“Arigatou NUMMI”

John Shook
2/26/2010
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Just a month remains until NUMMI plans to close its doors for the final time on March 31. But, during Toyota's difficult congressional hearings this week, California congressman Jerry McNerney made a pitch for Toyota to keep NUMMI open. Who knows - anything is possible.

As you regular readers of this column know, my introduction to lean production was working for Toyota to help launch NUMMI over 25 years ago. Here are several previous columns that have shared my experience.

I'm very happy to report that I was able to collaborate with the editors at Sloan Management Review to adapt this material into a great new article titled "How to Change a Culture: Lessons from NUMMI," which appears in the just published Winter issue. You can click here for a pdf of this article.

Alternatively, you can access it through the on-line version of the Sloan Management Review at the following link (though the printed article does contain different photos and is worth getting!):
http://sloanreview.mit.edu/the-magazine/articles/2010/winter/51211/how-to-change-a-culture-lessons-from-nummi/

I encourage you to visit the Sloan site (registration is free on the site) and check out the entire issue. In addition to my NUMMI article, there are articles on supply chain, pricing, and an interesting article on managing star employees using the Boston Celtics as an example. There is also a nice interview with MIT Prof. Charles Fine on supply chain strategy.

I'd also like to introduce you to a couple of insightful perspectives on NUMMI that have appeared recently. PBS NewsHour with Jim Lehrer aired a great piece on NUMMI, showing excellent footage of the plant, numerous interviews with NUMMI workers and featuring an interview with Prof. Robert Cole of Berkeley (who I have previously introduced to you here).

http://www.pbs.org/newshour/bb/transportation/jan-june10/nummi_02-09.html

Another wise perspective can be found in a recent article by my co-author of Kaizen Express, Ms. Toshiko Narusawa. In "Arigatou NUMMI," published this month in the Japanese journal "Factory Management" ("Kojo Kanri"), Ms. Narusawa places the importance of NUMMI in historical context. For those of you who speak Japanese:

http://pub.nikkan.co.jp/mgz/kokan/zkok10020-114.pdf

She writes that NUMMI marked the beginning of the concerted expansion of TPS outside of Japan, even outside Toyota City. Prior to NUMMI, TPS had been "discovered" by a few non-Japanese, a few Americans (for example, Len Ricard of GM had discovered TPS through his benchmarking of Isuzu, which GM had purchased), the French (Freddie Balle, for one!), Brazilians (with direct guidance from Taiichi Ohno!), and no doubt others, but at that time understanding was rudimentary and implementation nascent. In 1984, the combined Japanese share of the U.S. auto market was a little over 18%. Twenty-five years later, Toyota alone had a US market share of over 16%.

In Arigatou NUMMI, Narusawa expresses regret that NUMMI is closing, and gratitude for the role NUMMI played. "NUMMI showed that Toyota levels of quality could be attained through establishing a Toyota-style culture in only one year" she says. For those of us working to learn and implement TPS on the North American side of the pacific, we wouldn’t ordinarily stop to consider the impact NUMMI had on Japanese manufacturers' philosophies and approaches as they entered an intense period of transplanting their operations overseas.

Even here within North America, while it makes sense to focus on NUMMI's role for Toyota and GM, NUMMI's influence spread far beyond the doors of Toyota and GM. Yes, NUMMI provided Toyota with validation that its production system would work in North America.

Toyota got what it basically wanted from NUMMI very early on. Toyota's ongoing involvement as GM's joint-venture partner at NUMMI has been a matter of loyalty as much as anything. Under ordinary circumstances, Toyota would never close an operation it had invested in. Toyota has a track record of proving time and again the lengths to which it will go to preserve jobs well past the apparent business need for them.

But, now NUMMI closes. It's unfortunate, but perhaps natural. Everything comes to an end sometime. The numbers just don't add up right now.

Toyota is getting some heat (when it rains ...) for finally pulling the plug, but NUMMI was never supposed to last this long to begin with. The Chrysler-led anti-monopoly lawsuit ended up in a ruling that limited the life of the joint venture (JV) to 12 years, so NUMMI should have closed up shop in 1996 (a ruling that was amended ten years later to allow the JV to operate with no legal time limit).

From a learning perspective, I think it is surely unfortunate for GM that they pulled out of the venture last year, foretelling NUMMI's ultimate closure. Toyota is GM's second most important rival (Ford will always be its first rival - as GM is Ford's), and the joint venture gave GM great access to keep tabs on Toyota. Longer-term, I have to think GM will miss a lot from not having access to NUMMI. I think that matters much less to Toyota. Toyota got what they needed from the JV long ago.

The biggest loss from the closing of NUMMI is for neither GM nor Toyota, but for the greater North American manufacturing community. NUMMI proved that the best manufacturing practices in the world could work right here in North America with a union workforce. And more than just prove that it could work, it showed how it could work. I think we will be discovering more about the impact of NUMMI on North American manufacturing for years to come.

john

John Shook
Senior Advisor, Lean Enterprise Institute

  1. PDF: How To Change a Culture, Sloan Management Review

  2. http://sloanreview.mit.edu/the-magazine/articles/2010/winter/51211/how-to-change-a-culture-lessons-from-nummi/

  3. http://www.pbs.org/newshour/bb/transportation/jan-june10/nummi_02-09.html

  4. Arigatou NUMMI in "Kojo Kanri" (Factory Management): http://pub.nikkan.co.jp/mgz/kokan/zkok10020-114.pdf
1 Comments | Post a Comment
Umbahli February 28, 2010
Thanks for all the historical context and putting this current news story into context. For people outside of auto manufacturing this joint venture seems like a well kept secret. Too bad more Americans don't realize that "the best manufacturing practices in the world [can] work right here in North America with a union workforce."