AutoPoint Blog

Disrupting the Industry, the Past: NUMMI

Posted by Manuel Soto Friday, September 11, 2015
In recent years, American-made vehicles have begun to build a reputation for quality and reliability. The kind of reputation their Japanese-made counterparts have had for decades.But despite their recent success, American-made vehicles have historically been excluded from published lists of the most reliable car brands. American auto companies have struggled with quality issues and employee management. Most notably at one particular site in California called Fremont Assembly.Fremont’s Assembly’s failure sparked one of the most interesting collaborations the auto world has ever seen. And in this blog, we’re going to take a look at how it happened and what it did to disrupt the industry.An Assembly Site in TroubleIn 1982, GM shut down its General Motors Fremont Assembly plant. During the plant’s two decades in operation, the Fremont Assembly staff had transformed into a lethargic collection of inefficient, absent, and downright bad workers.Every day at the plant, about one in five workers wouldn’t even show up. Sometimes the managers had so few employees, they couldn’t start the line.GM was ready for the plant to close. Their staff wouldn’t work and the cars and trucks were bad quality—why go on?But was the problem really their staff, or was it their style? Toyota decided to show them.An Unlikely AgreementIn the 1980s, Toyota produced higher quality vehicles than GM, and with greater efficiency. The Japanese manufacturer had figured out how to make small cars and still make a profit—something GM hadn’t accomplished. But Toyota badly needed a foothold in U.S. manufacturing, and GM were the ones to help them get it.The two companies came to an unlikely agreement that they would operate the former Fremont Assembly site as a cooperative. They called it NUMMI: New United Motor Manufacturing, Inc. But first, Japan had to help GM make some changes.A Time for ChangeToyota took GM, along with their delinquent workers, under their wing and changed the way they managed their operations. There were some key differences between the Japanese way of doing things and the GM way, and as it turns out, they made all the difference. Let’s compare the two:The Way GM Managed:
  • Workers and managers were opponents, not partners
  • Workers were discouraged from expressing their ideas and opinions
  • No one could stop the line—ever
  • Mistakes made on the line were put off to be fixed later
The Way Toyota Managed:
  • Managers existed to lead and assist workers as members of the team
  • If there was a problem, managers asked for workers’ ideas on how to fix it
  • Workers had a method for stopping the line if necessary
  • Mistakes were fixed immediately
Toyota’s management style contributed to making high-quality, high-profit cars and kept their workforce happy in the process. So what did GM do with their newfound knowledge?The Toyota EffectGM took what they learned from Toyota and implemented it at NUMMI—to the benefit of both companies. Things changed. And not because the workers did. The new plant rehired the same problematic employees GM had had when the plant closed. However, the management style was fundamentally different.Under the Toyota way of doing things, many employees said they looked forward to their going to work for the first time ever. They were proud of the product they produced and felt empowered by their leaders, not trampled by their bosses.As a result, NUMMI started producing GM and Toyota cars the same quality as those made in Japan.The Problem with Other PlantsUnfortunately for GM, the managerial techniques they learned from Toyota didn’t spread to the rest of the company. They were unable to implement the same style and manufacturing techniques that worked so well at NUMMI into their other U.S. plants.Workers at other GM plants didn’t have the benefit of Toyota’s help. Their workers also hadn’t had the same experiences as NUMMI employees. Since NUMMI workers had previously lost their jobs and then been given a second chance, they had a much greater incentive to change their ways.Without a similar push, other GM workers were highly resistant to change. They refused to accept new processes and leadership styles. Workers especially resisted attempts to get rid of hierarchical perks like designated parking spaces and special privileges for senior employees.What We Can LearnAlthough NUMMI did not ultimately cause a ripple effect in the automotive world, it is a fascinating example of disrupting the industry. Rival manufacturers coming together to share trade secrets and make each other better—how often does that happen?NUMMI’s story makes us question our preconceived notions about competition and cooperation—even if only at one plant in California.Toyota and GM’s joint venture closed its doors in 2010. Now the former NUMMI plant is owned by Tesla, who just so happens to be the subject of our next blog on disrupting the auto industry. Stay tuned!

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