Worst to Best — Lessons from NUMMI
The story of how the Toyota Production system turned around the worst car plant in North America
I came across a wonderful article about a car factory in California called NUMMI, New United Motor Manufacturing Inc. The story of NUMMI is a classic rags to riches one, which saw the absolute worst car factory in North America transformed in little over 6 months into the very best.
This factory was so bad that the owner General Motors had actually closed it two years prior, assuming that nothing they could do would turn it around. The union work force were so strong that they preferred to see it go out of business than change the way they worked. Stories from workers talk about how the workforce would drink and take drugs on the job, absenteeism was well over 20% and up to 50% on Mondays and workers would strike for the smallest contravenance of union policy. To get back at “management” workers would often sabotage the very cars they were building, leaving bolts and soft drink cans in panels for instance to rattle and annoy customers. (This American Life)
The focus for this plant and indeed every GM plant in North America was one of throughput at any cost — they would fix any quality issues later. It was a cardinal sin to “Stop the Line”, the line being the automatic conveyor which moved cars from one station to the next. The car park was filled with cars that failed the final inspection, requiring costly rebuilding. Bonuses however were paid on quantity, not quality. With such poor quality it is not a surprise that GM and all the other North American big car manufacturers were losing market share steadily to much better made imports — particularly Toyota.
Toyota had the opposite problem to GM. They were starting to be so successful in America that the US government was considering adding significant tariffs to any imported cars. To get around this they they were going to have to start manufacturing cars within the states (NPR). With NUMMI they saw and opportunity to learn how to do this and so a partnership with GM was formed and the plant reopened in 1984 — unbelievable with over 80% of the workforce from the plant.
GM indeed sought to glean tips from Toyota’s magic. But the way the joint venture was run kept this learning to a minimum. GM placed a dozen or so managers at the plant; Toyota was in charge of operating the plant and filling other managerial positions. The learning-by-doing of Toyota managers turned out to be the more useful way to learn. (HBR )
John Shook was the first American who worked for Toyota in Japan and he was given a senior role in the reopening. Shook writes:
The best example of how the culture was changed at NUMMI is the famous stop-the-line — or andon — system on the assembly line. All of the GM and NUMMI people who underwent training in Japan experienced learning and working with the stop-the-line system (or some variation of it). One of the decisions to be made in establishing production at the joint venture was whether to install the stop-the-line system. For Toyota, of course, that was no decision at all — it was a given. The andon system epitomizes Toyota’s belief in, and commitment to, developing the means to enable employees to work in a way that “builds in” quality.
A key Toyota tenet is “Respect for People,” the conviction that all employees have the right to be successful every time they do their job. Part of doing their job is finding problems and making improvements. If we as management want people to be successful, to find problems and to make improvements, we have the obligation to provide the means to do so.
NUMMI is such an interesting case study as it show how important the system you place people in, is to the success of a venture. With the right system, people can flourish and of course the opposite is true as the pre NUMMI GM factory demonstrated. Shook describes how the implementation of the changes ran counter to traditional organisational theory:
The typical Western approach to organizational change is to start by trying to get everyone to think the right way. This causes their values and attitudes to change, which, in turn, leads them naturally to start doing the right things.
What my NUMMI experience taught me that was so powerful was that the way to change culture is not to first change how people think, but instead to start by changing how people behave — what they do. Those of us trying to change our organizations’ culture need to define the things we want to do, the ways we want to behave and want each other to behave, to provide training and then to do what is necessary to reinforce those behaviours. The culture will change as a result.
The stop-the-line andon process is just one example of acting the way to thinking, but it is a good one for two reasons. First, it deals with how people do their work right now. For each of us, every day, every moment, work comes at us. How are we equipped to respond? The andon system isn’t just a set of manuals and principles or training — it is how the work is done.
Second, on a practical level, the most important and difficult “cultural shift” that has to occur in a lean manufacturing transformation revolves around the entire concept of problems. What is our attitude toward them? How do we think about them? What do we do when we find them? What do we do when someone else finds and exposes one? The andon process is about building in quality by exposing problems. Sometimes those problems are of our own making. Exposing them can be a very personal and threatening matter.
Writes John Shook -
NUMMI was a great story in its own right. A story of people coming together and doing something great at a time and place in history. And NUMMI was important to both GM and Toyota. I think it was important for the UAW, too.
But, a less considered fact is that NUMMI was hugely important to American manufacturing. NUMMI proved that the best, supposedly “Japanese,” production methods in the world could work on American soil with American labor. An early motto at NUMMI was “Best of Both Worlds.” I truly believe NUMMI in its heyday embodied that motto in principle and in practice.
The quality that had been GM’s worst? In just one year, it became GM’s best. All with the exact same workers, including the old troublemakers. The only thing that changed was the production and management system — and, somehow, the culture.
The NUMMI plant was finally closed by Toyota in 2010. Today has a new life and similarly ground breaking role in American car manufacturing history as the Tesla Factory.
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