NUMMI – A Giant’s Atrophy

The higher rank one occupies, the harder it is to change for better/climbing higher. When you become # 1 — by whatever measurement — what’s next? This query is useful for individuals as well as organizations, but in this space, my focus will be on organizations – big, powerful, lumbering organizations.

I didn’t learn about the NUMMI case till a few months ago (from “This American Life”), but immediately recognized several management lessons. NUMMI stands for New United Motor Manufacturing Incorporated; it was a joint venture (JV) between GM and Toyota, back in the early 80s. NUMMI opened in 1984 and closed in 2010. It was a success story as well as a sad failure story.whynot

Before NUMMI, the GM manufacturing plant at Fremont, California, was replete with problems, from negative attitudes to high percentages of rejected cars. Sex, drugs, alcohol, and gambling were prevalent daily activities, right on the site. The animosity between labor and management was so deep that assembly line workers’ way of fighting management was to sabotage the cars at the line, leaving parts or Coke bottles inside the doors or omitting a few screws, etc. Both sides dug in in their power struggles; it’s as if they were living in their own self-created prisons. The dynamics exactly maps to the topmiddlebottom that I had previously described in detail. Absenteeism was rampant. On any given day, one out of five workers just didn’t show up. Mondays were the worst; there were times management couldn’t start the line.

GM had been losing market share for quite some time by then, especially in the small car market, and Japanese cars had been invading GM’s territory with quality cars. So, while top management in GM could never admit that the Japanese were turning out better cars – after all, GM had been number one in the world market for so long – they recognized that they had to do something. Toyota wanted to make further inroads in the US market, as well, to test Toyota management systems with American workers, and GM thought it might as well find out what all the fuss was about Toyota cars. In their joint venture, Toyota promised that GM would know everything about how Toyota made their cars.

Since Fremont Plant was “the worst of the bad mediocre plants in GM,” GM finally did its housecleaning. In 1982, GM laid off most of the workers and closed the plant. Next year, though, GM was in the planning phase with Toyota to reopen the plant under the JV.

Of course, not everyone in the system behaved selfishly; there were always a few diamonds in the rough. In his college days, Bruce Lee was the running back from the University of Arkansas, and had been the former UAW (United Auto Workers) Fremont chief. GM retained Lee to select a new crew for the JV. It surprised GM top management that Lee insisted on hiring back the same group of people. His reasoning? “…because I believed that it was the system that made it bad, not the people.” In the end, 85% of the new JV staff came from the old hands.

valle 2In 1984, Toyota started bringing the “old” Fremont people to Japan for training, groups of 30 at a time. The first group of Americans who went to Japan was apprehensive: How were they going to be received? Their arrival at the airport was a big news item, and the Japanese workers welcomed the Americans with gifts and smiles. There was one immediate noticeable difference: On average, the Americans were nine years older than the Japanese. Their age difference might or might not account for productivity difference; however, their physical size definitely did. Americans, being bigger than their Japanese counterparts, took an extra second or two to get in and out of the car while working on it. This added up to about 10-15% less productivity. Still, American workers could overcome this disadvantage…if they knew how.

The key in the how was in the “teamwork.” Well, there is teamwork, and there is teamwork. At the old Fremont, the team was huge, and the bosses got to dictate. At the Toyota plant, the team was of five or six people, and they would help each other, trouble-shoot together, and even stop the assembly line to correct mistakes or glitches. And all these were alien concepts to the Americans.

“Under the Toyota system, everyone’s expected to be looking for ways to improve the production process all the time, to make the workers’ job easier and more efficient, to shave extra steps and extra seconds off each worker’s job. To spot defects in the cars and the causes of those defects. This is the Japanese concept of kaizen, continuous improvement. When a worker makes a suggestion that saves money, he gets a bonus of a few hundred dollars or so.” Given my critique of “continuous improvement,” I will get into this potential problem in following posts.

At the GM plants, the cardinal rule was: You NEVER stop the line. Bruce Lee said, “You saw a problem, you stopped that line, you were fired.” Problems piled up. Even without overt sabotage, mounting numbers of rejected cars would be parked in the special lot for repairs at later times.

A veteran GM manager explained the rationale: “Because the theory was, they’ll stop it all the time. They don’t want to work, you know? They want to sit and play cards or whatever. That was a free break for them if the line stopped, so you wouldn’t give them the ability to stop the line.” This is quintessential Deficit Thinking (link). The foundation of this particular strand of thinking is one of the “bad management theories” I critiqued in my very first article.

In a way, Ford started the quantity over quality production. However, when the car was such a novelty and people weren’t terribly familiar with operating this new toy, they were willing to deal with constantly tinkering with the machine. That was way back, no longer the prevailing attitude in the 80s.

So at the Toyota plant, the Americans had to turn what they used to know and how they used to work upside down. As one American eventually learned, “Fix it now so you don’t have to go through all this stuff. That’s when it dawned on me that we can do it. One bolt. One bolt changed my attitude.” This testimony came from someone who used to pack his thermos with vodka back at GM Fremont.

tall trees

The newly trained American workers brought back new and shiny principles to the old Fremont environment and began the 2+ decades of quality production for GM…till 2010. The saga continues in the next week’s space in which I will explain how the 85% of the former workers were rehired…certainly not without protests and struggles. Till then,

 

Staying Sane and Charging Ahead.

Direct Contact: taso100@gmail.com

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