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.  19^th 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.

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[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.