Evolution of success in the Japanese automotive industry

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Evolution of success in the Japanese automotive industry

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"The work of helping Toyota grow and of helping Toyota's people realize their ambitions has for me been a kind of mission. Yet I also realize that a corporation is just one part of society, that Japan is just one society in the world, and that the pursuit of only Toyota's interests would be folly. The policies of a corporation must conform not only to the interests of Japan, but also to the needs of every society, however great or small. This thought occupies my mind even during the busiest of days."1
-Shotaro Kamiya (Founder of Toyota)

Fifty years ago, American consumers could hardly have imagined seeing a flux of Japan-made cars on their doorsteps, much less owning one. Japan, war-torn and politically turbulent, was far removed from producing world players in an industry so thoroughly dominated by American and European developers. Yet, today tells a different tale altogether: as of 2007, Toyota assumed the role of the world's largest auto manufacturer2, surging ahead of American rivals Ford and General Motors. Many of Japan's other car manufacturing companies, such as Nissan and Honda, also occupy top seats on the ladder. Few countries have been able to engineer ascension within such an expansive industry as quickly as Japan, now known across the globe for their space-efficient, gas-friendly, and readily-affordable vehicles.

Introduction - The miracle of the Japanese automotive industry.
New businesses and imported technology.
1. Assimilating foreign technology and improving upon it.
2. Two important developments that allowed for the expansion of these industries.
3. The onset of the Korean War.
4. The dissolution of pre-war Zaibatsu.
Specialized production and the labor force.
1. The Japanese auto industry.
2. Taiichi Ohno's approach to production.
3. The policy of specialization among auto parts suppliers.
4. The automobile industry today.
The role of the State.
1. MacArthur's plan of pursuing 'an integrated approach across the entire economic front.'
2. Liberalization of the market in 1960.
3. High tariff barriers and limiting foreign entry.
4. The oil shock crisis of 1971 and 1979.
Conclusion - The future ahead.

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[...] The future of Japanese automobiles, even in the face of both America and Japan's economic recessions, is positive. Most large Japanese companies have engaged in hybrid production and have production facilities worldwide. The question now is if they are ready for the radical changes in the marketplace, namely the collapse of America's top manufacturers and budding competition from Asian neighbors China, Korea, and Japan. Politically too, the phase of rampant Japanese growth is over. Japan lacks the resources to provide the same kinds of loans, subsidies, and bailouts that it once showered successful companies with. [...]

[...] In the same year, the automotive industry represented about 13% of Japan's total industrial production.[22] Therefore, protection of this industry's exports is of great importance to the Japanese government. The Development Bank of Japan and the Small and Medium Companies Finance Corporation provided manufacturers with low-interest loans for capital in technological development under the Machinery Industry Promotion Act of 1956, the Machinery Electronics Act, and the Machinery Information Act. High tariff barriers limited foreign entry, while a devaluated Yen made Japanese cars more appealing worldwide. [...]

[...] More importantly, they were able to adapt to a changing global economy in the 1980's after they had emerged as global competitors. The goal-oriented mindset of Japan's economy allowed companies like Toyota to be protected from external forces and focus on simply improving methods of production and management. Cooperation is also seen in the beneficial relationship Japan has shared with America. While Japanese companies may have initially lacked financial resources, by the end of the Korean War they had already been immersed in American automotive technology. [...]

[...] The role of the State Japanese auto-makers (and Japanese businesses in general) have always been closely led by the hand of the developmental state. Occupation authorities and Japanese nationals alike have shared Gen. MacArthur's plan of pursuing integrated approach across the entire economic front.”[18] In the initial phases of development, the Ministry of International Trade and Industry (MITI) provided select guidance for car companies and other groups by prioritizing allocations of foreign currency for the development of new automotive technology, restricting vehicular imports and foreign expansion, and providing loans and subsidies through the Reconstruction Finance Bank. [...]

[...] Specialized production and the labor force The Japanese auto industry has become famous for its unique and innovative means of production. “Lean production” became the term used in business circles for Toyota's efficient utilization of both human and mechanical resources. The Japanese labor market provided many different obstacles than Western labor while the workers were educated and diligent, they were also used to lifetime employment and seniority-based wages. Labor unions, strengthened by American occupation between 1945 and 1950, were able to negotiate guarantees of lifetime employment and access to all Toyota facilities for their workers. [...]

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