Wednesday, June 29, 2016

Japanese Autos Come to America, 1958 to 1980: A Brief History


1958-9 Toyopet Loaded for Export to U.S.



Japanese Automobiles Come in a Big Way to America
            As James Flink stated in The Automobile Age, organizational structures, policy programs and conscious planning were key to the success of the Japanese auto industry. [1]  In this case, government served as the promoter of the industry. At the heart of the success story is the Ministry of International Trade and Industry (MITI), created in 1949 to protect certain industries from foreign competition so that home industries could be competitive abroad. This was achieved by eliminating foreign competition from the domestic market. To this day, American cars in Japan are more curiosities than staples of transportation. Competition among Japanese firms was discouraged, and thus economies of scale resulted. With low wages and Union cooperation after 1953, the Japanese had a key initial advantage in their quest to penetrate American shores. But given their reputation for shoddy products, could they make cars that Americans would buy?
            While the Japanese made mostly military vehicles before WWII, the first seeds of its future growth were linked to supplying the American military during the Korean War. David Halberstam elegantly traces the emergence of the Japanese automobile industry in The Reckoning.[2] His story features a host of remarkable and powerful personalities, but perhaps two Americans were as critical as any in shaping the Japanese automobile industry. Prior to WWII, American engineer William R. Gorham played a key role in setting up the first factories and promoted a distinctive manufacturing philosophy. After 1945, statistical quality control expert W. Edwards Deming, instilled a passion for quality at a time when American automobile executives seemingly cared less.
            Deming's 14 Points, articulated in Out of the Crisis, served as management guidelines that were embraced by the Japanese.[3] The application of these points resulted in a more efficient workplace, higher profits, and increased productivity. They included the following:
  • Create and communicate to all employees a statement of the aims and purposes of the company.
  • Adapt to the new philosophy of the day; industries and economics are always changing.
  • Build quality into a product throughout production. 
  • End the practice of awarding business on the basis of price tag alone; instead, try a long-term relationship based on established loyalty and trust.
  • Work to constantly improve quality and productivity.
  • Institute on-the-job training.
  • Teach and institute leadership to improve all job functions.
  • Drive out fear; create trust.
  • Strive to reduce intradepartmental conflicts.
  • Eliminate exhortations for the work force; instead, focus on the system and morale.
  • Eliminate work standard quotas for production. Substitute leadership methods for improvement.
  • Remove barriers that rob people of pride of workmanship
  • Educate with self-improvement programs.
  • Include everyone in the company to accomplish the transformation.
            While the 14 points made for great publicity during the 1980s, statistical analysis was the key to Deming’s management methods. It was this merging of the quantitative with quality that made Japanese production methods so effective, with the result that “Made in Japan” meant goods of the highest precision and quality. But the Japanese have to be given credit for their efforts as well. At Toyota, lean manufacturing was pioneered after WWII. A complex system of ideas that is well described in James Womack, Daniel Jones, and Daniel Roos’s The Machine that Changed the World, lean manufacturing involved production, supply, and distribution principles that included continuous improvement with just-in-time inventories.[4] Deming’s ideas did not enter Japan in a vacuum, however. Toyoda’s culture, for example, was greatly influenced by Sakichi Toyoda, its founder.  19th century British self-help author Samuel Smiles had an enormous impact on Sakichi; in particular Smile’s emphasis in his writings on the authority of time. K. Dennis Chambers has argued that for Smiles – and Toyoda – “Almost everything else is replaceable; time is one commodity that can be lost forever and never recovered. That truth was to become the central tenet of the Toyoda family’s search for perfection.”[5]
Beginning in 1958, both Datsun and Toyota began to import vehicles into the U.S., but the few early models were underpowered and technologically primitive.  By the late 1960s, however, both quality and performance improved dramatically. The models that exemplified this transition to competitiveness were the 1965 Toyota Corona, 1969 Datsun 240-Z and the l972 Honda Civic CVCC. The Corona proved to be remarkably well built at a time when the quality of vehicles coming from Detroit was lagging. The Datsun 240-Z became a favorite among sports car enthusiasts, especially displacing British Triumphs and MGs, and the Honda Civic offered no-nonsense, reliable, efficient, and environmentally clean transportation.

The meteoric rise in Japanese imports to the US during the late 1960s and early 1970s is best reflected in the following table:[6]
Year
Toyota
Nissan
Honda
Mazda
Mitsubishi
Subaru
1965
2,986
13,201
--
--
--
--
1966
17,423
21,037
--
--
--
--
1967
36,013
33.275
---
--
--
--
1968
71,846
40,760
9
--
--
2,884
1969
127,018
60,872
51
--
--
2,406
1970
196,749
104,067
4,159
2,083
--
5,591
1971
294,850
188,029
12,509
19,630
28,381
14,162
1972
295,915
192,707
20,500
57,850
34,057
24,056
1973
289,378
235,449
38,931
119,003
35,523
37,793
1974
238,135
189,026
43,119
61,190
42,925
22,280
1975
283,909
253,192
102,383
65,351
60,356
41,587
1976
346,920
270,103
150,929
35,383
78,972
48,928
1977
493,048
338,378
223,633
50,509
121,262
80,826
1978
441,800
338,096
274,876
75,309
103,292
103,274
1979
507,816
472,252
353,291
156,533
138,053
127,871
1980
582,204
516,890
375,388
161,623
129,350
142,968
To fully understand the rise of the Japanese industry and its subsequent transitory stagnation post-1990, one must fully explore the complexities associated with international economics and monetary policy. The split-community tax, floating yen to dollar values, tariffs, and import quotas all contributed to Japanese competitiveness in the American marketplace, along with the inability of American manufacturers to export to Japan.




[1] James J. Flink, The Automobile Age, 327-345.
[2] David Halberstam, The Reckoning (New York: William Morrow, 1986).
[3] W. Edwards Deming, Out of the Crisis (Cambridge, MA: MIT Press, 1982).
[4] James P. Womack, Daniel T. Jones, and Daniel Roos, The Machine That Changed the World (New York: Rawson Associates, 1990).
[5] K. Dennis Chambers, Toyota. Greenwood Press: Westport, CT, 2008, pp.18-20.

[6]From C.S. Chang, The Japanese Auto Industry and the U. S. Market, New York, Praeger, 1981. P.204.  Data taken from The Automotive News.

[7]  On the history and operation of EFI, see http://bestride.com/blog/top-automotive-innovations-history-of-fuel-injection/2780/Fuel Injection, accessed 2/14/16; “A Short History of Fuel Injection,” http://www.secondchancegarage.com/public/fuel-injection.cfm, 2/14/16; http://members.rennlist.com/pbanders/djetfund.htm, accessed 2/14/16.



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