
NUMMI 2015 – Why are most American cars still not as good as foreign cars? - warunsl
http://www.thisamericanlife.org/radio-archives/episode/561/transcript
======
boyaka
I worked for a connector company in Japan (JST) for my co-op during undergrad,
and continued to work for them in Michigan for a couple of years. Without
listening to the podcast, I can already say that the attention to detail and
quality in Japan is incredible. American connector companies no doubt perform
the same testing, but in Japan each employee has a very specific focus and
will work relentlessly on that. They also have a large pool of contract
workers to perform these tedious tasks, and sadly their job stability is not
fantastic... In my 6 months there I went to at least 4 goodbye parties for
laid off contract workers. On top of that, working 8am ~ 6 or 7pm minimum is
the norm. While I was there I was the only one that would leave at 5pm (I was
forced to) while everybody else would take a 30 minute lunch-like break then
get back to work, sometimes until 11pm. Although, they at least would mostly
all leave on Friday after a 30 minute clean-up period at 5pm.

American employees tend to have wider responsibilities and probably wouldn't
be able to handle the relentless dedication to detail that is expected of
Japanese employees. Even though my office in Michigan was the same company and
had access to the same parts as Japan to sell to American car companies, our
work force just did not compare to Japan in its devout dedication to the
customer and making sure that parts are perfect in every detail, down to
plastic packaging and boxing that they are shipped out with.

~~~
hotaru29
> our work force just did not compare to Japan in its devout dedication to the
> customer and making sure that parts

That is true. But a big problem with Japanese companies is the
insider/outsider mentality. Japanese employees are loyal to their boss and
their company before any other person. These “other people” include the
general public (and their safety) and the actual stockholders of the
companies.

If something goes wrong, everyone in the company will hide it. Whistleblowing
is completely against Japanese culture and obedience to authority.

This mentality showed itself in numerous cases, most recently with Takata
airbags (employees know about the problem but covered it up). Japanese
cosmetics giant Kanebo had a product that caused permanent blemishes on the
face. Even after the company was well aware of the problem, they covered it
up. Other examples include the Toshiba and Olympus scandals.

Japanese quality is good, but I would never trust Japanese products in any
safety related thing (such as pharmaceuticals).

PS: IMHO, Japanese universities are mediocre. Japanese corporate success is
mostly due to the exploitation of their employees.

/rant

~~~
gohrt
This is a strange comment. USA companies also cover up embarassing failures,
until caught our by the public.

You say that employees are not loyal to customers, but you don't disagree with
"devout dedication to the customer" or the perfect-detail-obsession

How do you distinguish "safety" from "quality"?

What are the universities doing wrong, if they aren't holding back the worker
from achieving results in industry?

~~~
hotaru29
> USA companies also cover up embarassing failures, until caught our by the
> public.

I did not say that US companies are evil. But American employees are much less
cooperative with evil companies.

Americans in general are much less submissive and obedient to authority
figures. Americans also tend the view morally questionable things as wrong or
right (evil/not evil), while in Japan it is more gray.

Furthermore, Americans can exit and enter the job market. If you are unhappy
with how things are going at your company, you can quit and work somewhere
else. That will not happen in Japan: top companies hire new graduates and
someone who quit or was fired in middle age is unwanted in the job market.

In America, if your employer unfairly discriminates against you (for example
whistleblowing\refusing to do morally wrong things) you can go to court. In
Japan problems are solved via the existing power hierarchy, and courts are
fairly inaccessible.

In America, a new CEO digs up all the wrong things that the previous CEO did
and “cleans house”. In Japan, new CEOs are the previous CEO’s proteges and
continue to hide their predecessors secrets (cf. Toshiba and Olympus
scandals).

Lastly, in America, corrupt CEOs get send to jail (e.g. Enron). Three years
after the Olympus scandal, everyone just retired.

(There is an exception: if you are a foreign executive in Japan, and you have
50 painkillers, you are held for 18 days without charge until you quit and
return to your country).

~~~
hoopd
I've never seen somebody hate Japan so much!

> Furthermore, Americans can exit and enter the job market. If you are unhappy
> with how things are going at your company, you can quit and work somewhere
> else.

If you're an auto-worker you have two competitors to go work for and they
probably do business in almost exactly the same way. Other than that you have
to leave the industry.

> In America, a new CEO digs up all the wrong things that the previous CEO did
> and “cleans house”. In Japan, new CEOs are the previous CEO’s proteges and
> continue to hide their predecessors secrets

In a Japanese auto-company the new CEO is likely somebody who's worked many of
the jobs in the company and has an engineering background. In America the new
CEO has an MBA and little idea what their new employees actually _do_. This is
often stated as a bad thing.

> Lastly, in America, corrupt CEOs get send to jail

In America corrupt CEOs usually get golden parachutes. It takes extreme
corruption or political enemies to go to jail.

In all of this you've failed to explain why the American auto industry, with
our superior company culture, can't make competitive cars.

~~~
hotaru29
> I've never seen somebody hate Japan so much!

I don’t hate Japan, I absolutely love it! This country paid for my PhD studies
not asking anything in return.

But that does not mean that there are serious societal issues and it should
not be criticized.

For example, the culture of forcing employees to work overtime. Is it good
that so many men have no relationship with their children because of it? In
what world is that good? Power harassment and maternity harassment in the
workplace is absolutely sickening.

Corporate Japan’s success is built on the exploitation of its employees.
Traditional Japanese companies are absolutely horrible places for most people.
Do you think that the level of suicide is normal in any functional society
(1)? What about the phenomena of young employees dying of heart attacks(2)?

What about the treatment of woman as second-tier employees? Do you really
think the function of a grown and educated woman is to serve tea for men?

Many people have an overly romanticized view of Japan and Japanese. But the
fact is that Japan is in serious need of reform in many areas. In some areas
Japan competes globally (e.g. autos). But in some areas are seriously
dysfunctional. Examples of this is the dysfunctional university/research
system. Second example is the small scale unproductive agriculture with its
over-sized political influence. Third example it the legal system: 99%
conviction rate, and the extreme difficulty of getting access to the courts.
Until recently, the supply of lawyers were also severely restricted.

> In all of this you've failed to explain why the American auto industry, with
> our superior company culture, can't make competitive cars.

I did not discuss the auto industry. One of the reasons that the American
auto-industry failed was because of out of control labour unions (as the
article states).

Clearly the Japanese auto-industry excels. That is due to many things, such as
attention to detail and the responsible actions of employees at all levels.
These are some really good aspects of Japanese culture. (Another is
cleanliness, the ability to plan and timeliness. Just compare Tokyo’s train
system to Paris’ subway).

(1)
[https://en.wikipedia.org/wiki/List_of_countries_by_suicide_r...](https://en.wikipedia.org/wiki/List_of_countries_by_suicide_rate)

(2)
[https://en.wikipedia.org/wiki/Kar%C5%8Dshi](https://en.wikipedia.org/wiki/Kar%C5%8Dshi)

~~~
hoopd
The reason I accused you of hating Japan is you seem to idealize American
business while focusing on Japan's weak points.

From what I've seen and experienced 60+ hour weeks and not knowing your family
are common if you're trying to climb the corporate ladder in America. Forced
overtime and working yourself into a heart-attack happen here, too. And here
the company has no loyalty to you beyond what's forced by the threat of
lawsuit.

No offense but maybe RTFA? A lot of it's about how through NUMMI GM learned
from Toyota how to treat its employees better. Ctrl-f for _I saw a guy fall in
the pit, and they didn 't stop the line._ So much of the article is about how
the Japanese auto workers received more respect and how that translated into
better cars.

If you want to be an activist why focus on the metrics you're focusing on? In
Japan 72% of suicides are men, in America it's 78%. You mention maternity
harassment but the alarming gender disparity in suicide is left out, and it's
worse in America.

Japan's judicial system may be flawed, but we have 12 times their
incarceration rate. In America about 1 in 100 men is in prison, in Japan it's
less than 1 in 1000.

We can cherry-pick numbers all day, but I think it's safe to say Japan's
engineering excellence is not simply a product of worker exploitation. They're
doing some things better than us and we should learn from them.

[https://en.wikipedia.org/wiki/United_States_incarceration_ra...](https://en.wikipedia.org/wiki/United_States_incarceration_rate#Comparison_with_other_countries)

------
crdoconnor
If anybody's curious about the real history of Toyota, and how it came to
dominate the auto market, read this instead:

>Let me start my talk with a little story. In 1958, Japan tried to export this
first passenger car to the US market. The company was Toyota, the car was
called Toyopet. And, as you can guess from the name, it was a very cheap,
small subcompact car, more of a four-wheels-and-an-ashtray kind of thing,
which Toyota hoped rich American consumers could pick up as an afterthought,
after finishing their grocery shopping with the changes left. Unfortunately,
it was a total flop, so much so that Toyota actually had to withdraw the
product. In the realm of failures, this is, like, the biggest thing. It's not
just not selling well -- it had to be withdrawn from the market.

>This provoked a very heated debate in Japan. The free trade economists
centered around the Bank of Japan, the central bank, said, "Look, this is what
happens when you go against the theory of comparative advantage. In a country
like Japan, which in relative terms has lots of labor and little capital, we
shouldn't be producing things like motor cars, which are very capital-
intensive in production." Of course, at that time, Japan's biggest export item
was silk. So, case proven, already. And they said, "Don't tell us that you
couldn't succeed because you didn't have help. You had 25 years of very high
tariff protection. We kicked out all the foreign car makers 20 years ago and
didn't let any of them in since then. And back in 1949 this central bank even
injected public money into Toyota to save it from bankruptcy. So, please don't
tell us that you couldn't succeed because you didn't have help, because you
had all the help you can ask for."

[http://mrzine.monthlyreview.org/2008/chang030808.html](http://mrzine.monthlyreview.org/2008/chang030808.html)

Toyota benefited for at least 40 years from the intentional suppression of the
Japanese currency as well as subsidies and tariffs on foreign car imports.

This long-term mercantile policy corroded the US car industry to the point
where it simply couldn't compete. The general use of the US dollar as the
world's reserve currency didn't help either.

If Japan _hadn 't_ followed a mercantile policy, we'd probably be having a
similar discussion today about why American business culture and attention to
quality is superior to Japanese.

~~~
crdb
The flipside being that the Japanese paid this cost in various ways, such as
sucking in and "wasting" (vs other opportunities) a lot of talent into things
like car manufacturing whilst leaving other fields (like software) to free
market countries whose assets were better allocated, and in the invisible
taxation of the entire Japanese population that resulted from having higher
prices, less consumer choice, less jobs (or lower value creating jobs), etc.

~~~
crdoconnor
If Japan _hadn 't_ done this they would have kept their 1950s level per capita
income. Which was about the same level as Brazil, Bulgaria and South Africa.
They were poor as dirt.

Now, they're one of the richest countries in the world.

I don't think it was much of a trade off.

Being a 'free market country' is ok if you're already rich. If you're still
developing, it's a route to continued poverty.

~~~
vacri
Japan has an unusually strong work ethic and cultural demand for quality work;
I don't think you can simply paint their succcess as mere economic policy that
could be replicated anywhere.

~~~
hga
Another factor is that Japan is a "high trust" society, like the US, which has
a major effect on the types and sizes of business we can do effectively.

The classic counterexample are ethnic Chinese abroad, where they tend to do
things like trading companies, where putting relatives in high positions
doesn't tend to hurt vs. e.g. Wang Laboratories, where founder An Wang
crippled the company by promoting his unqualified son, as a friend working for
them in their R&D lab at the time told us; per Wikipedia
([https://en.wikipedia.org/wiki/Wang_Laboratories#Decline_and_...](https://en.wikipedia.org/wiki/Wang_Laboratories#Decline_and_fall)):

 _Dr. Wang 's insistence that his son, Fred Wang, succeed him contributed to
the company's failure. Fred Wang was a business school graduate, "but by
almost any definition," wrote Charles C. Kenney, "unsuited for the job in
which his father had placed him." His assignment, first as head of research
and development, then as president of the company, led to resignations by key
R&D and business personnel....

One turning point occurred when Fred Wang was head of R&D. On October 4, 1983,
Wang Laboratories announced fourteen major hardware and software products, and
promised dates of delivery. The announcement was well received, but even at
the time there were warning signs.... Very few of the products were close to
completion and many of them had not even been started. All were delivered late
and some were never delivered at all. In retrospect this was referred to as
the "vaporware announcement" and it hurt the credibility of Fred Wang and Wang
Laboratories.

In 1986 Fred Wang, then 36 years old, was installed as president of Wang
Laboratories. However, the company's fortunes continued to decline. Unlike
most computer companies that funded their growth by issuing stock, An Wang had
used debt to avoid further dilution of family control of the company. By
August 1989 that debt was causing conflicts with its creditors. On August 4,
1989, Dr. Wang fired his son...._

------
Animats
Today, of course, the NUMMI plant belongs to Tesla.

For a good book on the subject, see "Car Guys vs. Bean Counters", by GM's Bob
Lutz. He was the one who insisted that GM improve their sheet metal fit and
paint quality. Neither was really that hard, but GM hadn't focused on
perceived quality.

Lutz points out that at one point, the NUMMI plant was making a model which
shipped with both Toyota and GM badges. The Toyota model was getting better
reviews on quality, even though it was the same car made on the same assembly
line by the same people.

------
rogersm
Surprised how many people are talking about currency/government protection and
so few people about engineering.

~~~
crdb
Good engineering has a cost and this cost has to be financed somehow. You
cannot operate in an environment where all the other players have large
structural advantages due to macro conditions and "play fair" and win.

~~~
rogersm
Good engineering requires good processes, good planning and good decisions,
something almost no-one is discussing here.

Let's get real... there's a lot to improve in the american engineering.

------
crdb
On a higher level, there is certainly a case that foreign manufacturers have
more resources available per dollar per car. In other words they can afford to
put more in a car for the same sale price. Trying to sketch my thoughts:

In Germany, it is thanks to European monetary policy that artificially
depresses the Deutsche Mark, allowing for cheaper exports and lower costs for
German companies, as well as a captive market whose currency is overvalued in
exactly the same way destroying local industry (i.e. German loans pay for
German cars to be sold to the Europeans but the other way round is much
harder). Hello VW, goodbye Rover. On top of this Germany is absorbing East
Germany which is a handy source of incredibly cheap labour (in the same way
that illegal labour is in the US food and farm industry) AND massive subsidies
for whoever wants to go take advantage of it (I know a company that opened a
very, very expensive plant 200km from Berlin because the subsidy was such that
they came out profitable even if the plant lost money for 20 years).

In Japan, it is both systematic currency devaluation and the keiretsu system
(which I think is what drives the continuation of "Japanese corporate culture"
rather than the other way round). Its effects are/were (til early 2000s, not
sure about today): cheaper currency from systematic yen devaluation (same as
the eurozone effect), lack of competition including collusion to keep wages
down locally (tough immigration laws help), collusion to maintain very high
prices effectively "taxing" the population with the money directly "financing"
inefficiencies within keiretsu companies. These are all structural advantages
to Japanese manufacturers.

Culture plays a part, no doubt. There are appeals in the Tokyo metro to buy
Japanese bonds as a "patriotic duty", which is a form of voluntary further
taxation (and just look at who owns the majority of JGBs). The Mittelstand
culture, excellent education and long history of industry in Germany certainly
help. But I think macro factors are equally if not more important, and much
fewer discussed in "normal" circles (i.e. outside finance).

~~~
comrade1
Am I in a time warp? Germany is on the Euro and hasn't been on the Mark for
almost 15 years. And the Berlin wall has been gone for 25 years!

~~~
scintill76
I was wondering the same thing and did some searching. It turns out the mark
is still exchangeable to Euro, fixed at 1.95583 marks to EUR. As of 2012,
there were billions of marks supposedly still in circulation. Not directly
related to the GP comment, just interesting IMO.
[http://www.wsj.com/articles/SB100014240527023043738045775209...](http://www.wsj.com/articles/SB10001424052702304373804577520930784840596)

------
hukep
They are right. It is about the trust to the brand today. It will take quite a
long time for american car producers to gain that of the people again.

------
ExpiredLink
... and I thought the Germans build the best cars ...

------
acqq
Great insights.

OT, but speaking about quality and the hidden interests of the people making
the product: the page works very, very bad on iPhone and iPad. Is it better on
other mobile devices or is it the case of developers developing on the
desktops and just beleiving it's good enough on anything else?

------
bootload
transcript is here: [http://www.thisamericanlife.org/radio-
archives/episode/561/t...](http://www.thisamericanlife.org/radio-
archives/episode/561/transcript)

~~~
dang
Thanks! Url changed from [http://www.thisamericanlife.org/radio-
archives/episode/561/n...](http://www.thisamericanlife.org/radio-
archives/episode/561/nummi-2015).

The submitted title ("Why GM cars don't have the quality of Japanese imports")
doesn't seem to use language from the original source, so we changed it to use
a sentence from the transcript. If anyone suggests a better title we can
change it again.

