A Modern Parable - Toyota/GM

[Peter Gariepy]

A Modern Parable

A Japanese company ( Toyota ) and an American company (General Motors) decided to have a canoe race on the Missouri River . Both teams practiced long and hard to reach their peak performance before the race.

On the big day, the Japanese won by a mile.

The Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat. A management team made up of senior management was formed to investigate and recommend appropriate action. Their conclusion was the Japanese had 8 people rowing and 1 person steering, while the American team had 8 people steering and 1 person rowing.

Feeling a deeper study was in order, American management hired a consulting company and paid them a large amount of money for a second opinion. They advised, of course, that too many people were steering the boat, while not enough people were rowing.

Not sure of how to utilize that information, but wanting to prevent another loss to the Japanese, the rowing team's management structure was totally reorganized to 4 steering supervisors, 3 area steering superintendents and 1 assistant superintendent steering manager.

They also implemented a new performance system that would give the 1 person rowing the boat greater incentive to work harder. It was called the "Rowing Team Quality First Program," with meetings, dinners and free pens for the rower. There was discussion of getting new paddles, canoes and other equipment, extra vacation days for practices, and bonuses.

The next year the Japanese won by two miles.

Humiliated, the American management laid off the rower for poor performance, halted development of a new canoe, sold the paddles, and canceled all capital investments for new equipment. The money saved was distributed to the Senior Executives as bonuses, and the next year's racing team was out-sourced to India .

Sadly, The End.

Sad, but oh so true! Here's something else to think about: Ford has spent the last 30 years moving all its factories out of the US , claiming they can't make money paying American wages. Toyota has spent the last thirty years building more than a dozen plants inside the US . The last quarter's results: Toyota makes 4 billion in profits while Ford racked up 9 billion in losses. Ford folks are still scratching their heads.

[Peter Gariepy]

(Dont shoot the messenger, I got this via email)

[alsancle]

As long as GM has to pay 7500.00 per car for health and pension benefits to workers that no longer work for the company I would say they are screwed. http://www.nysun.com/article/25605

[rocketraider]

Wouldn't be half as funny if it weren't true. Most American corporations rely entirely too much on consultants, then won't implement any plan they come up with that makes sense.

Several years ago, our employee opinion survey had a loaded question- "Could company management be better utilized?" and the overwhelming answer was yes, in employee-think. Management-think, OTOH, read the response as needing more managers and promptly laid off 10% of non-supervisory personnel, while adding a layer of middle management.

Out of the four new managers that were assigned to this plant alone, there's one who, to this day, no one is really sure what his function is.

[Dave@Moon]

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">As long as GM has to pay 7500.00 per car for health and pension benefits to workers that no longer work for the company I would say they are screwed. http://www.nysun.com/article/25605 </div></div>

That figure is much too high, more than half the cost of Chevy Colbalt for instance. According to carlist.com the actual figures are $1525 per car for health care costs and a further $675 per car for pensions. Most figures quoted are in the ballpark with these.

None the less, it's a simple fact that domestic cars (and GM in particular) are less expensive than any of their imported competitors. Any equivalent Toyota, Honda, Subaru, or other "Japanese" car will cost more than a comaparable "Big Three car" (<span style="font-style: italic">As of today we can use that term again!</span>). Even "Korean" Hyundai and Kia vehicles are often more expensive than "American" competitors, and there's rarely a significant difference either way at that.

It isn't price that's killing GM.