Car Talk

The Machine that Changed the World, by James P. Womack, Daniel T. Jones, and Daniel Roos, New York: Rawson, 323 pages, $22.50

The End of the Line: Autoworkers and the American Dream, An Oral History, edited by Richard Feldman and Michael Betzold, Urbana: University of Illinois Press, 297 pages, $11.95

For decades, the automobile industry was the very symbol of American industrial superiority. Henry Ford, William Durant, Alfred Sloan, Walter Chrysler, and scores of smaller rivals slugged it out for market share, building ever more powerful and sleek vehicles at constantly declining real costs. Cars got better and cheaper at the same time.

Unfortunately, most of the smaller companies disappeared before World War II, and after the war the industry settled into a stable, boring triopoly of General Motors, Ford, and Chrysler, with American Motors trying to hold on with the remnants of Studebaker, Packard, Nash, Willys, and Hudson. Replacing the earlier entrepreneurial giants at the helm of the Big Three were corporate bureaucrats who had survived the intense internal battles for promotion. As the industry matured and its growth slowed in the 1960s and 1970s, it no longer attracted the more talented and adventurous graduates of our engineering and business schools.

The only postwar leaders whose names we will even recognize a decade after their retirement will be Henry Ford II and Lee Iacocca, and their signal contributions have been the Ford Mustang (a retrofitted Falcon); the Ford Fairmont; and the Chrysler (erstwhile Ford) minivan. Shockingly, there has been no memorable leader of General Motors, the industry's failing giant—and no GM product worthy of note for at least 30 and perhaps 50 years. (John DeLorean fans may disagree, but what did DeLorean bring to the market in his tenure at Pontiac and Chevrolet?)

When the Japanese cars appeared on our shores in the late 1960s, no one would have guessed that the American auto industry was vulnerable. The industry was busy introducing Pintos and Vegas that in hindsight were terrible cars, but at the time we had no idea of how much better cars could be. The Big Three, with no need to worry about competitors, grew fat and happy, and their workers simply got fat. But "lean" competitors lurked in the revitalized Japanese economy with their "lean" production system, says a group of MIT students of the industry.

The Machine that Changed the World details the success of the Japanese in designing and producing cars efficiently. Based on some real research at MIT and a large amount of conventional wisdom, this book provides interesting reading for those who know little about the subject. As a new contribution to the understanding of this industry's complicated evolution, however, it falls somewhat short. It relies heavily on two seminal pieces of research one by John Krafcik of MIT and one by Kim Clark of Harvard—published several years ago. These two articles detail the Japanese advantage in design, engineering, and the final assembly of a new car.

Otherwise, there is little new in The Machine. What this book lacks is an explanation of why U.S. companies perform so badly even in the face of overwhelming evidence of the success of the Japanese design, engineering, and production processes. The authors soon convince us that the Japanese are on to something here—"lean" production, "lean" design, "lean" engineering. Simply put, this means that the Japanese organize their supply chain to deliver components without defects precisely as they are needed at the assembly line so as to minimize inventory costs, provide their workforce with incentives to seek cooperative solutions to reducing labor time and improving quality, and design cars to meet changing consumer demands in minimal time.

The Japanese have refined mass-production techniques. They respond to consumer demands with new designs much more quickly than their U.S. counterparts. They understand that quality and reliability are important to buyers. They secure much greater cooperation and concern for quality from their workers. But there are no secrets to this success. Why can't U.S. firms copy their success and expand upon it? Why can't U.S. companies become mean and lean? After all, the Japanese still send their students to the United States to learn the sciences and engineering. Why can't U.S. graduates do as well as Japanese graduates in designing and producing cars?

We can find part of the answer missing from The Machine in an "oral history" of a U.S. truck plant, The End of the Line. This volume is actually no more than the transcription of several dozen interviews with current and recently retired autoworkers at Ford's Wayne, Michigan, truck plant. We don't know whether these workers reflect a representative cross section, but we get a glimpse of the problems that the U.S. industry faces and, indeed, that our larger society faces in the edited transcriptions of their rambling thoughts.

First, most of the workers dislike their jobs and even their employer, but none would consider quitting. Why? The editors don't tell us, but the plain fact is that are paid so much more than they could earn elsewhere that they feel trapped. They can't leave. They hate to stay. And they live in constant fear that they will lose their jobs as the U.S. industry reaches "the end of the line."

Second, most of these workers understand that in the past they produced low quality vehicles inefficiently. They realize that the salad days are over now that the industry has been made competitive by Japanese entry. One worker admits that "the adversary relationship worked all right in the past, but now we have to compete with the Japanese. They build a better product." Nevertheless, many workers resist the Japanese-style cooperation the U.S. companies now seek, because they think that all gains from such cooperation simply go to capitalists and management.

Third, despite the fact that most hate their jobs but live in constant fear of losing them, there is little evidence that these workers—young or old—have given any thought to improving their skills so as to increase their future value in the workplace. Ford has a tuition-assistance program, but one of the so-called team players laments that only 5 percent of the employees use it—surely a low frequency if they fear that they are near the end of the line.

Even more shocking is the fact that their children appear to have done no better with their lives. Many say that they don't want their children to have to suffer on an assembly line as they have, but there is little evidence that they have succeeded in stimulating a desire for education in their children. None tells us of his or her child graduating from college, despite Michigan's excellent public university system.

Finally, they share with their editors an erroneous belief that they are bound eventually to lose their jobs to low-wage workers in some distant underdeveloped country. Yet they must know that they are most likely to lose their jobs to workers in Ohio and Tennessee who are employed by the new Japanese transplants and are not poorly paid. The automobile industry isn't by the wildest stretch of the imagination gravitating to those poor countries that excel in producing shirts and underwear. More than 90 percent of the world's motor vehicles are still produced in highly developed countries such as Japan, the United States, Germany, France, and Canada.

The clear lesson that emerges from these books is that everyone eventually loses when monopoly power becomes entrenched in an industry. The U.S. steel companies, tire companies, and Big Three automobile companies enjoyed a noncompetitive market for too long. They were eventually forced to share their monopoly profits with their workers, but they didn't buy their workers' loyalty or affection in this process. More or less insulated from competition, these companies became lethargic, bureaucratic, and terribly inefficient. The increasing world mobility of capital and goods in the past two decades has forced each of these firms to compete in a global market with global players—many of whom are Japanese.

The old-line firms can't turn around their labor relations, and they can't run away from their workers. As a result, only three or four large steel companies survive out of bankruptcy—none without Japanese and Korean money and technology. Only one large U.S. tire company survives, and it appears to be struggling. No one knows how much of Ford and General Motors will be left by the year 2000. It seems increasingly likely that Chrysler won't be able to sort out its problems except as a small division of a major "lean" foreign player.

But fear not: It isn't "the end of the line." Modern automobiles are being produced in the United States with "lean" production systems, as the MIT authors would describe them. An American automobile industry composed of Nissan, Toyota, Honda, Mitsubishi, Mazda, Isuzu-Subaru, a severely scaled back General Motors, and a "leaner" Ford should serve us much better than did the Big Three in the 1950s and 1960s.

Robert W. Crandall is a senior fellow in economic studies at the Brookings Institution and co-author of Regulating the Automobile.