Yang: NUMMI – When The Giant Stumbles…

By ELENA YANG
Los Alamos
 
It hurts everyone in its path.
 
Is it possible that all those working at NUMMI (New United Motor Manufacturing Incorporated) were happy team players? Of course not, that’d be against reality, and so not American.
 
However, since the dissenters were few, there was little chance of upsetting production. Ultimately, the question was: If NUMMI was such a success, wouldn’t GM want the rest of the company’s plants, or at least the majority of them, to learn (not copy) from it?
 
As I have explained before, changes are personal (link here). When people perceive changes as threats to their skills or power, they resist. During the initial implementation of NUMMI, GM set up a team of 16 “rising stars” to help with NUMMI. After NUMMI was launched, these 16 “commandos” were basically sitting idle.
 
No one at HQ contacted them for valuable information. After two years, one of them quit, and another one went to GM Brazil to help set up the plant there and created some success, a la NUMMI.
 
In the meantime, a GM plant in Van Nuys, manufacturing the Camero and Firebird, was as infamous for both defective products and antagonistic attitudes between labor and management as the Fremont plant. The Van Nuys plant was 400 miles south of NUMMI and was facing the possibility of closing, just like Fremont plant did.
 
All the parallels between the two plants should have served as a warning. The Van Nuys plant manager came to NUMMI for lessons; he even got the regional UAW boss, Bruce Lee, to go to Van Nuys to help train the staff. Both management and labor resisted every step of the way.
 
They didn’t want to give up their comfort; they saw the Toyota ways as threatening in three aspects:
 
1. Workforce reduction,
2. Blurring the boundary between management and labor,
3. Loss of seniority. The trajectory of these aspects was the erosion of trust. (As if there was abundant trust at that point!)
 
The Van Nuys plant manager shut down the plant for two weeks for some serious training on product improvement and teamwork. However, there were no trips to Japan, no tearful farewells over sushi, and no immediate threat of job losses. During the training, people just went through the motions, probably not unlike most training programs most of us go through, following a 12-step manual, grumbling privately.
 
The 2-week disruption brought only greater skepticism and deeper distrust. In addition, all the suppliers in the system were part of the dysfunctional dynamics. So, in 1992, GM shut down the plant, resulting in a much larger workforce reduction.
 
Similarly, when managers from the rest of GM visited NUMMI, they often ended up not just criticizing but also attacking the system. They felt threatened…why didn’t they think of this first? Instead of seeing a good example, they were “shown” their inadequacy and were put on the defensive. Remember, change is very personal.
 
The Van Nuys plant manager had an Aha moment. He said, “You know, they [the Japanese] never prohibited us from walking through the plant, understanding, even asking questions of some of their key people. I’ve often puzzled over thatwhy they did that. And I think they recognized, we were asking all the wrong questions. We didn’t understand this bigger picture thing.
 
“All of our questions were focused on the floor, the assembly plant, what’s happening on the line. That’s not the real issue. The issue is, how do you support that system with all the other functions that have to take place in the organization?”
 
The above quote illustrates the quintessential failure to distinguish between learning from vs. copying success. 
 
Here is a sad example of an extreme case of copying success: 
 
“So I remember, one of the GM managers was ordered, from a very senior levelcame from vice presidentto make a GM plant look like NUMMI. And he said, ‘I want you to go there with cameras and take a picture of every square inch. And whatever you take a picture of, I want it to look like that in our plant. There should be no excuse for why we’re different than NUMMI, why our quality is lower, why our productivity isn’t as high, because you’re going to copy everything you see.’ ”Wow! Just wow!”
 
How do you copy attitude? How do you copy relationships and trust? How do you copy wisdom? How do you copy the ability to listen and think critically? And is the ability to listen and think critically of any value without encouraging its use? And on and on.
 
I am not suggesting that the Japanese have all these qualities and Americans don’t; I do contend that the Japanese possessed those not-easily-quantifiable assets in the 90s, more learned than copied, relative to their American counterparts in the auto industry.
 
Of course, as GM ate more humble pie, they eventually learned. And as Toyota grew bigger, they have had, in recent years, their shares of mishaps and colossal mistakes.
 
It never fails that as soon as one thinks of oneself as exceptional and the best, one begins to decline. This is true for individuals, groups, organizations, and nations. In the case of Toyota, the mantra of “continuous improvement” might sound as if they are open-minded about learning; in reality, that assumption ignores the lessons from the third law of thermodynamics (link here).
 
To reach that elusive and impossible goal of 100% perfection, an entity needs to commit all its resources and energy to the futility of “improving” that very last bit of imperfection. Along the way, the organization chokes off all innovation and creativity.
 
As for GM, eventually, it began to learn, especially as more and more managers rotated through on-the-job-training at NUMMI; the slowbecause giants don’t walk fastbut steady accumulation of learning among these managers did tip the scale. And GM began to improve its quality. Ironically, at the time of GM’s bankruptcy, it might have achieved its highest quality production in recent decades, albeit a little late.
 
Are we ever likely to learn from NUMMI? A few may, but most won’t…not necessarily for lack of smarts, willingness, or resources. Most organizations will not learn “properly” because such learning fundamentally requires top management to face facts, or, to truly grasp what the lower levels of managers and other employees know all too well.
 
It also demands that employees, of all levels, have a deep sense of humility, knowing that they don’t always know everything. It’s complicated to change even a small group, let alone a giant organization. “Too big to fail?” Until it fails…then everyone suffers.
 
In the end, NUMMI closed in 2010. After GM’s bankruptcy in 2009, it pulled out of the JV, leaving Toyota running the plant alone. NUMMI was Toyota’s only unionized plant in the States. Eventually, Toyota decided to close NUMMI. The NUMMI site was bought by Tesla for a fraction of its book value.
 
I don’t mean to end on a downer note, but let’s be realistic.
 
Till next time, Staying Sane and Charging Ahead.
 
Direct Contact: taso100@gmail.com
 
Editor’s note: Dr. Yang has a PhD in Management from the Wharton Business School of the University of Pennsylvania. She taught at Wharton for a number of years, and consulted for small groups and small organizations and on cross-cultural issues. Her professional worldview comprises three pillars: 1. All organizations are social systems in which elements are inter-related. 2. To improve organizations, the focus should be on the positive dimensions on which to build. This philosophical foundation is Appreciative Inquiry. 3. Yang subscribes to the methodological perspective that she is part of the instrument from which to gain quality data from respondents, and with which to compare and contrast with others’ realities.
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