Japan has no more rabbits to pull out of the hat — its automotive production system has matured, and the industry is in decline. So argues the author, who shows how exchange rates, demographics, and the increasing sophistication of U.S. management are causing a shift in relative competitiveness. Furthermore, these changes affect most Japanese industries, and U.S. managers should be prepared to take advantage of them.
1. This and other data on the North American market are drawn from various issues of Automotive News. For background on Japan, I rely on Nikkei Kogyo Shimbun.
2. Chrysler, however, also produced almost 1.2 million trucks, including 548,000 minivans.
3. Including Canadian operations, these are: the Big Six producers (GM, Ford, Chrysler, Honda, Toyota, and Nissan) and the eight second-tier producers, Auto Alliance (formerly Mazda, before Ford’s recent equity purchase), Diamond-Star (Mitsubishi), NUMMI (Toyota-GM), Saturn (GM), SIA (the joint venture of Subaru and Isuzu), CAMI (Suzuki), and the near-moribund Hyundai and Volvo operations. BMW and Mercedes-Benz are both set to enter.
4. M.A. Fuss and L. Waverman, Costs and Productivity in Automobile Production: The Challenge of Japanese Efficiency (New York: Cambridge University Press, 1992).
5. For details of this estimation, see:
M. Smitka, “The Decline of the Japanese Automotive Industry: Causes and Implications” (Cambridge, Massachusetts: MIT International Motor Vehicle Program, paper, June 1993), p. 27.
6. Historically, the most important aspect of JIT is reducing inventories in order to highlight bottlenecks in the production system and hence focus engineering attention on systemwide productivity. But in Japan, with small plants and few warehouses, it is also a scheduling and logistics system, and it is in this aspect that costs are rising.
7. For an extended discussion of this and other problems facing the Japanese industry, see:
R. Johnson and M. Maskery, “Rx for Japan,” Automotive News, 17 May 1993, pp. 1, 18–20.
The same issue also contains a series of articles on General Motors. See: P. Frame, “Smith Remakes GM for Today’s World,” Automotive News, 17 May 1993, pp. 1, 22–23.
8. In fact, from the beginning, Toyota and Nissan have shared about one-third of their suppliers. Others were small local suppliers for whom geographic constraints mattered. It was only for the few parts firms in which Nissan and Toyota had substantial equity that the taboo was meaningful.
9. For more on the relationship of car producers and parts firms in Japan, see:
M. Smitka, Competitive Ties: Subcontracting in the Japanese Automotive Industry (New York: Columbia University Press, 1991).