Ford Motor Company
Re: Why Toyota Won

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By GeezerRob
February 14, 2006

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Op-Ed in today's Wall Street Journal by James P. Womack. Worth reading by anyone interested in a succinct analysis of GM and Ford's non-labor-related woes. [subscription required]

Oh boy...someone wants to listen to me!!! ;)

On a point-by-point basis:

"GM and Ford can't design vehicles that Americans want to pay "Toyota money" for.
...a matter of Toyota's better engineering system, using simple concepts like chief engineers with real responsibility for products, concurrent and simultaneous engineering practices, and sophisticated knowledge capture methods."

GM and Ford are not the Keystone Kops...and Toyota is not the entrance to the Second Coming. The American companies are rapidly implementing efficient product development processes, benchmarked against the best. Toyota has their product development failures. Note the increased incidence of recalls and the engine failures (related to oil pan sludge) that the company has been quick to blame on customers.

"GM and Ford are clueless as to how to work with their suppliers. Sometimes they try to crush their bones -- which only works when the suppliers have any profits to squeeze, and few currently do.
... getting brilliant results and lower prices from American suppliers suppliers adequate profit margins. ... By relentlessly analyzing every step in their shared design and production take out the waste and put in the quality."

GM and Ford have indeed been clueless, but...they recognize it and are working to turn it around. With regard to Toyota's work with American suppliers...I guess I'm not knowledgeable on this. In my experience, most of Toyota's American suppliers are transplanted Japanese. If anyone has specific instances to cite, I'd certainly be interested to learn.

"GM and Ford have miasmic management cultures. These turn competent people into Dilberts. By contrast, Toyota does a brilliant job of making one person responsible for every key business process..."

Well, Dilbert IS one of my favorites...but that's probably true for most folks here. The American companies DO have processes that tend to interfere with progress, but it's improving. I'm not so sure that Toyota is brilliantly unusual in making individuals responsible for every key business process...but I'd like to learn more....

"GM and Ford cling to their wide range of brands: Chevy, Pontiac, Buick, Cadillac, Saab, GMC, and Hummer at GM; Ford, Mercury, Lincoln, Mazda, Jaguar, Volvo, Aston Martin, and Range Rover at about brand revitalization as the way ahead. Yet the most successful car companies in the world -- Toyota and BMW -- have only two or three brands. And this is not an accident.
...A plethora of brands that can't pull their weight drains management energy and company coffers."

This was written by someone that doesn't understand the business...sorry Mr. Womack! The incremental cost/time of added brands is dropping rapidly due to improvements in small volume production/prototype methods. The added management structure to handle the product differentiation is not much compared to the potential payback either. I'd say the major issue here for GM and Ford is to develop a solid brand strategy for each brand. I've seen the North American rollout for the Way Forward for the "local brands": Ford, Mercury and Lincoln. I think that we're "getting it"...surprise, surprise. There are lots of smart folks at GM; I hope they figure it out as well. It seems more difficult at GM. With regard to the brilliance of Toyota and BMW; well, until recently they were one-brand companies. Now they have two or three brands. They're smart adding brands. The American companies must be stupid to hold on to theirs and develop them ;).
By the way, for Ford they need Mercury to have a viable Lincoln brand (dealership volumes...note that Lincoln and Mercury dealerships are generally paired.)

"GM and Ford still treat customers as strangers engaged in one-time transactions. Toyota's Lexus customers cheerfully pay more for the car and the service and then come back for more cars because they love the treatment."

This one's easy. Mr. Womack just inserted his own thoughts here apparently. Compare JD Power ratings of consumer experience with various dealers.

This is just 2004 data, but you'll see Lincoln, Buick and Cadillac above Lexus...and Toyota is well below average. In fact, all of GM's established brands are above average...and not just in Lake Woebegone.

Main point: Perception is not reality* and the press is not always right.

*Yes, perception drives sales. Reality will eventually change perception.

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