...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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...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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...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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...NUMMI became a learning organization and therefore more competitive than the GM plant it replaced by having the willingness to experiment, trusting and encouraging feedback from its workers, implementing an integrated system in its work process, and installing leadership that showed the necessary commitment and patience. First, NUMMI was not afraid to experiment. They were willing to work exclusively with previous GM workers from the Fremont plant, even though the plant was famous for being considered unmanageable. Also, they were not afraid to negotiate with the UAW by giving the union a strong job security clause and greater say in plant operations. Second, NUMMI put complete trust in its workers by putting an emphasis in human development NOT technological development and implemented a team production assembly. They felt workers had the desire and motivation to do each job well and encouraged them to create ways of improving the products or processes. NUMMI’s ‘team assembly†was given autonomy to run its own line and rewarded each worker for improvement ideas. Third, NUMMI implemented a complete integrated system in its work process that paid attention to detail. From the outset, it set up the plant properly, did not complicate the work force with brand new technology, selected suppliers, developed transportation systems to coordinate shipments, focused on effective quality controls from each division, and established credibility and trust with the UAW early...
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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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...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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...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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...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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...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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...NUMMI was formed in 1984, from the ashes of a plant that GM had closed in 1982. General Motors reopened the plant, employing many of the same workers who had staffed, according to the United Auto Workers union, the former worst performing plant in the US. Employees of the defunct factory regularly drank on the job, had very high rates of absenteeism, and performed deliberate acts of ‘anti-QA’ sabotage, such as putting empty bottles inside car doors to annoy customers. GM and Toyota had formed NUMMI as a joint venture to satisfy imperatives for both companies; GM needed to learn how to manufacture small cars cost effectively, with high quality standards, and Toyota to learn about producing cars in the US in the face of changing import laws. Some of the American workers were sent to Japan to learn the Toyota Production System, and the results were remarkable. In a massive turnaround, NUMMI almost immediately began producing vehicles to quality standards that rivalled the Toyota factories in Japan that they had learnt from. The emphasis on quality inherent in the TPS, meant that employees became empowered to do things such as stopping the production line when they saw a problem, rather than allowing defects to build up and have to be fixed at a later stage. “I believed that the system was bad, not the people” – Bruce Lee, union representative Initially, the reemployed workers hated the idea of change, until they started going to Japan to view Toyota’s system at work....
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...In light of Dan Pink's SRA talk about motivation (Drive: The Surprising Truth About What Motivates Us), what should a leader do to help his/her organization achieve progress in its lean journey? In the cases of Wiremold and NUMMI, what are some of the key factors that are in place when a company "reverts" from lean? How can an organization prevent this? Is it possible to prevent this from happening? The main lesson of NUMMI is clear: Massive automation without corresponding changes in management and work force organization is not enough. Because GM's executives were too concerned with labor cost, they failed to recognize that other costs are also significant. These costs include inventory, defective parts, and overhead. Although automation can also reduce these costs, NUMMI clearly shown that changes in management practice are more cost-effective than buying new machines. Moreover, GM's corporate culture in the 1980s was resistant to change in management-worker relationship. Many managers of other factories dismissed NUMMI's practices as irrelevant. As a result, GM failed to fully develop its human resources. In contrast, the organizational innovations of Japanese car producers, such as teamwork, short product cycles, JIT , much longer training time for workers, and a more equitable relationship between management and workers allow them to fully exploit the advantages of flexible production. Besides the issue of management, GM's speed of automation also turned out to be...
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...efficiency of the facility. NUMMI’s attitude and culture with respect to workers created an environment where problems could get solved, workers were free to provide input into production and were free to stop the line or make changes where necessary. NUMMI workers felt accountable to their peers not to a perceived oppressive management. Workers depended upon one another to be on time and do the job right. Performance as a result was higher. Additionally, NUMMI understood that in addition to the concept of the way people were organized and managed, a good design and production system were vital. (2.) (a.) NUMMI’s philosophies created an environment where both workers and management strived for the same results of Kaizen and Kanban. NUMMI built an organization based on mutual trust, stressed team performance and treated every employee as a manager. Communication and team work was strongly encouraged. (b.) NUMMI effectively reduced GM’s prevailing culture of mutual mistrust of management and labor. As a result according to the article “The Japanese system itself, with its constant follow-up on details, and ongoing improvements, helped create an environment where problems could get solved without confrontations.” (c.) NUMMI effectively did this...
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...LEADS 1. Consider how NUMMI became a learning organization – what changes in structure, labor practices and especially management philosophy made NUMMI more competitive that the GM plant that it replaced? How do the different parts of the system support each other? 207 words NUMMI became a consummately adaptive enterprise. The leadership at NUMMI realized the importance of “Creative Tension”. They were true in their assessment in judging the current reality as well as very clear in the vision of where they wanted to be in the future. The managers at NUMMI took on the roles of designers, teachers as well as stewards thus creating an ambiance of shared responsibility and mutual respect. The corporate philosophy of the company changed to be customer centric. Service to its customers was considered as of paramount importance followed by service to its employees. The labors at the plant felt a sense of ownership and pride not only in the work they performed but also in the overall growth of the company. The hierarchical structure in the company was changed to be more flatter organization in which the opinions of the lowest members of the organization were also recognized for the benefit of the company. There was a culture of discipline and long term visibility of the firm shared among the employees of the firm. The management at NUMMI realized that the long term sustainability of the company could only be achieved by the process of continued learning, or something referred to...
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...organizations for its strategic achievement, which in this case is employee motivation. In the given Fremont plant of General Motors after nearly decades of internal conflicts, The Fremont Plant of General Motors (GM) had encountered bankruptcy. It was reopened and under the collaborative management of Toyota and GM with more effective management practices that were successfully at boosting employee motivation, which was formed as a legal entity, namely NUMMI. Motivation is defined as psychological process that induces employees to contribute to their work and perform “voluntary actions” that directly related organizational goals (Mitchell 1982, cited in Ramlall 2004). According to McShane et.al 2010, employee motivation can be categorized into different foundation of theories regarding how employees can be motivated. The composition will now explain how the alteration in management style reflects these theories. Afterwards, some recommendations will be provided in order to resolve the facing challenges as well as to give more suggestions on how NUMMI management can even further improve. Equity Theory (Adams’s Theory) Firstly, The UAW Labor Contract has diminished the payment and performance evaluation between highly professional employees and newly hired employees. According to Levine (1991), wage division in the workplace ‘leads to lower group cohesiveness’, which...
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...Executive Summary: The report of the plant manager for RIO BRAVO IV, a subsidiary of Packed Electrical a division of General Motors identifies mistakes made by top management. These mistakes clearly indicate top management failure to use project management principles in starting up a new manufacturing branch. It also points out the learning outcomes when good efforts are placed at the right places and with the right human talent employed. In the new economy organizations have to focus on the customer, environment and its resources and change their approach in doing business (paradigm shift). Senior management has to give clear goals and utilize the Total Quality Management (TQM) philosophy. Failure by top managed clearly state the objective of the project meant that it had no master plan and schedule. When the project was initiated the objective was to gain worldwide respect not to satisfy a customer and let the respect follow as an outcome. Top management failure is more evident through lack of proper feasibility study on the location and the customer getting customer Users Requirements Specifications (URS). There was no plan in place as such the project team did not exist at all. The machines were hastily installed; lay out set as per other factories not designed to cater for this customer. The location was never considered as what effect it might cause to the customer. Top management did not address the diversity issue an as a result communication was hampered by language...
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