The Origin of Competitive Strength: Fifty Years of the Auto Industry in Japan and the U.S.

287 Pages·5.7 MB·English

by  Akira Kawahara (auth.)

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The Origin
of Competitive
Strength
Fifty of the
~ars
Auto Industry
us.
in Japan and the
AKIRA KAWAHARA
, Springer
Author: Akira Kawahara
Address: 4-9-2 Mita, Minato-ku, Tokyo 108-0073, Japan
Tel.: [phone] Fax: [phone] e-mail: [email protected]
ISBN-13: 978-4-431-68421-3 e-ISBN-13: 978-4-431-68419-0
001: 10.1007/978-4-431-68419-0
Printed on acid-free paper
© Springer-Verlag Tokyo 1998
Softcover reprint of the hardcover 1s t edition 1998
This edition © Springer-Verlag Tokyo 1998 is a complete reproduction of the author's pri
vate edition © 1997 by Akira Kawahara, "The Origin of Competitive Strength - Fifty Years
of the Auto Industry in Japan and the U.S?' printed in the United States of America.
This edition © Springer-Verlag Tokyo 1998 was published by the author's arrangement with
Springer-Verlag Tokyo, Inc., Japan. All rights are reserved, whether the whole or part of the
material is concerned, specifically the rights of translation, reprinting, reuse of illustrations,
recitation, broadcasting, reproduction on microfilms or in other ways, and storage in data
banks.
The use of registered names, trademarks, etc. in this publication does not imply, even in the
absence of a specific statement, that such names are exempt from the relevant protective
laws and regulations and therefore free for general use.
SPIN :10666662

Acknowledgment
Including my years at the Automobile Section of the Japanese govern
ment's Ministry of International Trade and Industry (MITI), I have been involved
in the auto industry for more than 50 years. During this period I have made
many acquaintances who have directly and indirectly contributed to the devel
opment of the automobile industry, and I have learned a great deal from all
of them. I have a long list of people I would like to thank, and I hope those I
may have inadvertently overlooked will forgive me.
First I would like to thank the late Professor Kankuro Kaneshige (chair
man of the Japan Academy of Science), who was extremely helpful to me in
my student days; he was also a great source of encouragement and guidance
while I was working at Toyota. I would like to mention three professors at the
Production Engineering Research Institute of the University of Tokyo: the late
Atsushi Watari, the late Osamu Hirao, and the late Tomoo Ishihara, who were
like brothers to me. The following professors were also of great help: the late
Genpachiro Konno, chief consultant to the Japan Traffic Policy Research
Council; Totaro Miyashita, professor at Aoyama Gakuin University; the late
Yutaka Osawa, professor emeritus at Osaka University; and Chosei Ito, professor
emeritus at Sophia University.
I also express my thanks to myoid friends at Tokyo Higher School,
Ryoichi Nakagawa, former senior managing director of Nissan Motors; Ryoichi
Kawai, honorary chairman of Komatsu Co., Ltd., who was also the director of
the Machine Export Section at MITI during my tenure there; and Toyo-o Tate,
former chairman of Mitsubishi Motors, who, when I asked him to intervene
and get Chrysler's Lee Iacocca to stop bashing Japan, responded that Iacocca
was always a gentleman when he talked to him.
I was also greatly assisted by the following gentlemen: Seigo Kakitsubo,
advisor at Nitto Boseki (and director of the Automobile Section of MITI dur
ing the uproar around the so-called "people's car"); Shintaro Tabata, consultant
to the Japan Science and Engineering Information Center; Genji Furusho,
advisor at New Geothermal Engineering and Technology Development; and
Katsuyoshi Yoshikai, director of the Council on Science, Technology and the
Economy. I would also like to thank the following four individuals, who spurred
iii
ACKNOWLEDGMENT
me on in their research and presentation of the history of the automobile and
the automobile industry: Mitsuo Nakao, former managing director of Mitsubishi
Motors; Shoichi Inoue, professor at Kansai University; Yoshitake Iwasawa, former
general manager of the overseas office of the Japan Automobile Manufacturers
Association; and Katsunao Koiso, former general manager of the Data Office
of the Japan Motor Industrial Federation Inc.
I would like to express my sincere gratitude to Toyota chairman Shoichiro
Toyoda, president Hiroshi Okuda, and immediate past president Tatsuro Toyoda,
for providing me with their utmost support during the writing of this text (they
helped me obtain an advisory post at the Institute for International Economic
Studies). I must also extend my profound thanks to members of the Institute:
Bunroku Yoshino, president and director; Eiichi Kumabe, vice president; and
Yoshiharu Matsumoto, standing auditor - indeed, the entire staff. Expressions
of gratitude go out to Hideaki Horiuchi, chief researcher, who accompanied me
on my trip to the US., assisted me as an interpreter, and collected many mate
rials for me. I was also assisted by Miyako Yoda of Toyota Motor Sales, US.A.
(TMS), in the collection and translation of reference materials in the US. and
the compilation of collected materials by Wakako Ebata of the Institute for
International Economic Studies. I also received valuable advice from Toru Sasaki,
former general manager of the Business Development Division of Toyota, cur
rently a professor at Nagoya University of Commerce and Business Administra
tion. His advice helped me in drafting materials I used in my lectures on the
auto industry at Hitotsubashi University in 1981.
In May 1995, I issued a Japanese language book, The Origin of
u.s.
Competitive Strength - 50 Years of Japan & Automobile Industries
(Diamond Co., Tokyo, 1995). This book is the English version of the earlier
publication. It is not, however, a direct translation. After translation, some of
the original text was rewritten to be made more readily understandable for
English-speaking readers. Furthermore, as two years have now passed since
the publication of the Japanese version, I have, wherever possible, updated
the tables and charts with newly recorded facts and figures. As the progress
of the global automobile industry has been so rapid, an addendum reporting
the latest progress of the industry has been included. Additionally, an author's
message for the English version has been inserted in front of the main text.
iv
THE ORIGIN OF
COMPETITIVE STRENGTH
Once I began making the English version I found it was quite a difficult
undertaking because of the language and cultural differences. Many people
volunteered to assist me, but I could not possibly have finished the work with
out the help of Jim Cain, Earl Quist, Jeff Smith and Martin Smith of Toyota
Motor Sales, U.S.A, Inc. Along the way I encountered technical difficulties in
producing the drafts, but thankfully, these were overcome through the capable
assistance of Russ Bankson and Michio Inoue of TMS and my close personal
friend, Nobuyoshi Nakamura.
I would like to acknowledge all those who helped me while I was at
MITI and Toyota. In closing, I must thank Genichi Nakamura, professor at
the West Tokyo Science University, who unceasingly encouraged me in this
book, and also Tatsuo Fukuda and Eiichi Kuroki, both at Diamond Inc., who
assisted me in writing and publishing the book.
I must express my hearty gratitude not only to the above-named people,
but to my many friends who helped me as well. Thank you.
Akira Kawahara
v
vii
Author's Message for
English Version
Japan's auto manufacturers produced about one-half million vehicles
in 1960. In the same year America's auto industry built 8 million vehicles.
Who could have predicted that just 20 years later the Japanese auto industry
would produce more than II million vehicles - 3 million more than their
American counterparts manufactured in that same year - and become the
world's leading auto producer for the next 10 years?
Japan-U.S. Production of Motor Vehicles
14,000
""cC: 12,000
IeInI
10,000
::l
0
.c 8,000
I-
cQ:) 6,000
0
.- 4,000
'c
::J 2,000
0
co
"<t
~
Source: Japan Automobile Manufacturing Association,
American Automobile Manufacturing Association
The 1960s were pivotal years for Japanese manufacturers. They dedi
cated themselves as an industry to develop compact and sub-compact cars
with excellent fuel economy. They succeeded in producing those vehicles at
the lowest cost by adopting the "Just-In-Time" production management system
which Eiji Toyoda, the honorary chairman and the late Taiichi Ohno, the
executive vice-president of Toyota Motor Co. developed. At the same time,
they had succeeded in developing high quality cars by introducing the statis
tical quality control proposed by the late W. Edwards Deming, professor of
Columbia University, whose ideas have only recently been adopted by the
u.s.
auto industry.
In Japan not only the auto industry but many other industries followed
the doctrines of Dr. Deming and from them developed the management system
ix
AUTHOR'S MESSAGE
known as Total Quality Control (TQC). TQC enabled Japanese manufactur
ing industries to supply the highest-quality product at the minimum costs.
This meticulous dedication to quality was born of experience. At the
end of the 1950s Japanese automakers failed to sell their cars in the US.
market because of their poor quality and performance. By the late 1960s
after the implementation of such tools as TQC and the "Just-In-Time" produc
tion system - Japanese autos had become competitive against US. products
and other foreign cars in quality and cost. However, the consumer perception
created by the 1950s continued to adversely affect sales even after their prod
ucts had been improved.
It took an unforeseen international crisis, however, to serve as the
catalyst for the ascendance of Japanese autos in America. The "oil shocks"
caused by Arab-Israeli war in 1973 and the Iranian revolution of 1979
surprised US. consumers, who favored large cars with large engines. Seem
ingly overnight, gas prices skyrocketed, and suddenly people became fuel
economy conscious. The so-called "gas guzzlers" traditionally built by US.
auto manufacturers lost their market.
Japan was an island nation with little space and little oil resources, where
gasoline prices had always been about three times higher than in the U.S. Sud
denly the world's largest market-the United States-was clamoring for the
small, fuel-efficient cars which Japanese automakers manufactured in response
to the demands of their domestic market. The rest was a simple matter of
supply and demand. The Japanese cars flooded into the US. market.
Certainly no one in Japan thought their auto industry would grow so
dramatically so quickly, and few in the US. thought their own auto manufac
turers would ever be so profoundly challenged in the marketplace. To some
Americans, this challenge represented much more than mere competition for
car and truck buyers; it represented nothing less than a challenge to America's
national interest and its leadership role in the world.
While the rapid ascendance of Japan's products threatened some in
America, others sought to study how such companies as Toyota, Nissan, Honda
and others had won more than 20 percent of the US. auto market.
Clearly many American consumers were attracted to the fuel efficiency
of Japanese autos, and many stayed loyal to their Toyota or Honda because
these cars proved to be reliable, high-quality vehicles. The result was a new
international quality benchmark for automobiles.
x