Page 50 - Toyota Under Fire

THE MOST ADMIRED COMP ANY IN THE WORLD

American financial and regulatory system. A joint venture was
formed with GM in 1983, and a shuttered GM plant in Califor-
nia was reopened and named New United Motor Manufactur-
ing, Inc. (NUMMI). The agreement with GM specified that the
plant would build Chevy Novas; Toyota would be responsible
for engineering and production, while GM provided the facility,
supplier relationships, and capital. GM would get small, high-
quality cars in its lineup, and Toyota would have a low-risk way
to learn how to build its culture in the United States.
Given all the uncertainties—the first time TPS had been tried
with a unionized American workforce,* the first joint venture be-
tween Toyota and GM—NUMMI was a huge risk, and success
was by no means assured. The project was supervised by Tatsuro
Toyoda, one of Kiichiro’s sons and later president and then chair-
man of Toyota.
As it turned out, NUMMI was a huge success. Comparisons
to an established GM small car plant in Framingham, Massachu-
setts, found that it took 19 hours to assemble a car at NUMMI
compared to 31 hours at the GM plant, and with one-third the
defects along the way. NUMMI had 80 percent less inventory,
and its performance in its first year of production was compa-
rable to that of its parent plant in Japan.† Toyota’s ability to gen-
erate such high levels of quality and productivity in an American
plant with American workers was what truly brought its revo-
lutionary approach to manufacturing to the world’s attention.

* Indeed, one of the reasons that the plant had been closed when it was GM-
owned was that the local workforce was the worst in the United States in qual-
ity and basic discipline. Yet, as a condition of reopening the plant, the collective
bargaining agreement required that 80 percent of these workers be rehired.
† Statistics are taken from James P. Womack, Daniel T. Jones, and Daniel Roos,
The Machine That Changed the World (New York: Rawsons Associates, 1990).

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