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ALFRED
P.
WORKING PAPER
SLOAN SCHOOL OF MANAGEMENT
Key to High
in Japanese
Quality
and
Productivity
Auto Manufacturing
-'Small-Lot Production:
Michael A. Cusuinano
December 1986
VJP
Revised
#1841-86
MASSACHUSETTS
INSTITUTE OF TECHNOLOGY
50 MEMORIAL DRIVE
CAMBRIDGE, MASSACHUSETTS 02139
'Small-Lot Production:
Key to High
Productivity and Quality in Japanese
Auto Manufacturing
Michael A. Cusuinano
December 1986
VJP
Revised
#1841-86
MAR
1
9 1987
j
Michael A. Cusumano
Assistant Professor
M.I.T., Sloan School of Management
Cambridge, MA USA 02139
Draft 12/4/86
SMALL-LOT PRODUCTION: KEY TO HIGH PRODUCTIVITY
AND QUALITY IN JAPANESE AUTO MANUFACTURING
Managers
around
the
frustrated
world,
Japanese automakers,
productivity, cost, and quality achieved by
have often
the levels of
at
complained that what Japanese companies do is unique.
Visitors to Japan often leave convinced that without high-quality
workers
Japanese
their
and
willingness to
cooperate
Japan in,
say,
auto
know
this
is
now
automobile
plants
California
and
with
management,
not
necessarily
located
much
the
case.
But we
Japanese-run
demonstrated
have
levels
of
quality comparable to what Japanese workers and
the performance
as
performance of
in Tennessee (Nissan), Ohio (Honda),
managers have achieved in Japan.
lies
the
including their
manufacturing cannot be duplicated.
(Toyota-GM)
productivity and
key to
culture,
special
if
not
['
A major
]
of Japanese
more
in
reason is
that the
firms in auto manufacturing
their
approach
to production
management as any peculiar characteristics of Japanese workers in
Japan.
Compared to
have
been
at
the Japanese,
a
disadvantage
U.S.
and
due
to
European companies may
the
absence
of
clear
]
policies,
industrial
much confrontation
inadequate
But,
and less
historically,
and
in the work
European automakers who
well --
until auto
producers in
standards of productivity, general manufacturing
new
set
ethnic homogeneity
U.S.
founded the industry performed
Japan
programs, too
between management and labor, poorly educated
blue-collar employees,
force.
quality-control
product
efficiency, and
quality
low
at
The Japanese
cost.
accomplished this primarily by modifying, beginning in the 1930s,
American
and
European
techniques,
equipment,
assumptions about production management
.[
^
and traditional
]
For non-Japanese managers in autos and other industries such
as electronics,
the challenge of the past decade has been to stop
falling behind.
set
requires
companies
got
important
to
disorganized,
But
an
to
learning to
analysis
where
determine
remarkably
of
match the standards Japan has
precisely
they
are.
how
they
inefficient
In
how
leading Japanese
particular,
transformed
plants
U.S.
the
it seems
dirty,
Occupation
observers saw in the late 1940s and early 1950s, into perhaps the
most
superbly
the world.
['
conceived
and run manufacturing organizations in
THE USUAL EXPLANATIONS
common
There are several
automakers
evolved
and
explanations
came
to
as
dominate
the world industry.
Since car mass production began in the U.S., it is
that
Japanese
firms
details and
the
best
American thinking
And then the Japanese, or so the story
of experience.
paid greater
They
usually goes, did more:
often assumed
or imported American manufacturing
copied
equipment and techniques reflecting
and years
how Japan's
to
achieved better
attention to factory
implementation --
aided by factors
like ethnic homogeneity, better educated employees,
and "harmony"
between managers and workers, combined with now-famous techniques
that supposedly grew out
conditions:
of
Japanese
culture
and geographical
near-fanatical attention to cleanliness and quality,
group cooperation
as
seen
in
quality
circles,
"just-in-time"
production using "kanban" cards to control manually and precisely
the process flow and parts deliveries.
Nor is this scenario the only
productivity and
low costs.
Japan's high
Another is the large investments in
plant and equipment, which appear
edge in capital.
explanation for
to
give
Japanese
workers an
Yet another is huge economies of scale achieved
in the domestic market during the 1970s, which
may have
made it
possible for Japanese automakers to match international standards
of productivity and costs and then
the U.S.
and Europe.
begin large-scale
exports to
::
WHAT HISTORICAL ANALYSIS REVEALS
Studying
historical
the
evolution
of
the
Japanese automakers, Nissan and Toyota, as well as
numbers,
suggests
leading
two
some relevant
that the explanations outlined above need some
clarifications and corrections.
Japanese automakers did not all copy and import American or
One
and production-management
European equipment
was
temptation
great
manufacturing
and
accounted for
1959. [*]
and
so,
most
(Nissan,
did, during the 1930s and 1950s.
Mitsubishi, Hino)
assembly
do
to
techniques.
of
European
Isuzu,
In fact,
the
under license
models
of Japanese car production during 1953-
about 30%
But Toyota deliberately avoided
or techniques exactly.
There
Instead,
began an innovation process
copying foreign models
it developed in-house skills and
that led
eventually to
the highest
levels of productivity in the world. (^]
The
Two
simply
a
Japanese
matter of
varying degrees,
U.S. procedures
modifications
in automobiles is not,
"better implementation."
Led
therefore,
by Toyota, in
Japan's automakers all made critical changes in
and
of
success
It
was
these
practices
and
assumptions
concepts.
foreign
innovations or
directly to higher worker output, better quality, and
that led
savings in
:
:
areas such as inventory turnover.
High productivity -- surpassing U.S. averages -- was not
Three
due simply to huge economies of
during
market
Toyota
1970s.
the
scale derived
from the domestic
and then Nissan matched or
surpassed U.S. output levels per worker during the late 1950s and
early
and
1960s,
(Exhibits
volume in 1965!
3% to 5% of General Motors'
merely
at
and 2)
1
auto manufacturing be
Nor can the Japanese performance in
Four
attributed
simply
Nissan and Toyota
higher
to
matched
levels
doubled
then
and
capital investment.
of
U.S. productivity
levels in the 1960s with less capital per employee.
are difficult
Some statistics
to interpret.
example, workers at Nissan and Toyota had
fixed assets
as their
creating the
impression
productive because
(see Exhibit 3).
property, and
sales
counterparts at
Japanese
that
of investment
Not so.
The
equipment) required
2
GM,
(Exhibit 3)
In 1983,
for
to 2.5
times as many
Ford,
and Chrysler--
workers
were
twice as
levels that were twice as high
amount of
fixed assets (plant,
to produce one vehicle by the
late 1970s and early 1980s was roughly equivalent in Japan and in
(Exhibit 4)
the U.S.
Only
because "throughput" per worker per
year was twice as high in Japan did workers at
show twice
and the
as many fixed assets each.
overall Japanese
Nissan and Toyota
But it was actually labor
production systems,
not capital, that
were twice as productive as their U.S. counterparts.!^]
THE NEED TO PRODUCE IN SMALL LOTS
KEY FACTOR:
In attempting
the mid-1950s,
government
scholars,
debated
have
alike
to explain Japan's economic performance since
contribution
the
cultural harmony, education,
unique
Japanese
to
and
history.
emerges from studying the history of
and
talking
to
companies was
small-lot production
growing variety
at the
the need
That
.
lowest possible
costs,
increasingly sophisticated
Attempts by
Industry
failed.
to
(MITI)
First,
Japan's
to
to
become more efficient
after World
companies
War
had
to
accommodate
II
to
to master
produce
a
very small but
a
domestic market with
a
Ministry
"rationalize"
of
growing number
the
International
auto
industry
after World War II, MITI tried to
MITI wanted to reduce
industry,
The overriding
['']
passenger
abandon
is,
auto industry
and trucks at extremely low volumes and
of cars
of competing firms.
But a simple "fact"
the Japanese
automakers to
policy,
factors that seem
production engineers:
Japanese
concern that drove Japanese
than U.S.
industrial
of
or other
"luck,"
society
and businessmen
officials,
raise
car
production.
the number
scale
largely
convince firms
Then, during the 1960s,
of producers
economies
Trade and
competing in the
for any one manufacturer.
]
Company executives at nearly
a
dozen firms saw great potential in
industry and repeatedly refused to bow to the wishes of
the auto
government bureaucrats.
[^
At Toyota in particular, this
modifications in
lots inspired
fundamental engineering
manufacturing
lots
found
in U.S.
in the military
such as
these improvements,
buffer
and
scales,
more than anything
the
the manufacturing process,
worker productivity and, ultimately,
a
the
to
value of large
the importance of
inventories,
specialization,
machine
achievable at
concepts
and
minimum efficient
assumptions about
suppliers in
in small
Japanese managers to overturn traditional American
else, enabled
and
practices
And
aircraft industry.
produce
to
equipment or techniques based on
non-automotive factories
textbooks and
worker
"need"
role
of
labor
as well as the limits to
the
levels
of quality
given cost.
Japanese auto
production in
1950 consisted
of 31,597 cars
and trucks -- little more than one days' output for the U.S.
industry.
(Exhibit
Nissan, Toyota,
enter the
Isuzu,
field by
Japanese automakers
and
Hino
--and
half-a-dozen
more would
the early 1960s -- Mitsubishi, Honda, Mazda,
in 1966).
could use American mass-production equipment
and techniques for trucks
these
auto
Four local companies shared the market--
5)
Daihatsu, Suzuki, and Prince (which merged with Nissan
produced
and
models
made during
in
relatively
World War
large
II,
since they
runs (compared to
]
with
passenger cars), and
machine
or
thousands
stamp
changes.
few
identical
of
manufacturers did for much higher volumes,
was
It
possible to
components, as U.S.
and store
the excess
It was expensive to pay for equipment in this
for future months.
way, but possible with high
prices
under
protected market
the
that existed
in Japan from 1936 to 1945 and then from 1953 until
the mid-1970s.
[^
Nissan's history illustrates this
1930s, Nissan
strategy.
the mid-
In
entered into an agreement with Graham-Paige (which
sold out to Dodge before World War II) and bought specialized and
expensive American
machine tools and stamping presses to produce
the U.S.
company's standard-size
American
engineers
operations.
profit
high
came
margins,
Japan
to
Nissan then
truck.
sold nearly
to
continued to make the same
for
truck
two
all its
Japanese
the
A dozen high-salaried
and
army
engine,
years
and set up
output,
until
at rather
1945,
and
only minor
with
changes, until the late 1950s. [^°]
After
disappeared.
had to
War
World
To survive,
make the
production in
the
military
market
other Japanese automakers
trucks and buses (about 95% of
passenger cars.
Car
production at the
automakers rose from merely 5% of output in 1950
to about 65% in 1970.
require far
Nissan and
transition from
1950) to
leader Japanese
however,
II,
(Exhibit 6) Passenger vehicles also came to
more equipment
and options, as well as
8
a
variety of
model
frequent
more
and
styles
especially
changes,
as
the
Japanese companies improved their vehicles incrementally.
as well
For cars
annual model volumes were
trucks,
as for
extremely small during the 1950s and for much of the
example, Nissan
small-scale
increased
producer
by
a
world
in 1960
small 18.000
still
from
it made
car body.[^^
a
Nissan
was
]
a
The
very
The average annual
standards.
models increased
volume for Nissan car
1950 to
while
even
few cars
The
with
truck fitted
the small
number of new models
For
produced only two major products -- one
in 1950
standard-size truck and one small truck.
were actually
1960s.
minuscule 900 in
a
and 42,000
in 1965.
In
comparison. Ford, as early as 1923, had achieved an annual volume
for
Model
the
of
T
volumes for Nissan cars
1970s
and
additional
new
which
Toyota,
1983. ['=
fell
]
under
models.
had
an
over
2
were
million units.
circumstances
car-model
forced Nissan,
prevailed
at
volume of 100,000 in
for
cultural predispositions,
Toyota, and other Japanese automakers to confront
seemingly intractable dilemma:
preference
during the
(Exhibit 7)
Changing market requirements, not
a
low
after 1980 as Nissan introduced
Similar
average
Average annual
]
relatively
still
100,000
[^^
mass
the
producing
traditional auto factory's
huge
lots
components; and the Japanese market's demand for
of
a
of products in small amounts and at falling prices.
standardized
rising variety
The Japanese
government helped by limiting imports to about 1% of the Japanese
market following the postwar U.S. Occupation, although prices for
Japanese-made vehicles
early 1970s
dropped between
number of
as the
the early
1950s and the
local firms competing for the few
domestic customers tripled by the early 1950s. ['*]
Prices (and, presumably, unit costs) in Japan still
match international
1960s. [^^]
late
productivity
Yet
expand
to
an
reduce
and
automakers, beginning
1950s,
comparable small
levels for
with
costs
was
their
Exports
to
increase
desire
of
Japanese
attempts
in
the late
the
the
increased
cars until the
incentive
first
beyond
sales
car
domestic market. [^*]
additional
did not
limits
slowly
of the small
in importance,
from less than 4% of total production to just over 20% as late as
As quality rose and small cars became more popular in the
1970.
U.S., Japanese exports passed 50% of output in 1977.
A PROBLEM WITH A SOLUTION
But
in
the
lean
following
years
managers were not quite sure how
World War
to accommodate
II,
Japanese
changing market
needs and potential export requirements of low-cost, high-quality
vehicles.
U.S.
their equipment
engineers
and
companies
many of
and influenced
had
designed
much of
their experiences.
Not
surprisingly, many Japanese managers, especially at Nissan, first
10
]
believed that the best way to compete in automobile manufacturing
was to copy as closely as possible the systems perfected at Ford,
GM,
and other mass producers
The
worker
of
'
]
set
a
following were
concepts that assumed the
levels
^
involved
"paradigm"
U.S.
.[
equipment
and
large manufacturing
keep the expensive machines
machines requiring long
This involved
scales with
concept
"push"
period of time; and the
manufacturing and
high
extensive
buffer stocks to
workers constantly
parts or assemblies as possible in
as many
active, making
and
most efficient:
specialized
and
techniques
specialization;
automation; long production runs on huge
set-up times;
of
of
a set
production control.
delivering components according
to a master schedule, which was also designed to keep most of the
and components
machines running
might develop at
components
made
a
coming in despite problems that
few stations or suppliers.
in
lots required too many inspectors,
huge
companies adopted statistical sampling
determine if an entire lot
parts and
To inspect all the
techniques to
so
test a few
met an "acceptable quality
level," even though this meant some defectives would pass through
the system
as much
in house
possible,
supply.
[
at every
to
stage.
of the
insure
U.S.
automakers also tried to bring
components production
acceptable
'
®
11
levels
and assembly as
of price, quality,
and
contrast,
In
managers
production
U.S.
gradually
it
that
became
small
but
competitive
domestic
Japanese automakers after World War
smaller than
lots far
Toyota's
by
Ohno
needs of
Not only did
to
manufacture in
U.S.
or even Europe.
have
in the
(bn.
meet the
market.
II
were common
Taiichi
Japanese
to
modifications were necessary in
some
equipment and manufacturing practices to
their
Led
clear
Japanese managers
1912),
realized that the best way to do this required an increase in the
"flexibility" and utilization of traditional components
in their
manufacturing systems -- equipment, workers, and suppliers.
also sought to lower, as much as possible,
house personnel,
"fixed" costs
They
for in-
factory or warehousing space, and equipment, as
well as variable costs,
such as for in-process
or finished-goods
inventories.
Japanese
Individual
in different
with varying degrees of success and
pursued three
implemented
automakers
for
production
in-house
years,
yet all
One, beginning in the late 1940s
basic policies:
was the "just-in-time"
at Toyota and in the mid-1950s at Nissan,
concept
this strategy
or assembly and deliveries of
required several
departures from U.S.
components.
This itself
practices:
faster
setup
times for machine tools and stamping
(techniques
first
written
presses
incorporated
presses),
models
or
in
American
equipment
about
such
so each piece of equipment could be
components
without
12
long
in
the
Danley
as
U.S.
and
stamping
used for different
waiting
times;
tighter
]
synchronization between subassembly production, parts deliveries,
assembly, to increase equipment utilization and reduce
and final
in-process inventories; mixed scheduling
or
models
on
machines
single
or
of different components
assembly
lines,
to
avoid
specialized but under-utilized equipment and workers; and broader
could maintain the just-in-time
so managers
job specifications,
pace by shifting workers to different jobs as needed at any given
moment.
[
^
^
]
modifications
These
ended
up
simultaneously,
and
workers
resulted
operating
doing
different
several
some
inspection, especially in times of slow
as
machines
own maintenance and
their
of
productivity
higher
in
demand.
The discipline
the just-in-time pace along with small-lot production
imposed by
as workers paid more attention to
also tended to improve quality,
were doing
what they
stocks if they made
defectives,
no longer
and could
processing or
mistakes in
furthermore,
boost to productivity .[ ^
rely on large buffer
resulted
in
assembly.
Fewer
higher yields -- another
°
A second policy was to gain
some benefits
from the concept
of scale
economies, even at low volumes compared to the U.S., by
reducing
complexity
Beginning
in
the
in
late
product
1940s,
standardizing components across
(until the later 1950s),
designs
Nissan
different
and
and
car
manufacturing.
Toyota did this by
and
truck lines
reducing the frequency of model changes,
13
M
and limiting the number of options available to customers
policy
The third
integration
vertical
loosely
affiliated
process of establishing
took longer to set up
a
subcontractors
a
integration"
(the
U.S.
and final
lower-wage subsidiaries
.[
^
^
]
Toyota started the
network of suppliers in
the late 1930s
possible to
the
Nissan
supplier network, although, by the end of
automakers
demonstrated
percentage
of
levels
of
"group
total costs accounted for in-
Toyota held
a
minimum
were far higher than the most integrated
share) that
General
automaker,
without
of in-house
production
house or at affiliates in which Nissan or
20% equity
^
and as early as the 1940s for Toyota, the
for Nissan,
Japanese
largest
networks of
levels
all its major subsidiaries during the 1940s.
and founded
the 1970s
components
between
assembly, while building up
and
decreasing
involved
.[
(Exhibit
Motors.
This
8)
made it
achieve many of the benefits of vertical integration
personnel
higher
other
or
costs
that
formal
integration would have required.
For
example,
in
for
1983,
each small car they produced,
about 50% of the costs at Nissan and Toyota were accounted for by
subsidiaries and other affiliated subcontractors (see Exhibit 8).
These companies, furthermore, paid wages equal
those
received
workers.
by
(Exhibit
productivity gains
Toyota
9)
workers
Wages
were not.
were
and
to merely
77% of
81% received by Nissan
lower
at
suppliers,
but
By working with these companies to
14
]
improve their production systems as well as the
components
assembly
or
(Exhibit 10)
and
2.8-fold
was
This
value-added
services,
tripled
Nissan and Toyota subsidiaries
quality of their
between
productivity at
and 1983.
1950
rate of increase faster than the 2.4-
a
registered
improvements
respectively, in this same period.
at
Nissan
Toyota,
and
[^'
THE TOYOTA "REVOLUTION"
Toyota,
started
Nissan,
unlike
out
in the 1930s without
buying American design and manufacturing technology.
of the
company, Kiichiro
vehicle by copying
Chrysler
DeSoto
Toyoda (1894-1952), designed his first
chassis,
--
body
U.S. manufacturer.
showroom,
Ford
a
what
engine,
The first truck broke down on the
portending
importing
Chevrolet
a
a
was
a
a
decade to
essentially
U.S. models
way to the
of technical problems in Toyota
series
a
-- while
Nissan,
overcome.!^*]
Dodge truck, went quickly
into "mass production" in the mid-1930s and turned
comparable to
and
combining the "best" features of each
vehicles that took more than
by
The founder
establishing
for American manufacturing equipment and practices
out
a
a
vehicle
predilection
that managers
carried through to at least the 1970s. [^^]
In
contrast,
Kiichiro
and
they would need to improve vehicles
15
other Toyota managers realized
frequently, since
they were
experimenting with
Kiichiro's
particular,
design
designing cars
skills
objectives
could
(he
and trucks independently.
were
afford
not
cultivate in-house
to
buy
to
the blueprints,
equipment, and American assistance Nissan purchased),
to
up
set
an
inexpensive
Since the early vehicles
would not
buy all
production
as well as
system for low volumes.
were unreliable,
Toyota's output.
In
the Japanese military
Nissan, on the other hand,
had more orders than it could fill.
To solve its unique
again departing from
problems, Toyota,
Nissan, bought universal machine tools and small stamping presses
that were affordable and easily adaptable to model changes.
was the
beginning of
This
the "flexibility" in the Toyota production
system that, after World War
helped
II,
company introduce
the
numerous new models, for the domestic and export markets, quickly
Again, unlike Nissan,
and cheaply.
during the
European
1950s Toyota
or
U.S.
auto
chose not
producer
Isuzu, Hino,
to become
to
learn
and Mitsubishi,
affiliated with
modern
a
design and
automation technology developed in the 1940s and early 1950s.
Benefiting from
the versatile
equipment first purchased in
to executive
the 1930s and from the direction of Ohno,
who rose
vice-president
gradually introduced
in
the
company,
Toyota
a
series of innovations in manufacturing that rival the achievement
of Henry
a
Ford with the Model
T.
Ohno joined Toyota in 1943 from
loom-machinery producer, with no experience
16
in automobiles, no
predilections
favor
in
initiated the planning
result
of
for
high
extraordinarily
in
help
and
inventory turnover,
virtual
a
This
methods.
U.S.
that would
"revolution"
levels
Toyota
one manager
productivity
of
become
one
and
the most
of
efficient and profitable companies in history.
The
development
of
key
the
production system occurred between
used in Toyota's
techniques
1948 and
1965: [^^]
(See also
Exhibit 11)
1948:
Ohno instituted
"pull"
a
system in the machining shop
for engines, with each worker moving back to the
previous station to retrieve
the
necessary
time
immediate processing.
a
pull
system in
this practice
World War
II
the
process,
amount
the
flow
of
industry during
supermarkets.
This contrasted
in the U.S.,
components
production moved in
idea of
aircraft
U.S.
with the traditional "push" systems used
the
needed for
He first read about the
and in U.S.
other automakers
just at
Japanese newspaper which described
a
in
only
in
work in
a
and
Japan,
at Nissan and
and Europe, where
information
signalling
forward direction, according to
a
schedule, whether or not stations were ready to receive
the components.
The push system was not well suited to
small-lot production and tended to build
17
up in-process
whenever
inventories
stations
machinery breakdowns or other
fell
production
and
Toyota
downward.
fell
behind,
factors,
or
schedules
management
were
wanted
due
to
when sales
not
revised
control in-
to
process and finished-goods inventories because of large
financial losses associated with
collapse
the
of the
military market and postwar inflation.
1949:
The pull system in the machining shop allowed Toyota to
end the intermediate stockpiling of engines.
Ohno also
made workers
several machines
in the
rather
each,
machining shop operate
than specialize (as did
f
autoworkers at Nissan
companies), because
well
as
demand was
enough work to keep all machines
as
U.S.
low and
and European
there was not
operating constantly.
This procedural change improved worker productivity.
Ohno then asked production workers to conduct their own
inspections.
raised worker
This improved
quality
on
the
line and
output by cutting down on non-productive
inspection staff.
1950:
Toyota extended the pull
the
policy,
prompted
concept to
by
financial
marketing through
difficulties and
demanded by company bankers, of limiting
18
production to
orders received by Toyota Motor Sales from dealers.
synchronized
Toyota
with
final
engine and transmission machining
assembly,
reduce
to
further
in-process
inventories.
Indicator lights introduced on the engine lines alerted
supervisors to problems.
1953:
Ohno introduced an
exchange of
"kanban"
early
system,
using the
paper tags to signal processing operations
or parts production,
into
the
machining
shop.
The
Japanese called this the "supermarket method," since it
mimicked
practice
the
customers went
rather
supermarket replaced
supermarkets
than
store
goods,
also
while the
items on shelves as it sold them.
To simplify manufacturing, procurement,
Toyota
where
to buy what they wanted when
to stores
they wanted it,
U.S.
in
instituted
a
and conveyance
standardization program for
car and truck components.
1955:
Toyota synchronized its body
and final
assembly shops
to eliminate more in-process inventories.
Controls
introduced
on
19
parts
deliveries further cut
.
inventories
Toyota started to
small lots
mix
loading
the
for machine
components in
of
tools and to mix model runs on
final assembly lines to raise equipment
utilization as
well as lower inventories.
Line-stop
introduced
buttons
assembly lines gave
on
production
workers authority to halt
if
they noticed
defects or if other problems arose.
1957:
Indicator
lights
installed
supervisors
alerted
on
outside
all
the
production lines
machining
shop
to
problems.
1959:
A control
system for in-house to in-house and in-house
to outside conveyance again
cut in-process inventories
and waiting time.
1951:
Toyota
introduced
the
kanban
system to some outside
parts suppliers.
1962:
Toyota then extended the kanban system
shops, placing
to all in-house
the entire company on a small-lot, pull
system.
20
Foolproof devices added to machine tools helped prevent
defects and over-production.
example of rapid setup, Toyota lowered stamping-
As an
press changeover times for
previous years
dies from
2
or
3
hours in
minutes, through techniques such
to 15
as automating as much of the process as possible,
preparations
for
the
running, and training
changeover
teams
to
while machines were
specialize
in setup.
utilization and made
increased equipment
Rapid setups
doing
small-lot production more economical, as well as helped
reduce in-process inventories by cutting lead times.
1963
Ohno
:
asked
now
workers
to
machines each, compared to
1947,
and
1
in
previous
3
operate
to
4
years.
an average of 5
since
1949,
2
in
This raised labor
productivity.
Toyota extended the kanban system to
1955:
deliveries,
reducing
in-process
all outside parts
inventories
to
a
minimum.
IMPACT ON PRODUCTIVITY AND INVENTORY TURNOVER
The
results
of
Toyota's
21
techniques
were
impressive,
Vehicles per worker per year (unadjusted for vertical integration
or capacity utilization) tripled at Toyota between 1955
and then
rose another
60% by
1964.
(Exhibit
Toyota had passed productivity levels at
GM,
and 1957
By this time,
12
Ford,
and Chrysler
Nissan did not adopt the kanban or pull system,
(see Exhibit 1).
and focused on improving
its levels
European companies
But,
did.
of automation,
as U.S.
and
at roughly the same time or a year
or two behind Toyota, Nissan also worked at reducing setup times,
synchronization,
in-house
improving
Gross productivity
deliveries.
between
five-fold
1955
and
has
never
caught
parts
an improvement comparable to
1964,
despite
up,
controlling
Nissan then increased
levels at
still behind
Toyota, although Nissan was
and
and
Toyota in productivity
doubling U.S. productivity
levels.
Perhaps the most remarkable effects of Toyota's pull system,
clearest contrasts
and the
seen in inventory
into sales)
.
turnover
In
(average
firms, can be
and U.S.
total
inventories divided
This is an effective measure of how well
controls in-process stocks
goods.
with Nissan
low
well
as
stockpiles
company
of finished
Toyota, Nissan, GM, Ford, and Chrysler
the mid-1950s,
all had relatively
as
a
turnover
levels.
In
the U.S.
fact,
companies made no progress in this area between the 1950s and the
early 1980s
--until
they
began
"just-in-time" concept around 1982.
22
experimenting
(Exhibit 13).
with
a
limited
Nissan's
factories
are more dispersed than
From the 1930s, Nissan has also been more committed to
Toyota's.
automation
equipment
specialized
and
introduced
1960s
suppliers
and
Toyota, and in the
push-system
computerized
a
than
for
production
control resembling "Materials Requirement Planning" (MRP) systems
common
the
in
a
directly
market
demand
schedule that
and
not
is
automobiles
is not tied as
adjusted
almost
changes in shop conditions or at suppliers,
"instantaneously" to
as in Toyota's kanban
The result
system.
buffer inventories
keep larger
manufactures
thus
computer-generated
according to
to
Nissan
U.S.
to guard
Nissan must
is that
against disruptions in
the supply system or inaccurate computer information.!^'']
To accommodate product diversity
reduce warehousing
requirements in
at
the expensive
Tokyo and Yokohama, in the 1950s and early
modifying
machine
tools
get
to
volumes
small
more
urban area of
1960s, Nissan
rapid
setup
requiring more frequent parts deliveries than in the
practices brought
U.S.
since
firms.
1979,
located more
suppliers are
Nissan to
a
and to
began
times and
U.S.
These
level of inventory turnover beyond
Yet it is still considerably behind Toyota, and only
when
Nissan
than 20
adopted
minutes or
progress in
achieved by the mid-1960s.
so from
its factories (nearer
on-line terminals),
connected by
make substantial
kanban for outside suppliers
inventory turnover
(Exhibit 14)
23
did the company
beyond what it
One indication
that Toyota was not always so different from
American automakers can be
1955 was
turnover in
seen in
no higher
mid-1950s through
from the
the fact
that its inventory
than the average for U.S. firms
the early
Only with better
1980s.
synchronization among processes and with parts deliveries, mixing
but
assembly,
and
significantly
rose
built another plant
while Toyota
It fell for a few years
then
experiments with
and
the pull system, did turnover double between 1955 and
kanban and
1956.
production
parts
runs in
again between 1962 and 1963 (when
Toyota adopted the kanban system for
all in-house
shops) and in
1965-1966 (when Toyota brought suppliers onto the kanban system).
Nor was rapid turnover
when production
rapid increases
due to
volume fell
8% in
Even
in sales.
1974 following the first oil
shock, Toyota maintained a turnover level of more than 20 times--
twice as high as U.S. firms and Nissan.
After perfecting
these techniques
by the mid-1960s, Toyota
engineers and consultants taught their production system to major
subsidiaries
and
affiliates
such
efforts helped produce significant rises in turnover (as
productivity)
at
nearly
[^
.
°
]
But
realizing that
been
implement
able
Toyota's.
to
followed,
This can be seen
not all
just-in-time
not
24
only
did Mazda
as
competitors
foreign
consolation in
well as
subsidiaries in the Toyota group.
all
Companies affiliated with Nissan
mid-1970s
These
as Hino and Daihatsu.
should
in the
find
some
Japanese automakers have
systems
at
as effective as
Nissan,
but
also at
Heavy
Fuji
Honda,
Industries
and Isuzu, which have
(Subaru),
turnover rates comparable to GM, Ford, and Chrysler.
(Exhibit 15)
IMPLICATIONS FOR MANAGERS
The "quality" (education and discipline) of workers found in
been important,
no doubt
Japan has
after World War
companies had
labor difficulties U.S.
also reflected on the
II
then planned how to insure more
1930s and
in the
But Japanese managers
too.
cooperation from workers and to reduce personnel costs.
undercutting
by
this
white-collar
unions dominated by
to management
union officials
that union
workers
industrial
would
leaders
World
after
employment to select groups
cooperation; and
unions and setting up company
workers;
frequently promoting
positions, raising the likelihood
cooperate;
War
They did
and
II
then
employees
of
large
numbers of
offering
"lifetime"
firing
in
return
for their
subcontractors highly dependent
using low-wage
on the original equipment manufacturers to produce 70% or more of
the components (by value) of each Japanese car.[^']
Management- labor
relations
and
industrial
unions
have
evolved differently in the U.S., and it is unlikely that American
managers will
be able
Japanese companies.
excuse
for
less
to control
But labor
efficient
workers to the same extent as
differences
manufacturing
25
must
not
practices.
become an
Equally
happened
important to understanding what
industry
went
what
is
American managers came
stable
on
By the early 1950s,
automobile
manufacturing
with
technology,
Japanese auto
the
U.S:
the
view
to
"mature"
or
in
in
certain
as a
limits
to
productivity, minimum efficient scales of production, unit costs,
quality,
(or be coerced),
overall
of workers
the ability
and
well
as
production
contribute
to
as
system.
and suppliers to cooperate
improving the
to
original "American paradigm"
The
characterized by large production runs, push-type
high levels
of scheduling,
and worker specialization, with large
of automation
numbers of inspectors using
statistical sampling,
dominated the
thinking, and the goals, of U.S. as well as European managers.
There was nothing particularly "wrong" with this approach to
It proved
manufacturing.
volume production of
a
remarkably effective
to be
for high-
But then market
limited number of models.
War II
conditions and financial constraints in Japan after World
led
Toyota
then
and
assumptions
American
Japanese
other
and
master
produced greater efficiency in
output and
utilization
turnover, and
even higher
for
quality,
to challenge
production
small-lot
variety of areas:
a
rates
automakers
machinery,
.
This
higher worker
faster inventory
since "just-in-time" systems
did not tolerate defectives or equipment breakdowns, and Japanese
workers
producing
in
attention to what they
workers making
smaller
were
thousands of
found
lots
doing
--
as
components of
26
they
opposed
paid
greater
to American
one type, with large
piles of buffer stocks to draw on if they made mistakes.
the history of Japan's auto industry is a story both
In sum,
of American
involved
These innovations
spectrum of changes in American production technology,
a
Toyota
with
Japanese innovations.
lapses and
the
as
typified
automakers,
radical and with most other Japanese
most
by
Nissan,
incorporating
modifications of U.S. practices and equipment.
Critical
(Exhibit 16)
success in auto manufacturing was
Japanese
the
to
less extensive
that managers such as Toyota's Ohno did not accept U.S. practices
as
viable
only
the
believe that U.S.
capital and
way
had
firms
produce
to
reached
automakers
nothing mysterious
accomplished.
conditions, creatively
U.S.,
for
ultimately
new
dramatic
possible for
They
establishing
higher
learn
least come
improvement,
nothing
about what Japanese
responded
automobile
standards
else
specific market
to
developed first in the
using techniques,
in
and suppliers. And
labor,
or miraculous
applications
competing managers
should at
limits
the
worker productivity, quality, inventory turnover, or
the effective integration of equipment,
there was
automobiles, and did not
of
from
production,
and
efficiency.
If
this
story,
away convinced that improvement,
may
never
be
impossible
--
they
sometimes
even
industries that seem old, stable, and quintessentially Western.
27
in
REFERENCES
Evidence for this statement comes from numerous reports during
1985-1986 in The New York Times
The Wall Street Journal and
Consumer Reports regarding the quality and cost of Honda Accords,
Nissan Sentras, and Chevrolet Novas (nearly identical to the
Toyota Corolla and made by the GM-Toyota Joint venture) produced
in the U.S.
1.
.
,
of the arguments in this article see
2. For a fuller treatment
Michael
A.
Cusumano,
The
Japanese
Automobile Industry:
Technology and Management at
Nissan
and
Toyota (Harvard
University Press, 1985).
Vivid descriptions of the chaos and low productivity that
existed in the postwar Japanese auto industry can be found in the
company histories of Nissan and Toyota, the two largest auto
then and now:
producers in Japan,
Nissan Jidosha Kabushiki
Kaisha, Nissan Jidosha saniu-nen shi (A thirty-year history of
Nissan Motor), Tokyo, 1964, and Toyota Jidosha Kabushiki Kaisha,
Toyota Jidosha saniu-nen shi
(A thirty-year history of Toyota
Motor), Toyota City, 1967.
Also of historical importance in
documenting that the Japanese did not always establish clean and
well-organized factories are several field reports written by
American engineers from Western Electric, working as part of the
Occupation forces,
who visted Fujitsu,
Matsushita, Oki
U.S.
Sony,
and other Japanese communications equipment
Electric,
Charles Protzman and Homer Sarasohn, "Survey
producers in 1949:
of Six Japanese Manufacturing Companies," Civil Communications
Section,
Industry Division,
24 February 1949--13
June 1949,
Modern Military Records Group,
Box 3190B, Washington National
Records Center,
Suitland,
Md.
For a discussion of these
engineers and their observations as well as contributions to
"Creating
improving Japanese management see Kenneth Hopper,
Japan's New Industrial Management:
The American's as Teachers,"
Summer 1982;
and Ghary Gappelberg,
Human Resource Management
"'CCS' and Modern Japanese Management:
The Influence of American
Management Concepts on the Japanese Communications Industry,
1946-1950," Harvard College B.A.
Thesis, Department of History,
March 1986.
3.
.
Based on data in Amagai Shogo, Nihon jidosha kogyo no shiteki
tenkai
(The historical
development of the Japanese automobile
industry),
and the Japan
Tokyo,
Aki
Shobo,
136,
1982,
p.
Automobile Manufacturers Association, Nihon no jidosha kogyo (The
Japanese automobile industry), annual.
Please note that Japanese
names in the text of this paper are in the English order, with
surnames following given names.
however, Japanese
In the notes,
authors are listed in the traditional Japanese order, with
4.
28
,
surnames first.
decision not to link up
5. Examples of evidence that the Toyota
with foreign producers was indeed deliberate can be found in the
following:
Toyoda Kiichiro, "Toyota Jidosha ga konnichi ni itaru
made" (Toyota Motor up to the present, September 1936), reprinted
Masahisa, Toyoda Kiichiro shi
Tokyo, Jikensha, 1955,
in Ozaki
Nagoya, Toyota
pp. 172-173; Shotaro Kamiya, My Life with Toyota
Motor Sales, pp. 51-70; Toyota Jidosha saniu-nen shi
pp. 346.
.
.
348.
thanks to Kim
helping me interpret
standpoint.
6.
My
Clark of the Harvard Business School for
numbers
these
from
an economist's
discussion of this need to produce in small lots and
7. A good
the response at Toyota can be found in Ohno Taiichi, Toyota
seisan hoshiki (The Toyota production system), Tokyo, Daiyamondo,
1978.
On 18 March 1983, I also interviewed Mr. Ohno, the founder
He retired from Toyota as a senior
of Toyota's kanban system.
vice-president in 1978.
government policy toward the auto industry, see
8. On Japanese
"The Automobile Industry of
Hiroya Ueno and Hiromichi Muto,
Japan," in Kazuo Sato, ed.. Industry and Business in Japan New
York, Croom-Helm,
1980, pp. 148-155; Masaru Udagawa, "Historical
1917-1971:
Development of the Japanese Automobile Industry,
Business and Government," Keiei shirin 19.4:31-46 (January 1983);
Magaziner,
"Japanese Industrial Policy:
Source of
Ira C.
Strength for the Automobile Industry," in Robert E. Cole, ed.
Model and Challenge for the
The Japanese Automobile Industry:
Future? Ann Arbor, Michigan Papers in Japanese Studies, No. 3,
.
1981, pp.
79-83.
9. Regulations on imports can
be found in Jidosha Kogyo Shinko
(Automobile Promotion Association)
Kai
Jidosha hakubutsukan
chosa hokokusho (Automobile museum survey report), Tokyo, Vol. I,
and Nissan Jidosha Kabushiki Kaisha Chosa-bu (Nissan
May 1978;
,
Motor Business Research Department),
Jidosha kogyo handobukku
(Automobile industry handbook), Tokyo, 1983, p. 373.
for these comments on Nissan include the company
10. Sources
history as well as Jidosha Kogyo Shinko Kai (Automobile Promotion
Association),
ed.
Nihon
jidosha shi kojutsu kiroku shu
(Recordings of oral interviews on the history of the Japanese
automobile industry),
Tokyo, Vol.
II, 1975; Nihon Jidosha Kogyo
(Japan Automobile Manufacturers Association),
Kai
Nihon
ed.
jidosha kogyo shiko (A history of the Japanese automobile
industry), Vol. II, 1967, and Vol. Ill, 1969; and interviews with
former Nissan managers Kawazoe Soichi
June 1982), Sasaki
(2
Sadamichi (18 May 1982),
Katayama Yutaka (31 May 1982), and
Okumura Shoji (10 June 1982).
,
,
29
,
11.
See Nissan Jidosha saniu-nen shi
12.
Ford Annual Report
.
data section.
1923.
.
13. For a
listing of all current models see Toyota's Japaneseversion of the 10-K annual report (yuka shoken hokokusho).
14. The historical movement of
prices for particular models can
be followed in Jidosha hakubutsukan chosa hokokusho
.
15. For international
price comparisons,
see the book by former
Nissan President Iwakoshi Tadahiro,
Jidosha kogyo
ron (A
discussion of the automobile industry), Tokyo, University of
Tokyo Press, 1968.
16. See
Kamiya,
74-82;
Toyota Jidosha
saniu-nen shi
pp.
especially pp.
456-457;
and John B.
Rae,
Nissan-Datsun:
A
History of Nissan Motor Corporation in U.S.A..
1960-1980 New
York: McGraw Hill, 1982, especially pp. 15-18.
.
.
17. This
comment is based on interviews with former Nissan
managers Okumura, Sasaki, Kawazoe, Katayama, Maeda Riichi (21 May
1982), and Matsuzaki Shiro (14 July 1982).
18. See Kirk
Monteverde and David J. Teece, "Supplier Switching
Costs and Vertical Integration in the Automobile Industry," Bell
Journal of Economics 13.1:206-213 (Spring 1982).
19. Details on Toyota can be found in numerous sources, including
Ohno, especially pp. 11-23, 36-53, 62-72,
138-141, 175-193. 217229; Y. Sugimori et al. (from Toyota's Production Control Dept
"Toyota Production System and Kanban System of Materialization of
Just-in-Time and Respect-f or-Human System," International Journal
15.6:553-564 (1977);
of Production Research
Toyota Jidosha
265-271,
334-336,
saniu-nen shi
421-430; Toyota Jidosha
pp.
Kabushiki Kaisha. Toyota no ayumi
(The path of Toyota Motor),
Toyota City, 1978, pp. 342, 345-346; Shingo Shigeo, Toyota seisan
hoshiki no lE-teki kosatsu (An industrial-engineering analysis of
the Toyota production system), Tokyo, Nikkan Kogyo Shimbunsha,
1980; Robert W. Hall,
Zero Inventories Homewood, Illinois, DowJones Irwin,
1983; and
several publications by Yasuhiro Monden:
"What Makes the Toyota
Productiion
System
Really Tick?"
Industrial Engineering
January 1981; "Adaptable Kanban System
.
)
.
.
.
.
Helps Toyota Maintain
Just-in-Time
Production, "
Industrial
Engineering
May
1981;
"How Toyota Shortened Supply Lot
Production Time, Waiting Time,
and Conveyance Time," Industrial
Engineering
September
and Toyota Production System
1981;
Atlanta,
Institute of
Industrial
Engineers,
1983.
For
developments at Nissan I relied on interviews with two managers
responsible for production control, Kanao Kaiichi (11 April 1983)
and Matsuzaki
(14 July 1982 and 19 January 1983); Nissan Jidosha
sanju-nen shi
244-246,
330-339;
Nissan Jidosha
73,
pp.
.
.
.
.
30
Kabushiki Kaisha, Nissan Jidosha shashi (Nissan Motor company
history), Tokyo, 1975, pp. 44-47, 375-376.
On the impact of just-in-time on quality see Richard J.
Schonberger,
Japanese Manufacturing Techniques
New York, The
Free Press, 1982, pp. 15-82.
20.
.
Product development at Nissan and Toyota can be followed
including data series on car and
through the company histories,
For Nissan, see also Ikari Yoshiro, Daitruck specifications.
Bluebird no otoko-tachi
Sharvo Sekkei-bu:
(The No. 1
Ichi
Men of the Bluebird), Tokyo, Bungei
Chassis Design Section:
1981.
On limitations on options and complexity in
Shunshu,
see Harbour and Associates,
Inc.,
assembly,
"Comparison of
Japanese Car Assembly Plant Located in Japan and U.S. Car
Assembly Plant Located in the U.S.," Berkley, Michigan, ca. 1980,
12-13;
"Where's the Niche?" Forbes, 24
and James Cook,
pp.
September 1984, pp. 54-55.
21.
22. On the development of subsidiaries and supplier networks, see
Toyota Jidosha saniu-nen shi pp. 180-181, 196-202, 207-210. 226san-ju nen shi pp.
205-206, 239,
229, 272-273; Nissan Jidosha
320-321, 339-342; Nissan Jidosha shashi pp. 31-33, 55-56, 60-61,
281-284.
76-79, 178-179, 222,
229,
262,
On the vertical deI
relied on an article by former Nissan
integration strategy,
manager Okumura Shoji, "Jidosha kogyo no hatten dankai to kozo"
(The developmental
stages and structure of the automobile
industry), in Arisawa Hiromi,
ed.,
Gendai Nihon sangyo koza
(Series on
contemporary Japanese industry), Tokyo,
Iwanami
Shotfin, Vol. V, 1960, pp. 327-330; and interviews
with Matsuzaki
and a former Nissan manager responsible for procurement and
recent chairman of Nihon Radiator, Ota Hisakichi (20 May 1982).
.
.
.
See Cusumano, Table 50,
I
deflated the valuep. 202-203.
Japanese consumer
added data
using the
price index for
automobiles and related expensives.
Unadjusted value-added data
on Nissan and Toyota, as well as their main subsidiaries, can be
found in Nihon Seisansei Honbu (Japan Productivity Center), Fuka
kachi bunseki (Value-added analysis), Tokyo, annual since 1960.
23.
The discussion of Toyota is based primarily on Toyota Jidosha
Ozaki
saniu-nen shi
and Toyoda Kiichiro in Ozaki Okumura;
Kamiya;
Morikawa
Hidemasa,
"Toyoda
Kiichiro," in Morikawa
Hidemasa et al., Nihon no kigyoka (Japanese entrepreneurs),
Tokyo,
Yuhikaku Shinsho, Vol.
Ill,
1978; Kamiya interview in
Morikawa Hidemasa, ed.
Sengo sangyo shi e no shogen (Accounts of
the history of postwar industry), Tokyo, Asahi Shimbunsha, Vol.
II, 1977; Ohno
and interviews with Ohno and Okumura.
24.
;
:
,
;
25. The following discussion
of Nissan is based primarily on
Nihon jidosha kogyo shi kolutsu kiroku shu Aikawa Yoshisuke,
Watakushi no rirekisho (My
career),
Tokyo,
Nihon Keizai
;
31
:
Shimbunsha, Vol.
XXIV, 1955;
Ozawa Chikamitsu, Aikawa Yoshisuke
den (Biography
of Aikawa
Yoshisuke),
Yamaguchi
Yamaguchi
Shimbunsha,
Nihon iidosha kogyo shiko Vol. II; Nissan
1974;
Jidosha sanju-nen shi Ikari;
and interviews with Aikawa Yaichi
(7 September 1982), Katayama (31 May 1982), Sasaki, Maeda (21 May
May 1982).
Okumura.
1982), Asahara Hideo
(19
Matsuzaki. and
Kawamata Katsuji (8 June 1982).
,
.
;
This chronology is based primarily on Ohno, especially pp.
228-229; my interview with Ohno;
and Toyota Jidosha sanju-nen
26.
shi
.
comments are based on interviews with Matsuzaki and
27. These
Kanao, as well as Nissan Jidosha sanju-nen shi
especially pp.
72-73, 244-246,
330-339, 375-388; and Nissan Jidosha shashi pp.
44-47, 375-376.
.
.
28. For a discussion of Mazda (formerly named Toyo
Kogyo), see
Harvard Business School (Kim Clark), "Toyo Kogyo Co. LTD (A),"
9-682-092,
Boston,
HBS Case Services No.
1982;
and Richard
Pascale and Thomas Rohlen,
"The Mazda Turnaround, " Journal of
Japanese Studies 9.2:219-264 (Summer 1983).
29. A discussion of labor relations is
beyond the scope of this
paper, although I refer the reader to Cusumano,
Chapter 3, as
well as sources such as Aoki Satoshi Nissan kyoeiken no kiki
roshi niju kenryoku shihai no kozo (The crisis of the Nissan
group:
The structure supporting the dual authority of management
and labor), Tokyo, Chobunsha, 1980; and Yamamoto Kiyoshi, Jidosha
sangyo no roshi kankei
(Management-labor relations
in the
automobile industry), Tokyo, University of Tokyo Press, 1981.
,
32
Exhibit
1:
Vehicle Productivity Adjusted for Vertical
-
Integration, Capacity Utilization, and Labor-Hour
Differences, 1965-19S3
GM,
Fi'
Nissan
Ford, Chrysler'
Relative Scale (U.S.
=
Toyota
1.0)
1965
1.0
0.9
1.5
1970
"
1.9
lA
1975.
"
1.7
2.6
1979
"
2.0
2.7
1933
"
1.9
2.2
SouTca: Derived fzcm.
Notes: 'This
cci'jsr.r.
annual reports.
i~dicczes cvezzge figures far
GM.
Fcrd.
a~d C:
based on wcrldwdde dciz.
*
The
assumed
IQQ2 figures for
GM
and
Fcrd. bu: net fcr Chrysler,
the vertical integration levels of 1979.
Exhibit
FY
1965
2:
PRODUCTION SCALES ADJUSTED FOR VERTICAL INTEGRATION,
1965-1983
,
Exhibit
3:
Fixed Assets
(at
Cost) per Estimated Labor
Hour, 1965-1983
GM;
FY
Ford, Chrysler
=
Relative Scale (U.S.
1965
'
1.0
"
1975
1980
"
1983
"
Source: Derived fiom
Toyota
1.0)
"
1970
Nissan
0.7
0.8
0.9
1.3
1.4
1.7
1.4
1.7
2.0
2.5
•
annual reports.
Notes: Exchange rates are based on purchasing-power parity data for capital
formation (SI. 00 = 299 yen in 1975)
Rates for other years and constant values found by using the Japanese and
U.S. price deflators for domestic non-residential fixed investm.eni. For
purchasing-power parity rates see Irving Kravis et al., World
Product and Income
International Comparisons of Real Gross
Product Baltimore, Johns Hopkins University Press/World Bank,
:
,
1982, pp.
178-179.
Exhibit
4:
Fixed Assets per Vehicle Produced, 1965-
1983
Adjusted for Integration and Capacity Utilization
FY
GiM, Ford; Chrysler
Relative Scale (U.S.
'
1965
=
100
Nissan
^
Toyota"
ICO)
76
1970
1975
1979
1983
Sources:
Annual
reports (English versions for Nissan
and Toyota).
Notes: "Figures for Toyota prior to 19S3 are adjusted upward by 9% to
account for the fixed assets of Toyota Motor Sales; thds was the level of
Toyota Motor Sales' fixed assets in the 2 years prior to the merger.
an estimate of 50% for accumulated depreciation not listed in
Nissan's 1975 report. This estimate is based on data from other years.
''Includes
Exhibit
5:
JAPANESE AND U.S. AUTO PRODUCTION BY
VEHICLE TYPE, SELECTED YEARS
Exhibit
6:
Nissan and Toyota Production by Vehicle Type, 1941-8:
%
NISSAN:
Production
Small
Trucks
%
Standard
Trucks
%
Small
Cars
%
Standard
Cars
1941
19,688
4.6
86.6
8.1
1950
12,458
34.0
54.8
6.9
1955
21,767
34.7
32.1
30.3
1960
115,465
42.9
8.8
47.7
—
—
—
—
1965
345,165
45.1
4.8
48.8
04
1970
1,374,022
32.9
1.0
63.8
1.6
1975
2,077,447
25.0
0.9
69.8
4.0
1980
2,644,052
23.7
1.9
69.1
4.3
1982
2,407,734
18.6
5.3
66.7
8.8
1983
2,482,540
17.8
6.8
66.0
8.9
TOYOT.\:
.
EXHIBIT 7:
NISSAN CAR MODELS AND AVERAGE A^^NUAL VOLUMES. 1950-1983
FY
MODELS
AVERAGE ANNUAL VOLUME /MODEL
1950
1
900
1955
2
3,000
1960
5
11,000
1965
7
24,000
1970
9
100,000
1975
11
140,000
1980
16
120,000
1981
16
117,000
1982
21
86,000
1983
20
93,000
1984
21
88,000
Sources:
Calculated from
Nissan Jidosha
"Nissan
Ltd.),
Nissan Motor Co. Ltd., Data File 1984
Kabushiki Kaisha (Nissan Motor Co.
Jidosha no gaiyo" (Overview of Nissan
Motor, 1982) and Nissan Jidosha 30-nen shi (A 30-year
history of Nissan Motor, 1964)
;
Exhibit
8
:
1965-1983
Company and Gruup
(%)
Intcgratiun, U.S.-Japan,
Exhibit
9:
Average Monthly Wages per Employee
(Excluding Bonuses)
(yen,
number
Company
—Nissan and Toyota Groups, 1983
of employees)
Exhibit 10 :Net Value-Added Productivity (VAP)
1960-1983 (number
of firms
and employees; 1000 yen
at
Nissan and Toyota Subsidiaries,
in constant 1983 values)
o
oo
ON
I
00
o
ao
CL.
o
o
o
QJ
>
o
Q
4J
•H
XI
w
"3
^
L/-.
JI
-^
<
Exhibit 12:
UNADJUSTED VEHICLES PER WORKER AT TOYOTA, NISSAN,
GM & FORD, 1955-1964 & SELECTED YEARS
Exhibit
Perioc.
i3:Inventorv Turnover Comparison; 1955-1983
Exhibit 14:
FY
Inventory Turnover Comparison, 1955-1983
Exhibit 15:
Inventory Turnover in the Nissan and Toyota Groups, 1965-1983
—
Toyota Group
Toyota Auto Body
1965-1969
1970-1974
1975-1979
19S0-1983
I
Exhibit 16: SPECTRUM OF JAPANESE RESPONSES
MOST RADICAL
TOYOTA
FASTEST SETUP
COMPROMISE
CONVENTIONAL
67
1
iiiii
3
I
mil
IDflD
111'
111
iTiii'ij"i
II
II
nil
III
111
1
DM Ebl Ebb