A New Approach to Productivity

The increasing penetration of the Japanese Manufacturing Machine in selected American markets has received widespread coverage in the media. The impact on our automotive industry has been of sufficient magnitude to make it a national issue. It is prudent for us to examine what the Japanese are doing in the area of productivity, to isolate the significant factors in their approach, and to determine which things we might emulate to our advantage. Everyone is aware, to some degree, of the inroads the Japanese have made in United States markets. Product areas, such as television, video-recorders, cameras, watches, motorcycles and even shipbuilding, have become dominated by them. Of particular concern today are machine tools and automotive products, but an impact will soon be felt in the aerospace-electronics field. In all areas, we know that, not only do the Japanese compete with us at competitive prices, but the level of quality they have been demonstrating in recent years has been phenomenal. Many people believe these accomplishments are attributable to cultural differences. They envision the Japanese dedicating their lives to their companies and working long hours for substandard wages, which would be unthinkable in America. The evidence, however, is contrary to these distorted notions. First, it is important to understand that the Japanese, as a nation, have had one fundamental economic goal: full employment through industrialization, and establishing market. The strategy employed to achieve it called for obtaining market dominance in very select product areas. They very carefully chose those industries where they believed they could become dominant and concentrated on them, rather than diluting their efforts over a broad spectrum. Their tactics were threefold. First, they imported their technology. (The entire Japanese semiconductor industry was built around a twenty-five thousand dollar purchase for the rights to the basic semiconductor process.) Instead of reinventing the wheel, they avoided major Research and Development expenditures, with the attendant risks, then negotiated license agreements to make the successful, workable new products. Second, they concentrated their ingenuity on the factory to achieve high productivity and low unit cost. The best engineering talent available was directed to the shop floor, instead of the product design department. Third, they finally embarked on a drive to improve product quality and reliability to the highest possible levels in order to give their customers product reliability that competitors were not able to supply. The best managed manufacturing companies in Japan have clearly shown us the viability of their approach to productivity, many elements of which were borrowed from America. We can now borrow back many of their modified approaches and may very likely adjust them to meet our environment. What is important is that we recognize the value of what they are doing, and gain an understanding of how they do it. Realizing that most of the techniques are not culturally restricted, we apply the applicable innovations to our businesses so we can enhance our own productivity and be competitive with them. We cannot even get started if we do not accept the rationale that Japanese productivity methods can work in the United States and must be implemented if we are to successfully compete in the future. During the last five years, Japan has been able to offset its inflation rate by productivity improvements so the cost-per-unit-output has remained relatively flat. By contrast, with sometimes negative productivity changes combined with high inflation rates, United States manufacturing costs-per-unit-output are now thirty-five percent higher than they were five years ago. Shall we let that trend continue or shall we make the changes necessary to reverse it? The kinds of changes we are talking about here are long term in nature, because they involve the changing of fundamental concepts. It took the best Japanese companies more than thirty years to get where they are. It may take decades for us. There are no miracles or quick fixes. The Japanese say that American visitors are always looking for tricks and secret weapons , but there are not any. Management Motivations are just good principles applied rigorously in the right management environment over a long period of time. The time to start is now