downfall. NUMMI closed its doors in 2010 as Toyota pulled out the previous year.

The Return of Auto Pride in America

The lessons from NUMMI taught American auto workers a valuable lesson. Quality cars can be produced in the U.S. at every plant. It takes teamwork. When everyone is on the same page and egos are left at the door, competition will be strong from U.S. companies. Buyers of Buicks and other American cars, can now look forward quality vehicles in the future, thanks to lessons learned from our Japanese competitors.

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