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Conventional wisdom holds that process improvements in the auto industry over the last 15 years have reduced labour costs to approximately 10-15% of total costs. Cars acknowledges that whilst direct labour costs may be of this order, total labour costs are far higher: around 70% of the value created in an 'average' company. Thus labour still represents the largest single expense for automobile companies, and success lies in removing labour from production, thereby reducing labour's share of value added. The authors assert that whilst some companies have lost sight of this objective, and others have failed, successful companies - the Ford Motor Company in the period 1910-30, for example, and Toyota from 1950-80 - have become tremendously wealthy.
It was widely argued during the 1980s that Japanese success was attributable not to low wages or a docile workforce, but to a unique method for organizing and managing production. In 1990, researchers from MIT legitimated this claim in The Machine That Changed The World, arguing that the Japanese system of 'lean production' was vastly superior to other systems. This myth soon became standard fare in discussions of the auto industry. However, having reanalysed the MIT data, the authors of Cars conclude that many of the advantages attributed to the Japanese system - such as 100% productivity advantage or better space utilization - are either exaggerations or the result of questionable methods of measurement and comparison. Moreover, they argue that the quality of working life under lean production is no better than under traditional mass production: indeed, it may even be worse. They conclude that the 'superiority' of the Japanese system is largely an illusion, due on the one hand to the Japanese social organization of automobile production which conceals the true nature of the system, and on the other to academics and consultants who profit by 'marketing' these ideas.
Cars also refutes the claim that lean production was invented in Japan by Toyota during the 1950s: rather, it was developed much earlier in the USA by the Ford Motor Company. The authors attribute this misreading of Ford's radical innovation to past studies which have emphasized certain features of the Ford system - dedicated machinery, a standardized product and inflexibility, for example - at the expense of other features, such as flexibility, constant product and process innovation, and minimal in-process inventories. Drawing on Ford's archives, Cars demonstrates that most of the basic principles of lean production such as 'kaizen' or constant improvement, JIT (just-in-time) assembly, sequential machining, and minimal managerial/ administrative overhead were all well articulated in the Ford Motor Company between 1913 and 1927.
Finally, Cars challenges the belief that Ford and Toyota represent prototypes for new manufacturing systems and that by adopting these systems other companies will achieve comparable results. This claim, found both in older works on Ford and more recent studies of Japanese production (including the MIT study), attributes failure to achieve comparable results to an 'incorrect' implementation of the system. Cars maintains however that Ford and Toyota are not prototypes, but 'heroic exceptions', whose ability to 'gush cash' cannot simply be attributed to new production systems. Rather, their success must be seen as inseparably linked to the specific historical conditions under which these companies operated. Moreover, Ford and Toyota's success is itself a constraint on the success of other companies.
Cars makes important methodological and substantive contributions to the auto industry literature. Its direct challenge to many accepted beliefs is a refreshing change within a literature which often repeats accepted formulas and pat phrases. Anyone seriously and critically interested in the auto industry would benefit from reading this book.
Carl H.A. Dassbach
Michigan Technological University