Friday, November 5, 2010

Toyota May Be Just-In-Time

AutoNation, Inc.'s chairman and chief executive, Michael Jackson (he promises that the kid is not his son), encouraged American consumers at the end of October by stating, "We continue to see a gradual recovery in the U.S. auto industry, but it's pretty tough out there."

General Motors is breaking records as well. It made its first profit since 2004 (talk about a good investment for the US . . . [it would have been better to sell half of it to Fiat . . .])! It actually profited the first quarter of 2010.

On the other side of the world, Toyota Motor Corporation, the world's biggest automaker, is once again increasing its performance. In the last three months, its revenue grew 5.8% - a measly $59.58 billion. I wonder how much better they could do if the US (or Japan for that matter) would spot them an extra $25 billion. In your dreams! (I had that nightmare in 2008, but the company was GM.)

I would encourage "The Big Two and a Half" (that includes the remaining 65% or more of Fiat owned Chrysler) to steal another play from the Toyota Motor Corp. coaching staff. The first play they stole was Just-In-Time (JIT) manufacturing. And it paid off big time. Toyota used its Samurai ways and created a streamlined manufacturing process that decreased wasted time, movement, and space. It increased oversight measures and developed three page long mathematical calculations to determine the best minute of the day to order the correct parts. This allowed them to minimize storage costs, wait-times, and assembly line foul ups. JIT is the basic standard for manufacturing processes.

Why can't the Three Stooges of the American auto industry figure out what Toyota does best (make money) and try to emulate the mysticism (after all, if Tom Cruise can become a Samurai . . .). I know its hard out there in a big open world with competing pressures. Find what you're good at and try that. We all know that GM has not been good at making money. In that vein, learn from the pros and fire the cons.


  1. You're probably right that the Big Three need to implement the JIT concepts. My dad is an industrial engineer and designs these lines. From what he tells me, they're pretty efficient.

    But GM and Chrysler don't have to look to foreign manufacturing for the solution to their problems. Ford is also showing incredible life after refinancing their debt and eliminating some of the weight of their unions.

    The reason Toyota is so profitable isn't because of JIT. It's because they never got shackled with massive pension plans and benefits from UAW. Most of Toyota's US production is in Southern states with "right to work" laws.

    If you want some business tips from foreign competition, breaking up Union power might be the way to go.

  2. Sorry for the lack of clarity. I am pretty sure that they HAVE implemented JIT. I am asserting they should use other aspects of Toyota's money making strategy. I do believe that you're on to something. The Collective Bargaining Agreements (CBA) that these unions use are absolutely imprisoning on many issues.