Big Failed Three, Meet the Successful Eight

Big Three, Meet the “Little Eight”

The 1,300-acre plant, in which Toyota has invested $5.3 billion, produces a car roughly every minute. Georgetown’s population has doubled. In fields where farmers once grew tobacco and raised cattle, McMansions, apartment complexes, and condominiums have sprouted. A 150,000-square-foot upscale retail center is rising near the Toyota plant, the better to serve its 7,000 employees.

In San Antonio, the Toyota Tundra plant lay idle for three months this fall, though Toyota hasn’t laid off anyone. Instead, according to Richard Perez, president and CEO of the Greater San Antonio Chamber of Commerce, Toyota offered the city “a whole bunch of folks who need to get busy.” (San Antonio put them to work on beautification projects.) Of course, Toyota has resources to act in a more paternalistic manner – in part because the parent companies aren’t saddled with the burdens of providing health care and retirement for workers in home markets.

This is not behaving in a paternalistic manner, this is behaving in an honorable manner with the other long term stakeholders that have a shared interest in the long term success of the company. When managers and executives do their jobs the company will succeed in good times and have a plan for bad times and will deal effectively with obvious long term issues. Health care costs, pensions costs, and bad labor-management relations have been obvious critical issues to solve for GM, Ford and Chrysler for decades. The pathetic job those 3 have done with those, and other issues (they still don’t understand how to work with suppliers, how to stop the obsessive focus on quarterly profits, how to demand honorable behavior [not looting] from senior executives…), lead to their current situation.

The poor economy leads the the situation you now see with Toyota and Honda: profits being cut, having to put in place plans to retain employees while they are not needed to produce output today, etc.. You don’t see companies needing billions to survive a few months unless they were incredibly poorly lead. And those leading them were paid many times more than those that led Toyota and Honda. They have had decades to act responsibly. They have failed. And there failure will be felt by those that enabled them to take huge pay packages that were not warranted. They should be ashamed.

While I lay most of the blame for the failure of the big three with management (as Deming’s surely told them in the 1980’s) labor unions failure to create the future their members needed was also responsible for the current state. When those leading the company are destroying the future of your employees you need to find a way to make that future successful. Granted it is a difficult task but non-the-less the situation faced by employees now is partially the responsibility of unions that did not more successfully build a better future for their workers. The most obvious failure is the clinging to outdated concepts that restrict flexibility and require great wastes of staff resources due to restrictive work rules.

You can make plenty of money manufacturing in the USA. You just need to be lead by honorable, knowledgeable and caring people that respect the long term success all the stakeholders deserve who are willing to do the hard work to create success instead of make excuses.

Related: Honda has Never had Layoffs and has been Profitable Every YearBad Management Results in LayoffsToyota in the US EconomyGlobal Manufacturing Data 2007People: Team Members or Costs

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  1. Pingback: Manufacturing Cars in the USA at Curious Cat Investing and Economics Blog

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