Birth-order and tradition played an important part in the existence of Toyota Motor Company. An unusual chain of events began in 1915 when Sakichi Toyoda[1] adopted Kodama Risaburò, the husband of Toyoda’s eldest daughter, and younger brother of the head of Mitsui Trading’s branch in Nagoya. This strengthened Toyoda’s ties with the Mitsui Group, one of the most powerful business groups in Japan, who had also financed earlier expansions of Toyoda Spinning.[i] Since Risaburò was 11 years older than Kiichiro Toyoda, he technically became the eldest Toyoda son and Sakichi made him president of Toyoda Automatic Loom, with Kiichiro (Sakichi’s direct heir) serving as Risaburo’s subordinate. The Toyoda expansion into the auto industry may have been a way to provide his son Kiichiro with an inheritance.
In the very early stages, before what was to become Toyota Motor Company separated from its parent group (Toyoda Spinning and Weaving), Kiichiro’s early projects were primarily targeted towards technology absorption, including motorcycles, cars and aircraft. Long before any serious vehicle production took place, Toyota had a massive research and development effort. This was not a unique approach to the auto business, for Sakichi had hired an American engineer, Charles A. Francis, in 1907 for similar reasons. Francis had previously been employed at Pratt and Whitney and he proceeded to train the Toyoda employees in “The American System of Manufacture.”
By 1937 the Toyota research department was studying aircraft design; by 1942 their aircraft department was copying a Beechcraft. This department was later separated into a subsidiary, Tokai Aircraft, with Kawasaki Aircraft contributing 5 million yen, most of the engineers and designs. It is a bit of a stretch to say that the designs were contributed by Kawasaki, because the original engine was to be a Benz V12; however, this product never materialized. They did end up producing a 9 cylinder version in what is now the Motomachi Plant.[ii] To complicate matters, in 1944 Mitsubishi (Zero) moved in with Toyota because their facility had been destroyed.[iii] Tokai Aircraft was later renamed Aisin Seiki and changed from making aircraft engines to automobile transmissions, brakes and other components after World War II.
The culture of technology adoption by Toyota was being developed; they were not satisfied with the technology being used by their peers, but were investigating technologies from leading industries. In the 1930’s no manufacturing industry was more advanced than the aircraft industry, and the concept of system integration was already being used -- a radical departure from the current automotive methods used by Ford or GM. The technology focus went far beyond the designs of aircraft or automobile components, into production methods of the materials and the tools (equipment) used in making their automobile.
Because of Toyota’s connection with the aircraft industry and the prohibition on war material related industries in Japan after the US occupation, Toyota had a unique advantage. They could hire many highly qualified engineers, which resulted in a generally unrecognized massive technology transfer. Tatsuo Hasegawa, who was the first generation Corolla project manager, was once the chief designer of Tachikawa Aircraft. Technologies attributed to the aircraft industry by Hasegawa and adopted by Toyota include aerodynamics, monocoque structure (which developed into what we know as the unibody), weight reduction technology, standards for structural strength, chief designer systems, and product planning methods.[iv] Between 1923 and 1933, Kawasaki Aircraft Engineering Company's head designer was a German, Dr. Richard Vogt, who returned to Germany in 1933. He designed the KDA-5 multi-purpose military biplane, adopted for service in 1930 in one- and two-place variants. This German connection can be considered as one of many possible sources for Takt[2] in the TPS lexicon.
Toyota was not alone in drawing upon aircraft engineering talent[v]. A number of American engineers under the direction of William Gorham (another former aircraft engineer) were critical to Nissan’s attempts in assembly line production in the early 1930’s.[vi] The Mitsubishi group entered aviation during World War I, building French aircraft engines under license, and soon producing trainer aircraft that were also French. A design group headed by Britain's Herbert Smith, who had been a chief engineer at Sopwith Aviation Company, crafted new warplanes that became standard equipment of the Japanese Navy. Mitsubishi also learned lessons from Germany, first by working with the aircraft designer Alexander Baumann, and then through collaboration with the German firm of Junkers. During 1939, Mitsubishi also launched Japan's most famous and deadliest wartime fighter: the Zero.
While tracing the early years of Toyota Motor Company, we should not forget the early years of Taiichi Ohno, considered by some to be the architect of TPS. “Ohno started his career at Toyoda Spinning and Weaving in 1932. When Ohno was working as supervisor at the spinning factory of this textile company, he realized that its rival, Nichibo (Japan Spinning) was outperforming Toyoda in productivity through a benchmarking study. Further studies revealed that the production system of Nichibo was very different from that of Toyoda Spinning and Weaving. Toyoda had separate buildings by process steps; Nichibo had adopted the line layout along the process flow. Toyoda moved yarns in large lots; Nichibo conveyed them in small lots. Toyoda had emphasized skills of rework (yarn tying) at the downstream step; Nichibo had emphasized making good yarns at the upstream and eliminating rework at the downstream. In this way, Taiichi Ohno obtained some of the ideas of Toyota Production System, including product-focused layout, small-lot production, and 'doing things right the first time', through the benchmarking study in the textile industry. When Ohno moved to Toyota Motor Manufacturing in 1943, his first impression was that: ‘It would be easy to raise productivity of the automobile business by three to five times by simply introducing the production system adopted by Toyoda Spinning and Weaving.’”[vii]
There has been a rumor of a mysterious 4” binder[viii] which some attribute to the origin of TPS and associate authorship to Kiichiro Toyoda[3] about 1938 or 1939, but it has more humble origins. An engineer named Kan Takatoshi joined Toyota in 1933 and under Kiichiro’s direction began to draw up plans for a pilot plant (Kariya). In addition to his experience in Japan, Kan was sent to the US to visit numerous auto and machine tool companies over five months. “Kan observed their operations carefully, analyzing the manufacturing process and the flow of production. When he visited machine-tool companies to purchase machines, he requested detailed explanations regarding materials and the ways of processing them. He made revisions to his outline of an operation sheet, as well as to the tool layout sheet he had drawn up. In March of 1936 Kiichiro Toyoda directed Kan to design a new plant (Koromo), which began operations in November 1938 with the capacity to produce 2,000 vehicles per month.”[ix] These plans were significantly different from current practice. It is easy to see how the application of current practice from the aircraft industry and other foreign companies could be misinterpreted as a new and creative effort by those with no industrial background.
There were several interesting adaptations applied by Kan and Kiichiro in the new plant. The start-up, rife with changes, needed flexibility; install many of the machines on floorboards in order to make it easier to change the layout as needed. Another was the partial use of conveyors; this was more from a financial point than logistics. The partial conveyors led to the development of moving small batches of parts in conjunction with the ‘”Just-in-Time” idea (in lots of 10 vehicles[x]). This led to development of a method prior to computers to track the materials, commonly known as kanban. This Japanese word for signal is exactly what the paper or metal tag did in the production environment.
Toyota wasted no time getting their business in order to deal with conditions after the war. “Two or three days after the war had ended, Director Shotaro Kamiya, who was in charge of sales, appeared at the automobile distribution company in Nagoya. ‘The war’s over. Let’s get down to business,’ he said. He immediately set to work rebuilding the dealer network of TMC, which had been consolidated with those of other automakers into a single distribution company during the war.”[xi] He had held the distribution post for the consolidated automotive industry during the war, so he had an insider’s advantage in converting desirable dealers to Toyota after the war ended, even plundering other car dealer networks. In a meeting with the distributors about a month before the government disbanded their distribution network in June 1946, he was able to enlist a number of the stronger dealers who had formerly worked with other producers, mostly Nissan.
In November 1945, Chairman Risaburò Toyoda resigned and the company deleted the manufacture and sale of aircraft from its “Articles of Incorporation.” The official history by Toyota mentions that this was done to rid themselves of the stigma of forced wartime activities[xii]. This may be a bit disingenuous considering the long history of activities that started before the war. This was to be an effective strategic move since Toyota had been designated as a military supply company during the war. As such, they were targets for having their assets seized for war reparations. They also avoided having their upper management removed; a fate not avoided by many other large companies. The war had ended in August 1945, but the situation was quite bleak. There was a statement by management that they were not sure they could feed everyone, and anyone who wanted to leave was free to do so. By the end October, only 3,700 of the 9,600 employees of the Koromo Plant remained. Even though they resumed limited production in late September on an order from GHQ (General Headquarters) their production was only 82 trucks.
The GHQ issued strict orders to dissolve the zaibatsu[4] and in April 1946, Toyota was included because it was designated as a Mitsui-affiliated restricted company. Mitsui held 40,000 of the company’s outstanding shares and Toyo Menka Kaisha, Ltd. held 210,000, which meant that 13.7% of Toyota Motor Company’s stock was owned by Mitsui affiliates. Toyota somehow managed to survive without any management purges by GHQ. The same cannot be said for their primary competitor, Nissan. Some estimates are as high as 200,000 for the number of people blacklisted or purged from high level positions. However, while the number is quite significant, in industry the number of people removed from 154 leading companies by 1947 was 1,937 company executives at managing director level or above.[xiii] One unexpected effect created by this artificial management vacuum was the acceptance of alternate forms of management structure and value systems. The “Civil Communications Management Seminar[5]”, introduced in 1949, embodies a core of principles that we generally consider to be “Japanese Management”.
It was not all gloom and doom after the war. “With high expectations for future growth, the company also hired 200 new employees (April 1946). Many of these people had been aircraft engineers. Kiichiro stated, “Japan is being allowed to develop an auto industry. Future competition will be fierce. Now that aircraft production has been discontinued, it is important to put the technical skills our engineers developed in making aircraft to good use in making cars. I don’t want to waste Japanese technology.””[xiv]
Somewhere between 1945 and 1947 (depending upon reference) Ohno had the opportunity to begin to make some changes in the Koromo plant, working to convert it from a process layout to a product layout (the same as Flanders did to Ford’s plant in 1907). “To catch up with America, I thought of having one operator to care for many machines and also different types of machines rather than one person per machine. Therefore, the first step was to establish a flow system.”[xv] To help the struggling Japanese auto industry, “MITI (Ministry of Trade and Industry) imposed a VAT (import tax) on automobiles of 40% right after World War II. This continued into the 1970’s, effectively shutting out nearly all imports into the Japanese market”.[xvi] At this time, Toyota had a single model car in production, the SA. It was introduced in 1947 and continued until 1952. A total of 215 were produced, the equivalent to a rate of about 1 car per week.
Toyota’s monthly vehicle production nearly reached 1000 per month during the summer of 1952 (mostly trucks). By the fall a credit crunch caused by severe inflation caused them to abandon the production plan. Other automakers were not immune to the troubles and began to lay off workers. In October, Isuzu dismissed 1,271 workers and Nissan did the same for 2,000. “The unions at both companies immediately called strikes.”[xvii] Toyota made wage cuts of 10%, but even this was not sufficient to solve the crisis. The crisis at Toyota was a crisis for the entire community of Nagoya. In December, a group of 24 banks met to provide aid to Toyota. The terms called for a radical reorganization and had strict conditions. One of these called for the separation of the sales group from the production company, and did not allow any of the Toyoda family to participate in the new sales company. Part of the new requirements from the banks to the production company – no vehicle could be produced that was not sold, and the sales group had the control over the order book. Further personnel cuts[xviii] were required. The electrical production was spun off as NipponDenso Co., Ltd., removing 1,445 employees from their rolls.”[xix] The Toyota Motor Sales (TMS) group, founded April 1950, took 353 employees. At the same time the TMC labor union began collective bargaining. The company asked for 1,600 voluntary retirements.[xx] After extended negotiations, labor and management found a common ground in June. Kiichiro Toyoda resigned as President (two other top officials also resigned). Employees began voluntary retirement; the total was larger than originally requested by the company (2,146), leaving 5,994 employees remaining.
The mood was rather dismal after more than 25% of the company was dismissed, the top management resigned, and several business units were spun off. Just one month after the layoffs (July 1950), the US military requested Japanese automakers to submit bids for an order of 1,320 trucks for use in the Korean War. Although this was the first job for the Export Department of TMS (Toyota Motor Sales), which had just begun operations, it won an order for 1,000 trucks. After this, a series of orders came from the armed forces of the US.[xxi] (Toyota continued truck production until 1962 when US legislation required the purchase of US made equipment). This provided the cash flow necessary to float the company.[xxii]
“Manufacturing special procurement vehicles enabled TMC to learn effective quality control methods. Given the production technology of the time, tremendous efforts were needed to guarantee the quality and meet the delivery dates demanded by the United States military. The strict inspections carried out by the military gave TMC a chance to develop its highly advanced and standardized inspection technology.”[xxiii] (Other sources indicate that Toyota strongly resisted this involvement in their production, but it was a forced condition of the government contract. The real learning of quality came only after Nissan won the coveted Deming prize in 1960, Toyota won in 1962.)
1950 was a busy year, with several important people in the Toyota organization going to America; in June, Shotaro Kamiya (president of the sales group) left to complete an agreement with Ford. This was stopped with the outbreak of the Korean War. His time in the US was not wasted, for he realized that the US did not have the excess production capacity for significant exports. He also spent his time studying the American consumer finance system. In July, Eiji Toyoda (managing director) visited the Ford River Rouge Plant. In October, Shoichi Saito (managing director) also visited Ford’s plants. Both men closely studied Ford’s production methods and management. Even though there was a significant gap between Ford and Toyota in both production volume[xxiv] and technology, this visit solidified Eiji’s resolve to catch up, and the realization that it was possible.
This visit may have been a critical turning point in Eiji’s decision to support Ohno’s methods, without which we would never have heard of TPS, or the possibility of Toyota becoming the global competitor that it is today. It may seem obvious that the system works, but it would be pure fantasy to believe that the Toyota organization readily embraced the new methods. The resistance came from all quarters, from the accounting department to the other departments which supplied the machine shop that Ohno ran. Over time Ohno was promoted and had an opportunity to place supervisors who followed his methods but this resistance lasted into the late 1950’s.
Another key part of Ohno’s training was the training programs introduced by the Americans during the occupation. It is ironic that the very programs used to train new employees and boost productivity would become the enablers for Kiichiro’s vision of a synchronized factory. The TWI (Training Within Industry) programs are becoming better known as the core of TPS – standard work, “Train the Trainer”, 5S, kaizen, etc… were derived from this program. Ohno was one of many certified as a trainer under these programs. Other lesser known programs had similar far-reaching impact. The MTP (Management Training Program) consisted of 22 classes which covered the TWI programs and general management knowledge; this program was developed to educate the middle management. Less well known is the “Civil Communications Management Seminar[xxv]” produced by CCS (Civil Communications Section). While this program was originally targeted towards the communications sector, it spread to other industries. The early graduates of this program read like a “Who’s Who” of Japanese industry. They were the leaders in the first Japanese industries which became globally competitive.
The Japanese economy was growing and Toyota’s production volumes began to grow rapidly; 14,000 in ’52, 23,000 in ’54, and 71,000 by ’57. Yet, their production was still 70% trucks – the small car was just around the corner. It is difficult for the outside observer to comprehend the pressures on a manufacturing operation that must expand rapidly. Most companies collapse under prolonged expansions exceeding 30% per year, finding it impossible to train people rapidly enough to maintain the skills necessary for properly function and maintain the company culture. Between 1955 and 1964, Toyota’s annual growth rate was 37.3%! There is a positive side to expansion rates such as this, given the extreme pressure to produce; people are more receptive to discovering methods to meet the current demands.
The new Motomachi assembly plant gave Ohno the opportunity to implement JIT (in 1958 with his kanban process). This was not without difficulties and he faced much resistance with those wanting to run the facility in the ways they knew. Solving the shop floor issues was not simple or done in a short period of time. It was only after intense work using Ohno’s shop floor quality control methods that the system was sufficiently debugged. Then upper management considered applying the system outside of this plant. In 1962, kanban was adopted on a company-wide basis and by 1965 Toyota began formally to use the system with their suppliers. Ohno had been working on implementing these methods for 20 years inside the auto company, not to mention the dozen years working in the loom company, but his journey was not yet complete.
A side note about SMED (Single Minute Exchange of Dies), there has been much controversy over where the idea developed and who was responsible. Nearly a decade before Shingo’s famous breakthrough of defining tasks into “inside or outside” in 1969[6], Toyota had been pursuing methods to reduce changeover times. In 1959 Danly shipped a six-press tandem dual moving bolster stamping line to Toyota. This line was equipped with Danly trademarked QDC (for quick die change). By 1962 Toyota had revolutionized its body-stamping facilities, but did not stop there, improving many other facets of the body production process.
While the companies began to pursue auto production in the early 1960’s, truck productions still exceed the auto production until 1968. By the mid-1960’s the Japanese auto companies had a product that could be exported to a limited number of nations. Toyota and Nissan both tried some early exports to the US in the late 1950’s and early 1960’s. On the surface, these ventures could be characterized as disasters, yet the companies used the dismal showing in the US as learning experiences for their next attempt. And the rest is history… “In 1980, the first year Japan led the world in automobile output, Toyota made 3,200,000 vehicles and Nissan 2,600,000, eclipsing Ford of America (1,900,000) to become the world’s second and third biggest automakers, excluding overseas subsidiaries, behind General Motors of the United States (4,700,000).” [xxvi]
Please address any questions or comments to: Mark.Tesla2@gmail.com
Copyright 2008 - Mark Warren
[1] In this book we will use the European format of placing the family name last. The Oriental convention would place the family name first.
[2] Takt is German for tempo in a musical sense – in manufacturing it is the pace of production.
[3] "Kiichiro never told me where he got the idea for Toyota's production system, but what this comes down to in the last analysis is a system free of waste." (Toyota: Fifty Years in Motion, Eiji Toyoda – pg 166)
[4] Japanese term for ‘money clique’ or conglomerate. These were powerful groups of businessmen that effectively ran the country.
[5] http://deming.ces.clemson.edu/pub/den/ccs_manual_complete.pdf - revised version of original textbook available here.
[6] There are numerous counterfactual references that attempt to pre-date this understanding on SMED.
[i] The Japanese Automobile Industry, 1985, Michael Cusumano, pg.58-9.
[ii] Toyota: Fifty Years in Motion, Eiji Toyoda, pg 66
[iii] Ibid., pg 67
[iv] The Evolution of a Manufacturing System at Toyota, Takahiro Fujimoto, pg. 74
[v] Flow Production had already been introduced into the aircraft factories in 1943 by Ichiro Sakuma at Nakajima Aircraft Company. Small lot production and cells were keys to the concept. This factory also produced engines for the Zero – the connection to Toyota, as Mitsubishi moved here late in the war. “Fordism Transformed” , pg 16, Kazuo Wada
(Sakuma named his concept ‘semi-flow production’. The description of his idea is mainly based on the article by I. Sakuma, ‘Han nagare sagyo seisan hoshiki ni kansuru kenkyu’ [on the semi-flow production method], Nippon Noritsu, 2/7 (1943).)
[vi] Between Imitation and Innovation; pg 72
[vii] The UK & Japanese Automobile Industries: Adoption & Adaptation of Fordism, Takahiro Fujimoto & Joe Tidd
As Ohno later emphasized in his autobiography, many of his key ideas about the themes of product-focused layout, small-lot production, right-first-time, and autonomation, developed from his benchmarking studies of Nichibo. The experience of the textile industry also provided a model for the pursuit of a “Japanese path” of technical development and confidence in Japanese originality and creativity. - Interview with Taiichi Ohno by Koichi Shimokawa and Takahiro Fujimoto, 16 July 1984
[viii] Toyota: Fifty Years in Motion, Eiji Toyoda – pg 57
[ix] The Emergence of the ‘Flow Production’ Method in Japan, Kazuo Wada
[x] Toyota: A History of the First 50 Years, pg 72 – this is important to note that they did NOT implement one-piece-flow, but batch processing.
[xi] Ibid. pg 94 (World War II ended on August 15, 1945)
[xii] Ibid, pg 96
[xiii] The Puritan Gift, William Hopper, pg 112
[xiv] Toyota: A History of the First 50 Years, Toyota Motor Corp. pg 98
[xv] Toyota Production System: Beyond Large Scale Production, Taiichi Ohno, pg 10 - Multiple machine operation has been around more than a century, especially in the textile industry. There are photos of multiple machine operation by a single operator in the automotive magazines as early as 1905.
[xvi] The Japanese Automobile Industry, Michael Cusumano – pg 7
[xvii] Toyota: A History of the First 50 Years, Toyota Motor Corp. pg 105
[xviii] Ibid., pg 106
[xix] Ibid., pg 104 - In March 1950, soon after becoming independent, NipponDenso announced personnel cuts, which immediately precipitated a strike.
[xx] Ibid., pg 107
[xxi] Ibid., pg 110
[xxii] Toyota: Fifty Years in Motion, Eiji Toyoda – pg 112
[xxiii] Toyota: A History of the First 50 Years, Toyota Motor Corp. pg 112
[xxiv] At the time of the visit, Ford’s production volume was about 8,000 per day compared to Toyota’s 40 per day.
[xxv] http://deming.ces.clemson.edu/pub/den/ccs_manual_complete.pdf This link is a slightly edited version of the original CCS program.
[xxvi] The Japanese Automobile Industry, Michael Cusumano – pg 1
No comments:
Post a Comment