...INTERNATIONAL JOINT VENTURES AND THE U.S. AUTO INDUSTRY Darwin Wassink Robert Carbaugh In 1983 General Motors Inc. and Toyota Inc. formed a joint venture, the New United Motor Manufacturing Inc., to assemble auios in the United States. For Toyota, the venture was a first attempt to locate production in America. General Motors viewed the venture as a means of learning how to produce low-cost, high quality, small vehicles. Facing an onslaught of anti-union Japanese firms, the United Auto Workers had to demonstrate that unions would not be an impediment to Japanese production in the United States. By 1986 the venture was termed a success. This paper considers the welfare effects of international joint ventures among compettng manufacturers, as applied to the U.S. auto industry. Darwin Wassink is Professor of Economics at the University of WisconsinEau Claire. Previously he served as an economist in Pakistan and Saudi Arabia. Robert Carbaugh is Associate Professor of Economics at Central Washington University. He is author of International Economics and coauthor of The International Monetary System. ISSN: 088i~390H. THE iNTERNATlONAL TRADEJOVRNAL,Volu>ne I No. I. hall 1986 47 48 THE INTERNATIONAL TRADE JOURNAL The American auto industry is undergoing an evolution in which the "all American car" is rapidly becoming a thing of the past. Although American automakers will continue to develop and build their own mid-size and large autos in the...
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...under both brands. The collaboration could be beneficial to GM because it was an opportunity to learn how a Japanese company operates and how to combine techniques to eventually make a plant that exceeds all others. The main goal of both companies was to learn how each other operates to mimic the management style and operations. It was also beneficial to Toyota because they could learn to operate in an American environment. The factory which was built by GM was taken over by the New United Motor Manufacturing, Inc. (NUMMI). The plan was to have car produced under Toyotas supervision in a Japanese way. When the joint venture failed both companies pulled out but GM first. When GM pulled out the plant was no longer viable. The main reason the plant closed was because the plant was not built to survive without a partner. Workers were afraid to lose jobs and mainly benefits. A lot of the burden was on shipping parts back and forth to facilities. When NUMMI reopened, GM workers were rehired. From that point things had to change from the old style of operations. Employee's were treated with equality and with respect. Under Toyotas system who set up a spot in the refurbished plant after reopening. Teams were organized. Jobs were rotated and employee's were given control over personal work processes. The operations system worked mainly my breaking down the job into specific steps to work more efficiently. The plan was to work smarter not harder. The "refurbished" plant...
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...NUMMI Joint Venture GM entered the NUMMI joint venture because it needed to build smaller cars that met the United States government's new emissions guidelines. GM had tried to build these cars on its own, but had always lost money on these smaller cars in the process. GM's quality control was, at the very least, extremely questionable, and they knew it. Toyota entered the NUMMI joint venture in order to begin building in the United States. There had been talk of the United States restricting car imports, and Toyota was at risk of losing a huge chunk of its business. Toyota had a lot of trepidation about entering the US market. It did not know how to incorporate its system into North America. So partnering with GM on NUMMI would assist them in this regard. GM's sincerity regarding smaller, more fuel efficient vehicles was overshadowed by overconfidence that their way was the better way. GM's management had a superior attitude approach to NUMMI. Not enough of GM's senior management was humble enough to accept the fact that they could learn from a competitor. However, even GM recognized how poor their factory efficiency was. They knew that their workforce was the worst in the industry. They also knew that the Fremont plant was the worst of the worst. Freemont Plant GM's Fremont plant conditions were horrendous, which led to horrendous errors on the production line. Sex, drugs, and alcohol were rampant during working hours. Employees came to work drunk or high...
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...RUDE AWAKENING Chapter 6 A Tale of Two Plants: NUMMI Teamwork Versus GM Bureaucracy One might not recognize Rick Madrid as the same man who carried, by his own admission, "a pen and a punch" as an inspector (wo years ago. Oh, the outward appearance hasn't changed much—tattoos and mirrored shades continue to be his trademarks. But the "Iron Maiden" T-shirt is now cleverly concealed beneath his sharply pressed shop coat provided by the company. He's a team leader now, qualified and sanctioned by his peers. He prefers to be called a team motivator, however. "I'm part of the team; I don't have a team. Let people maintain their own personality." —CM Today publication 41 workers. There is a pervading attitude that "if you give them an inch, they'll take a mile," because they don't really want to work. The idea, for example, that a worker in the plant would have the power to stop the line in order to eliminate a problem was heresy. Wouldn't such permission lead to widespread line-stoppage for every whim? Not, according to Toyota, if you instituted a system of worker responsibility and accountability. American companies might think they had a tight rein on employees, but with little responsibility resting directly in the workers' laps, there was also little accountability. And what were the workers being held responsible for? In the first instance, quality. In Japanese companies, quality was part of the process, not something added on in the inspection phase. American...
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...Alternatives One alternative for GM would be to re-evaluate their partner selection process. In the case, it seems as if most GM’s partner firms gained more from the partnership with GM than did GM gain form the partnership. In most cases, foreign firms allied with GM to gain access to a new or expanded market for their automobiles. GM’s goals although fundamentally were anticipated to gain knowledge from foreign firms ultimately became directed solely at gaining profits. GM needs to re-evaluate not only how they select their partners, but for what precise reasons. GM needs to select partners that help the firm achieve its strategic goals. In this case gaining access to critical core competencies that Japanese manufacturers possessed. Second, to be a good partner for GM, the firm needs to share the firm’s vision for the purpose of the alliance. Most of GM’s alliances do not seem to share the same agenda, greatly increasing the chance that “the relationship will not be harmonious, will not flourish and will end in divorce.” Lastly, GM needs to identify whether its partner firm is trying to opportunistically exploit the alliance for its own ends, exploiting the partner firm while providing little in return. This seems to be evident in many of GM’s alliances where foreign firms retain all control over the company and its decision making, while taking on GM mostly as a financial partner; these are trying to exploit GM’s knowledge of the US distribution and operational...
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...helps the company fulfill its commitments to local labor" (Toyota Motor Corporation, 1998). To be aligned with the current trend called the North Americanization of the company, seven plants have been targeted as a potential production plant for the new Lexus RX330 line. In order to streamline this approach in the most efficient and effective manner, we have selected Toyota Motor Manufacturing Canada (TMMC) and New United Motor Manufacturing, Inc. (NUMMI). These two plants were selected based on their annual production capacity and current product lines. While it is important to point out that every Toyota plant has been awarded multiple awards, is ISO 14001 certified, and has great capacity and competency potential, we believe that each plant is operating effectively and efficiently within their current production line. Out of the 7 plants, we believe that it is these two plants that haves the greatest ability to fully optimize the production of the RX330 line. There are several exogenous factors in selecting TMMC over NUMMI, some of which include government regulations, economic factors, location and social factors. These were some of the concerns of Ikebuchi Nakatanis, Chairman of Global Operations, who believed that that these factor could have an adverse effect the final decision of where to produce the e RX330 line. In regards to these exogenous factors, it is common knowledge that every state or providence has their own rules and regulations that may have an effect on...
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...Question 4: Why did Toyota enter into the NUMMI joint venture with General Motors in 1984? What was the benefit of this venture to Toyota? Answer: Toyota today manufactures a diverse line-up of vehicles all over the globe. As an innovative leader, Toyota is well-known for its management philosophy and the world's first mass-market hybrids. New United Motor Manufacturing, Inc. (NUMMI) was an automobile manufacturing company in Fremont, California, jointly owned by General Motors and Toyota that opened in 1984 and closed in 2010. On October 27, 2010. Reason for NUMMI Joint Venture: General Motors saw the joint venture as an opportunity to learn about lean manufacturing from the Japanese company, while Toyota gained its first manufacturing base in North America and a chance to implement its production system in an American labor environment. Toyota’s marketing and Distribution strategy was not so good in America, they had the quality product but their Marketing strategy didn’t works properly. Whereas General Motors Marketing and Distribution strategy was too good than Toyota in America. For these reason to gain the benefits of general motors’ marketing and distribution strategy in America Toyota went to the new joint venture of New United Motor Manufacturing, Inc. (NUMMI) which was established in 1984. Benefits of joint venture for Toyota: The Joint Venture of New United Motor Manufacturing Inc. (NUMMI) has some benefits for Toyota. These benefits are given below: 1...
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...market position and brand recognitionS4: Product diversification. S5: Produce innovative models in a cost-efficient way | W1: Product recalls due to defect quality could affect brand image and reputationW2: Declining sales in key geographic segmentsW3: Poor allocation of resources as compared to peersW4: Lack of high technical skills of engineering designs when they have high level of skills in productionW5: Loss of control. The management failed to anticipate looming problems and expanded too quickly, ignoring Toyota’s style of disciplined growth. | Opportunities | S0 Strategy | WO Strategy | O1: Growing global automotive industryO2: Toyota poised to benefit from growing joint venture with GM called New United Motor Manufacturing Inc.(NUMMI)O3: Strong outlook for the global new car market04: Augmented worldwide distribution and servicing network to increase market penetrationO5: Expanding automobile market and opportunity launching new products | 1. Exploit engineering and R&D capabilities to produce new and innovative car models(S2,05) 2. Integrate the competitive advantage of both Toyota and GM to create strong brand name and competitive position in automotive manufacture industry(S3,02) | 1. Closely monitor quality and overhaul its design and manufacturing operations to enter growing global automotive industry (W1,W4,O1) 2. Joint venture with GM cause Toyota strive for continuous improvements and enhance the sales and market share in particular geographic market(W2...
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...assault and reestablish its domestic leadership, GM unleashed a radical business plan to automate and modernize its factories as well as its car models. It was not a subtle strategy—the centerpiece of the plan was to substitute high-tech robotics for inefficient labor, relying on GM's huge financial resources to make it all work. The estimated cost—$40-45 billion—was 14 times Ford's annual pretax earnings at the time. Because Smith believed robots could "do anything," the bulk of the capital expenditure was spent on factory automation, including the latest technology in advanced computer services, microelectronics, and systems engineering. The brand new, automated factories would, in theory, produce fuel-saving, smaller cars of the highest quality in greater volume and more cheaply than the competition. "In one masterstroke, GM would stop the import invasion cold and leave the competition years behind." In line with the revolutionary transition to automation, GM also announced the most widespread reorganization since the consolidation days of the 1920s. Two manufacturing fiefdoms—Fisher Body and the GM Assembly Division—were abolished and control of production was placed under two newly created operating divisions. To break down silos across functional areas, each division would...
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...http://www.youtube.com/watch?v=oBOeWylSMfM 1) List the business processes displayed in the video: _ The identification of the package that follows a very standardized process. . _Secondly the way packages are handled on the conveyor belts is also very repetitive. _Last the shipping process: packages are transferred to airports. 2)Lists the types of information systems listed in the video. The types of information systems shown in the video are the transaction processing system and office automation systems. Indeed the transaction processing system is highlighted by the billing systems to send invoices to customers automated on the conveyor belt with the scanners. The office automation system allowed to improve greatly the productivity thanks to technology .Knowledge management system seems also efficient since the employees filmed knew very well their jobs and the functioning of the factory and the organization of FedEx. 3)Why is fedEx an entreprise system? FedEx is an entreprise system. It offers high quality of service, dealing with large volumes of data and is capable of supporting some large organization. The amount of packages handled is indeed significant. The sorting center is a technology platform that enables organizations to integrate and coordinate their business processes. There is no information fragmentation since the succession of business processes is very clear (see question 1). 4)How important is technology to FedEx business processes? Technology...
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...********************* In today’s “tech” and competitive world, businesses are in transformation from manual inventory system to automated inventory system, including small businesses. Automated Inventory systems can reduce costs, retain the existing customers and gain profits. It can replace the time consuming manual process by providing more accurate data. Every business should have a proper inventory system in order to track whether the store is running out of the stock of an important item or there are some items that are obsolete. Nowadays, automated system is used almost by all the retailers, grocery stores and manufacturing companies. A good inventory control system will alert the retailer when it is time to reorder (www.barcodesinc.com). Automated inventory system will keep the competitive advantage of your company and increase the value of your business. This plan will describe all the necessary equipment required for a low-cost automated inventory system for a small clothing store. It will also explain the costs involved in creation of the system and describe the ongoing maintenance that will be required for the smooth running of the system and provide a workflow diagram of how the system will work. The equipments required to install a low-cost automated inventory system in small clothing store consists of a computer- desktop or laptop whichever is more cheaper, system requirements that can handle and store the inventory system, backup/recovery/portable hard disk...
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...AUTOMATION TECHNOLOGY 1 WHAT IS AUTOMATION? • Automation is the use of machines, control systems and information technologies to optimize productivity in the production of goods and delivery of services. • The correct incentive for applying automation is to increase productivity, and/or quality beyond that possible with current human labor levels so as to realize economies of scale, and/or realize predictable quality levels. 2 AUTOMATION • In the scope of industrialization, automation is a step beyond mechanization. Whereas mechanization provides human operators with machinery to assist them with the muscular requirements of work, automation greatly decreases the need for human sensory and mental requirements while increasing load capacity, speed, and repeatability. Automation plays an increasingly important role in the world economy and in daily experience. 3 ADVANTAGES OF AUTOMATION • Increased throughput or productivity. • Improved quality or increased predictability of quality. • Improved robustness (consistency), of processes or product. • Increased consistency of output. • Reduced direct human labor costs and expenses. 4 METHODS WHERE AUTOMATION MAY BE IMPLEMENTED TO IMPROVE PRODUCTIVITY, QUALITY OR ROBUSTNESS • Install automation in operations to reduce cycle time. • Install automation where a high degree of accuracy is required. • Replacing human operators in tasks that involve hard physical or monotonous work. • Replacing humans in tasks...
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...Memo for S-S Technologies a) S-S Technologies’ organizational purpose is for manageable growth, focusing on products within the company’s scope and skills. b) Using the framework in CoCo’s guidance on control to evaluate S-S, in my view, the control system of S-S is not efficient in some area. Firstly, from the aspect of purpose, s-s has its objectives, but as we can know from the consultants’ interviews, few employees were aware of SST’s goals and strategies. SST also don’t have specific policies to support the achievement of its objectives, for instance, there was no policy regarding bonus or merit pay. Secondly, from the aspect of commitment, SST has high commitment and employees loved the work environment. However, as we can know from the consultants’ interviews, the responsibilities are not clear among the managers or workers. Some employee felt cheated because SST could not afford to pay bonus. Thirdly, the employees in SST do have necessary knowledge and skills and knew whom to contact for technical information. However, in terms of performance appraisal, it was not done at regular intervals, people also don’t know whom to contact about benefits and salary ranges. The decisions and actions of different parts of the SST are not coordinated. What’s more, it doesn’t have efficient monitoring processes. SST can’t reassess its related information systems as condition change. c) Example of market: in early 1990, the North American economy was in a recession...
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...300.365 HARMONIC FILTERS: Harmonic filters shall be designed to meet the intent of EA BS G5/4, EN 61000-3-4, AS2279 and IEEE-519. Harmonic Filter Systems shall be a low pass harmonic filter intended for use with one or more 6-pulse variable frequency drives and other 6-pulse, 3-phase diode or SCR rectifiers to eliminate as far as possible the input harmonic current reflected onto the power system. Harmonic Filters shall treat all of the characteristic low frequency harmonics generated by a 3-phase, 6-pulse rectifier load including the 5th, 7th, 11th, 13th, 17th, 19th, 23rd, 25th, etc. 3-phase characteristic harmonics shall be suppressed without the need for tuning the filter or adjusting capacitors, inductors or other components. Harmonic mitigation shall be by passive, series connected, low pass filter network consisting of inductors and capacitors plus damping resistors to prevent the possibility of filter excitation and resonance. IGBT based active filters shall not be used. Harmonic traps shall not be used. Harmonic attenuation shall be accomplished without the need for phase shifting loads against other harmonic sources. To assure quality control and proper performance, the filter shall be manufactured in the supplier's own manufacturing facility, not by a contract manufacturer. Filters shall be fully tested prior to shipment. The supplier shall provide evidence of relevant application experience of not less than 5 years upon request. The harmonics...
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...In today's business environment, even many smaller businesses have come to rely on computerized inventory management systems. Automated systems can replace the cost and time consuming processes that were once completed by hand while providing companies with more accurate data. Inventory control is important to ensure control in businesses that handle transactions revolving around consumer goods. Without proper inventory control, a store may run out of stock on an important item. A good inventory control system will alert the retailer when it is time to reorder (www.barcodesinc.com). It will also aid in the prevention of theft and product loss. Overall, a good inventory system will increase the value of your business, satisfy your customers and create more freedom in your life. In this paper, I will describe all the necessary equipment for a low-cost automated inventory system for a small clothing store. I will also explain the costs involved in the creation of the system, describe the ongoing maintenance that will be required and provide a workflow diagram to illustrate how the system will work. An inventory control system that I feel best provides the need of a small clothing store consists of a PC (laptop), backup/recovery and archive device, wireless router, inventory control software, mobile scanning device, and barcode printer. The system shall provide versatility and reliable performance application demands. This system will make tracking inventory simple and intuitive...
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