8 ms·

NUMMI 2015 – Why are most American cars still not as good as foreign cars?

66 points by warunsl 11y ago

bootload 11y ago
transcript is here: http://www.thisamericanlife.org/radio-archives/episode/561/transcript http://www.thisamericanlife.org/radio-archives/episode/561/t...
- dang 11y ago
  Thanks! Url changed from http://www.thisamericanlife.org/radio-archives/episode/561/nummi-2015 http://www.thisamericanlife.org/radio-archives/episode/561/n.... The submitted title ("Why GM cars don't have the quality of Japanese imports") doesn't seem to use language from the original source, so we changed it to use a sentence from the transcript. If anyone suggests a better title we can change it again.
boyaka 11y ago
I worked for a connector company in Japan (JST) for my co-op during undergrad, and continued to work for them in Michigan for a couple of years. Without listening to the podcast, I can already say that the attention to detail and quality in Japan is incredible. American connector companies no doubt perform the same testing, but in Japan each employee has a very specific focus and will work relentlessly on that. They also have a large pool of contract workers to perform these tedious tasks, and sadly their job stability is not fantastic... In my 6 months there I went to at least 4 goodbye parties for laid off contract workers. On top of that, working 8am ~ 6 or 7pm minimum is the norm. While I was there I was the only one that would leave at 5pm (I was forced to) while everybody else would take a 30 minute lunch-like break then get back to work, sometimes until 11pm. Although, they at least would mostly all leave on Friday after a 30 minute clean-up period at 5pm. American employees tend to have wider responsibilities and probably wouldn't be able to handle the relentless dedication to detail that is expected of Japanese employees. Even though my office in Michigan was the same company and had access to the same parts as Japan to sell to American car companies, our work force just did not compare to Japan in its devout dedication to the customer and making sure that parts are perfect in every detail, down to plastic packaging and boxing that they are shipped out with.
- hotaru29 11y ago
  > our work force just did not compare to Japan in its devout dedication to the customer and making sure that parts That is true. But a big problem with Japanese companies is the insider/outsider mentality. Japanese employees are loyal to their boss and their company before any other person. These “other people” include the general public (and their safety) and the actual stockholders of the companies. If something goes wrong, everyone in the company will hide it. Whistleblowing is completely against Japanese culture and obedience to authority. This mentality showed itself in numerous cases, most recently with Takata airbags (employees know about the problem but covered it up). Japanese cosmetics giant Kanebo had a product that caused permanent blemishes on the face. Even after the company was well aware of the problem, they covered it up. Other examples include the Toshiba and Olympus scandals. Japanese quality is good, but I would never trust Japanese products in any safety related thing (such as pharmaceuticals). PS: IMHO, Japanese universities are mediocre. Japanese corporate success is mostly due to the exploitation of their employees. /rant
  - michaelbuddy 11y ago
    I've heard the tough thing is getting into the universities. once you're in supposedly the challenge is a bit lighter. Just what I heard. never attended.
    - hotaru29 11y ago
      Sorry, I brought up another topic :) In Japan there are two types of universities: national universities (such as University of Tokyo/University of Kyoto) and many private universities. For Bachelor students, getting into national universities (especially prestigious ones) are extremely difficult. But when someone successfully entered a university, no special effort is needed to graduate. Passing is the norm, even with minimum effort on the part of the student. The first three years are spent mostly on club activities. The last year-and-a-half is spend on job search. After someone secured a job, they have very little incentive to work for the remainder of their stay. So, it is basically a question of doing as little as possible and holding out until the job starts. There are perhaps 3 or 4 good private universities (Keio, Waseda, etc...). (They are actually fairly mediocre by international standards, but many in Japan think they are great. ()) The rest of the private universities are absolute garbage. The majority of people will go to this type of university. Many of these were upgraded "colleges" for women who had ambitions to become housewives, but have not yet found suitable husbands. Especially with the falling number of students, these universities will accept literally anyone. In these universities it is also extremely easy to graduate, so any degree from them is essentially worthless. A big problem with these universities is truancy (e.g., http://abcnews.go.com/Technology/story?id=7716805 http://abcnews.go.com/Technology/story?id=7716805). These places are very similar to bad high schools (in the way classes are given and students are treated). () Many in Japan think that Waseda is one of the best elite universities in Japan and well regarded world wide. Yet, international rankings shows that it is lower-ranked than the University of Belgrade, Beihang University, and Federal University of Minas Gerais. http://www.shanghairanking.com/ARWU2014.html http://www.shanghairanking.com/ARWU2014.html
deleted 11y ago
[deleted]
crdoconnor 11y ago
If anybody's curious about the real history of Toyota, and how it came to dominate the auto market, read this instead: >Let me start my talk with a little story. In 1958, Japan tried to export this first passenger car to the US market. The company was Toyota, the car was called Toyopet. And, as you can guess from the name, it was a very cheap, small subcompact car, more of a four-wheels-and-an-ashtray kind of thing, which Toyota hoped rich American consumers could pick up as an afterthought, after finishing their grocery shopping with the changes left. Unfortunately, it was a total flop, so much so that Toyota actually had to withdraw the product. In the realm of failures, this is, like, the biggest thing. It's not just not selling well -- it had to be withdrawn from the market. >This provoked a very heated debate in Japan. The free trade economists centered around the Bank of Japan, the central bank, said, "Look, this is what happens when you go against the theory of comparative advantage. In a country like Japan, which in relative terms has lots of labor and little capital, we shouldn't be producing things like motor cars, which are very capital-intensive in production." Of course, at that time, Japan's biggest export item was silk. So, case proven, already. And they said, "Don't tell us that you couldn't succeed because you didn't have help. You had 25 years of very high tariff protection. We kicked out all the foreign car makers 20 years ago and didn't let any of them in since then. And back in 1949 this central bank even injected public money into Toyota to save it from bankruptcy. So, please don't tell us that you couldn't succeed because you didn't have help, because you had all the help you can ask for." http://mrzine.monthlyreview.org/2008/chang030808.html http://mrzine.monthlyreview.org/2008/chang030808.html Toyota benefited for at least 40 years from the intentional suppression of the Japanese currency as well as subsidies and tariffs on foreign car imports. This long-term mercantile policy corroded the US car industry to the point where it simply couldn't compete. The general use of the US dollar as the world's reserve currency didn't help either. If Japan hadn't followed a mercantile policy, we'd probably be having a similar discussion today about why American business culture and attention to quality is superior to Japanese.
- crdb 11y ago
  The flipside being that the Japanese paid this cost in various ways, such as sucking in and "wasting" (vs other opportunities) a lot of talent into things like car manufacturing whilst leaving other fields (like software) to free market countries whose assets were better allocated, and in the invisible taxation of the entire Japanese population that resulted from having higher prices, less consumer choice, less jobs (or lower value creating jobs), etc.
crdb 11y ago
On a higher level, there is certainly a case that foreign manufacturers have more resources available per dollar per car. In other words they can afford to put more in a car for the same sale price. Trying to sketch my thoughts: In Germany, it is thanks to European monetary policy that artificially depresses the Deutsche Mark, allowing for cheaper exports and lower costs for German companies, as well as a captive market whose currency is overvalued in exactly the same way destroying local industry (i.e. German loans pay for German cars to be sold to the Europeans but the other way round is much harder). Hello VW, goodbye Rover. On top of this Germany is absorbing East Germany which is a handy source of incredibly cheap labour (in the same way that illegal labour is in the US food and farm industry) AND massive subsidies for whoever wants to go take advantage of it (I know a company that opened a very, very expensive plant 200km from Berlin because the subsidy was such that they came out profitable even if the plant lost money for 20 years). In Japan, it is both systematic currency devaluation and the keiretsu system (which I think is what drives the continuation of "Japanese corporate culture" rather than the other way round). Its effects are/were (til early 2000s, not sure about today): cheaper currency from systematic yen devaluation (same as the eurozone effect), lack of competition including collusion to keep wages down locally (tough immigration laws help), collusion to maintain very high prices effectively "taxing" the population with the money directly "financing" inefficiencies within keiretsu companies. These are all structural advantages to Japanese manufacturers. Culture plays a part, no doubt. There are appeals in the Tokyo metro to buy Japanese bonds as a "patriotic duty", which is a form of voluntary further taxation (and just look at who owns the majority of JGBs). The Mittelstand culture, excellent education and long history of industry in Germany certainly help. But I think macro factors are equally if not more important, and much fewer discussed in "normal" circles (i.e. outside finance).
- comrade1 11y ago
  Am I in a time warp? Germany is on the Euro and hasn't been on the Mark for almost 15 years. And the Berlin wall has been gone for 25 years!
  - crdb 11y ago
    That's the whole point! The monetary union means the EUR (the "new" mark) is lower (from a German standpoint) than it would be should it be trading separately. Having Greece in the EU is an ADVANTAGE to German manufacturers. Greece is "passing on" its currency advantage to Germany. See what just happened to the CHF when the peg lifted.
Animats 11y ago
Today, of course, the NUMMI plant belongs to Tesla. For a good book on the subject, see "Car Guys vs. Bean Counters", by GM's Bob Lutz. He was the one who insisted that GM improve their sheet metal fit and paint quality. Neither was really that hard, but GM hadn't focused on perceived quality. Lutz points out that at one point, the NUMMI plant was making a model which shipped with both Toyota and GM badges. The Toyota model was getting better reviews on quality, even though it was the same car made on the same assembly line by the same people.
rogersm 11y ago
Surprised how many people are talking about currency/government protection and so few people about engineering.
- crdb 11y ago
  Good engineering has a cost and this cost has to be financed somehow. You cannot operate in an environment where all the other players have large structural advantages due to macro conditions and "play fair" and win.
  - rogersm 11y ago
    Good engineering requires good processes, good planning and good decisions, something almost no-one is discussing here. Let's get real... there's a lot to improve in the american engineering.
acqq 11y ago
Great insights. OT, but speaking about quality and the hidden interests of the people making the product: the page works very, very bad on iPhone and iPad. Is it better on other mobile devices or is it the case of developers developing on the desktops and just beleiving it's good enough on anything else?
ExpiredLink 11y ago
... and I thought the Germans build the best cars ...
hukep 11y ago
They are right. It is about the trust to the brand today. It will take quite a long time for american car producers to gain that of the people again.

66 points by warunsl 11y ago

transcript is here: http://www.thisamericanlife.org/radio-archives/episode/561/transcript http://www.thisamericanlife.org/radio-archives/episode/561/t...

dang 11y ago
Thanks! Url changed from http://www.thisamericanlife.org/radio-archives/episode/561/nummi-2015 http://www.thisamericanlife.org/radio-archives/episode/561/n.... The submitted title ("Why GM cars don't have the quality of Japanese imports") doesn't seem to use language from the original source, so we changed it to use a sentence from the transcript. If anyone suggests a better title we can change it again.

boyaka 11y ago

I worked for a connector company in Japan (JST) for my co-op during undergrad, and continued to work for them in Michigan for a couple of years. Without listening to the podcast, I can already say that the attention to detail and quality in Japan is incredible. American connector companies no doubt perform the same testing, but in Japan each employee has a very specific focus and will work relentlessly on that. They also have a large pool of contract workers to perform these tedious tasks, and sadly their job stability is not fantastic... In my 6 months there I went to at least 4 goodbye parties for laid off contract workers. On top of that, working 8am ~ 6 or 7pm minimum is the norm. While I was there I was the only one that would leave at 5pm (I was forced to) while everybody else would take a 30 minute lunch-like break then get back to work, sometimes until 11pm. Although, they at least would mostly all leave on Friday after a 30 minute clean-up period at 5pm. American employees tend to have wider responsibilities and probably wouldn't be able to handle the relentless dedication to detail that is expected of Japanese employees. Even though my office in Michigan was the same company and had access to the same parts as Japan to sell to American car companies, our work force just did not compare to Japan in its devout dedication to the customer and making sure that parts are perfect in every detail, down to plastic packaging and boxing that they are shipped out with.

hotaru29 11y ago
> our work force just did not compare to Japan in its devout dedication to the customer and making sure that parts That is true. But a big problem with Japanese companies is the insider/outsider mentality. Japanese employees are loyal to their boss and their company before any other person. These “other people” include the general public (and their safety) and the actual stockholders of the companies. If something goes wrong, everyone in the company will hide it. Whistleblowing is completely against Japanese culture and obedience to authority. This mentality showed itself in numerous cases, most recently with Takata airbags (employees know about the problem but covered it up). Japanese cosmetics giant Kanebo had a product that caused permanent blemishes on the face. Even after the company was well aware of the problem, they covered it up. Other examples include the Toshiba and Olympus scandals. Japanese quality is good, but I would never trust Japanese products in any safety related thing (such as pharmaceuticals). PS: IMHO, Japanese universities are mediocre. Japanese corporate success is mostly due to the exploitation of their employees. /rant
- michaelbuddy 11y ago
  I've heard the tough thing is getting into the universities. once you're in supposedly the challenge is a bit lighter. Just what I heard. never attended.
  - hotaru29 11y ago
    Sorry, I brought up another topic :) In Japan there are two types of universities: national universities (such as University of Tokyo/University of Kyoto) and many private universities. For Bachelor students, getting into national universities (especially prestigious ones) are extremely difficult. But when someone successfully entered a university, no special effort is needed to graduate. Passing is the norm, even with minimum effort on the part of the student. The first three years are spent mostly on club activities. The last year-and-a-half is spend on job search. After someone secured a job, they have very little incentive to work for the remainder of their stay. So, it is basically a question of doing as little as possible and holding out until the job starts. There are perhaps 3 or 4 good private universities (Keio, Waseda, etc...). (They are actually fairly mediocre by international standards, but many in Japan think they are great. ()) The rest of the private universities are absolute garbage. The majority of people will go to this type of university. Many of these were upgraded "colleges" for women who had ambitions to become housewives, but have not yet found suitable husbands. Especially with the falling number of students, these universities will accept literally anyone. In these universities it is also extremely easy to graduate, so any degree from them is essentially worthless. A big problem with these universities is truancy (e.g., http://abcnews.go.com/Technology/story?id=7716805 http://abcnews.go.com/Technology/story?id=7716805). These places are very similar to bad high schools (in the way classes are given and students are treated). () Many in Japan think that Waseda is one of the best elite universities in Japan and well regarded world wide. Yet, international rankings shows that it is lower-ranked than the University of Belgrade, Beihang University, and Federal University of Minas Gerais. http://www.shanghairanking.com/ARWU2014.html http://www.shanghairanking.com/ARWU2014.html

deleted 11y ago

[deleted]

crdoconnor 11y ago

If anybody's curious about the real history of Toyota, and how it came to dominate the auto market, read this instead: >Let me start my talk with a little story. In 1958, Japan tried to export this first passenger car to the US market. The company was Toyota, the car was called Toyopet. And, as you can guess from the name, it was a very cheap, small subcompact car, more of a four-wheels-and-an-ashtray kind of thing, which Toyota hoped rich American consumers could pick up as an afterthought, after finishing their grocery shopping with the changes left. Unfortunately, it was a total flop, so much so that Toyota actually had to withdraw the product. In the realm of failures, this is, like, the biggest thing. It's not just not selling well -- it had to be withdrawn from the market. >This provoked a very heated debate in Japan. The free trade economists centered around the Bank of Japan, the central bank, said, "Look, this is what happens when you go against the theory of comparative advantage. In a country like Japan, which in relative terms has lots of labor and little capital, we shouldn't be producing things like motor cars, which are very capital-intensive in production." Of course, at that time, Japan's biggest export item was silk. So, case proven, already. And they said, "Don't tell us that you couldn't succeed because you didn't have help. You had 25 years of very high tariff protection. We kicked out all the foreign car makers 20 years ago and didn't let any of them in since then. And back in 1949 this central bank even injected public money into Toyota to save it from bankruptcy. So, please don't tell us that you couldn't succeed because you didn't have help, because you had all the help you can ask for." http://mrzine.monthlyreview.org/2008/chang030808.html http://mrzine.monthlyreview.org/2008/chang030808.html Toyota benefited for at least 40 years from the intentional suppression of the Japanese currency as well as subsidies and tariffs on foreign car imports. This long-term mercantile policy corroded the US car industry to the point where it simply couldn't compete. The general use of the US dollar as the world's reserve currency didn't help either. If Japan hadn't followed a mercantile policy, we'd probably be having a similar discussion today about why American business culture and attention to quality is superior to Japanese.

crdb 11y ago
The flipside being that the Japanese paid this cost in various ways, such as sucking in and "wasting" (vs other opportunities) a lot of talent into things like car manufacturing whilst leaving other fields (like software) to free market countries whose assets were better allocated, and in the invisible taxation of the entire Japanese population that resulted from having higher prices, less consumer choice, less jobs (or lower value creating jobs), etc.

crdb 11y ago

On a higher level, there is certainly a case that foreign manufacturers have more resources available per dollar per car. In other words they can afford to put more in a car for the same sale price. Trying to sketch my thoughts: In Germany, it is thanks to European monetary policy that artificially depresses the Deutsche Mark, allowing for cheaper exports and lower costs for German companies, as well as a captive market whose currency is overvalued in exactly the same way destroying local industry (i.e. German loans pay for German cars to be sold to the Europeans but the other way round is much harder). Hello VW, goodbye Rover. On top of this Germany is absorbing East Germany which is a handy source of incredibly cheap labour (in the same way that illegal labour is in the US food and farm industry) AND massive subsidies for whoever wants to go take advantage of it (I know a company that opened a very, very expensive plant 200km from Berlin because the subsidy was such that they came out profitable even if the plant lost money for 20 years). In Japan, it is both systematic currency devaluation and the keiretsu system (which I think is what drives the continuation of "Japanese corporate culture" rather than the other way round). Its effects are/were (til early 2000s, not sure about today): cheaper currency from systematic yen devaluation (same as the eurozone effect), lack of competition including collusion to keep wages down locally (tough immigration laws help), collusion to maintain very high prices effectively "taxing" the population with the money directly "financing" inefficiencies within keiretsu companies. These are all structural advantages to Japanese manufacturers. Culture plays a part, no doubt. There are appeals in the Tokyo metro to buy Japanese bonds as a "patriotic duty", which is a form of voluntary further taxation (and just look at who owns the majority of JGBs). The Mittelstand culture, excellent education and long history of industry in Germany certainly help. But I think macro factors are equally if not more important, and much fewer discussed in "normal" circles (i.e. outside finance).

comrade1 11y ago
Am I in a time warp? Germany is on the Euro and hasn't been on the Mark for almost 15 years. And the Berlin wall has been gone for 25 years!
- crdb 11y ago
  That's the whole point! The monetary union means the EUR (the "new" mark) is lower (from a German standpoint) than it would be should it be trading separately. Having Greece in the EU is an ADVANTAGE to German manufacturers. Greece is "passing on" its currency advantage to Germany. See what just happened to the CHF when the peg lifted.

Animats 11y ago

Today, of course, the NUMMI plant belongs to Tesla. For a good book on the subject, see "Car Guys vs. Bean Counters", by GM's Bob Lutz. He was the one who insisted that GM improve their sheet metal fit and paint quality. Neither was really that hard, but GM hadn't focused on perceived quality. Lutz points out that at one point, the NUMMI plant was making a model which shipped with both Toyota and GM badges. The Toyota model was getting better reviews on quality, even though it was the same car made on the same assembly line by the same people.

rogersm 11y ago

Surprised how many people are talking about currency/government protection and so few people about engineering.

crdb 11y ago
Good engineering has a cost and this cost has to be financed somehow. You cannot operate in an environment where all the other players have large structural advantages due to macro conditions and "play fair" and win.
- rogersm 11y ago
  Good engineering requires good processes, good planning and good decisions, something almost no-one is discussing here. Let's get real... there's a lot to improve in the american engineering.

acqq 11y ago

Great insights. OT, but speaking about quality and the hidden interests of the people making the product: the page works very, very bad on iPhone and iPad. Is it better on other mobile devices or is it the case of developers developing on the desktops and just beleiving it's good enough on anything else?

ExpiredLink 11y ago

... and I thought the Germans build the best cars ...

hukep 11y ago

They are right. It is about the trust to the brand today. It will take quite a long time for american car producers to gain that of the people again.