Of Cars, Cheese and American Know-How

Volume 131 No. 50 - Friday, June 15, 2007

When someone is about to walk off a cliff, the sensible thing to is to tell him or her even if it may offend. No one really likes to face his or her foibles. So much of ourselves is invested in the way we are, that change is a touchy thing. But embracing truth, warts and all, is the first step towards real change.

Cutting my teeth in Operations, (not cheese, but Operations nonetheless), and graduating from the school of hard knocks after 20-odd years in the trenches, I have been privileged these last 11 years to share in the intimate details of more than a handful of food-related businesses. This has given me perspective, and the confidence to be blunt. 

But I will speak first of Cars, not Cheese. Even a casual glimpse at how the automotive industry fumbled its response to the so-called “Japanese Invasion” can help us learn to better compete, if we read between the lines. 

How a handful of tiny companies, building engines by hand, in a country devastated by losing a war could, in just a few decades, shake down giants is a story worth telling in itself, but the inept, some say arrogant refusal by US car manufacturers to face facts in spite of overwhelming evidence is a cautionary tale we need to hear. In case you were on another planet, last month Toyota overtook GM as the largest car company in the world.

Past decisions pave the road to present realities. While we are not to blame, we are accountable for dealing with the consequences. So first, a little history. In 1949 General Douglas MacArthur assigned an obscure American statistician named W. Ed-wards Deming to help take a census of post-war Japan. 

Dr. Deming had dabbled in Management Theory but his ideas were misunderstood back home. The Japanese were desperate, with nowhere to go but up, so they in-vited Dr. Deming to speak. 

In August of 1950 he met with top management from a variety of industries. In attendance were what were to become the leaders of Sony, Toyota, Panasonic, Mitsubishi, Honda and others, inspiring the change that led from devastation to renewal, from ashes to producers of some of the finest goods in the world. Toyota, in particular, seized on Dr. Deming’s ideas and created a system of production that is the most efficient and profitable in the automotive world. 

What was kooky in the US, struck gold overseas. In fact, the very American ideas espoused by Dr. Deming, an American, have met acceptance outside of America in spite of resistance and misunderstanding at home. The root of our refusal to listen to our own best minds comes from just after that War as well.

US Industry grew incredibly from 1950 on, fueled not by better quality products or more efficient production, but by a lack of competition. The rest of the industrial world lay in ruins. We won not because we were better but because we were the only choice. Profit was so easily made we thought we knew what we were do-ing and stopped studying our competitors or trying to improve. 

In the 1970s, Henry Ford the younger said without shame on 60 Minutes that Ford built cars poorly, and they would continue to do so until consumers demanded better cars. They were making too much money with “planned obsolescence.” 

When the Japanese Invasion began, the automotive industry ridiculed them. When they began to impact market share, the industry cried foul, rather than own up to the fact that Japanese cars were cheaper, better built, got better mileage, lasted longer and cost less to maintain.

So the auto industry went to Washington claiming subsidies, dumping, and unfair business practices left them no choice but to beg for protection and relief -anything but build a better car. They called customers who bought Japanese un-American. Some Asians were actually beaten by overzealous employees, though ironically, few if any were actually Japanese.

What began in arrogance rooted in short-term thinking for short-term profits, and was built on a foundation of thinly veiled contempt for employees and consumers, fed by a lack of proper training, and led by an overly robust management populated by men with little experience in the job at hand, led to a bloated, unmanageable system that resisted change.

It would take another 15 years before the first US car company woke up and hired Dr. Deming, leading to the creation of the Taurus, giving Ford a brief run as the most profitable American Car Company. In the 90s, they abandoned Deming’s way to ride the wave of the SUV, a change that has led them to the brink of bankruptcy.

Our automotive industry seems to miss the essential at every opportunity: mediocrity is neither patriotic, responsible, nor a ticket to long-term survival. 

For me, the glory in business is in providing real solutions and better lives for those we serve. The rest is merely speculation. Only a system built with humility rooted in long term thinking, founded on profound respect for its people, processes, and machines in genuine service to its customers framed by a lean management with hands-on experience and a continuously trained workforce in whom pride of workmanship has been allowed to flower can survive and profit in today’s fast moving, international economy.

Know-how and ability are patriotic, not wishful thinking or stubborn adherence to a failed path. What previous generations used to call “Savoir Faire” matters. In the words of Dr. Deming himself: “It is not enough to do your best; you must know what to do, and then do your best.”

This is the first in a series of columns discussing what can be done. We will look at production systems, quality systems, management styles and what is really needed to train a manager and other topics. It is this author’s hope, like a drop of ink in a lake that eventually spreads to every nook and cranny; these words will help ignite discussion. When people discuss, good things happen. Until next time, consider the following:

Is your company more efficient, better motivated, and making a better product than your worldwide competition? Do you deeply respect your employees and their hidden potential? Do you invest regularly in educating them and yourselves? Are you driven by the long or short term?

In the words of a Ford engineer years after they abandoned the Deming philosophy: “Why isn’t quality second nature at Ford? Because cost is king. For the past six or seven years, there’s been a huge emphasis on cost reduction. You walk in in the morning and all the alligators are circling.” Quoted in an article on Quality in the NY Times, June 13, 2001 www.nytimes.com/2001/06/13/business/13QUAL.html

In case you think replacing a focus on cost reduction with a focus on quality won’t work, let the facts speak for themselves:

Result Employees 2006 Sales Net Profit
GM 335,000 $207 Billion Loss of Almost $2 Billion
Toyota 286,000 $179 Billion Profit of 11 Billion, 681 million

Dan Strongin is managing partner and owner of Edible Solutions, a consulting company focused on helping companies making great food make a profit. He will be writing a monthly column in Cheese Reporter. Strongin can be reached via phone at (510) 224-0493, or via e-mail at dan@danstrongin.com


Other Strongin Articles written for Cheese Reporter
The Gathering Storm
As Our Industry Evolves, So Should Our Terminology:
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Visit John Umhoefer
Visit Neville McNaughton

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