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Toyota: Still Paranoid.

Rick Carter, Editor-in-Chief

Despite what Ozzy Osborne said about it, paranoia can be a good thing, especially when it comes to business. Those afflicted with the real thing - a psychotic disorder characterized by delusions of persecution - are, in essence, always in fear that someone or something is after them. And if there's one simple practice business professors everywhere should be teaching, it's this.

Toyota knows about paranoia. The automaker that is now poised to surpass U.S. automakers in domestic market share is keenly aware of its own come-from-behind status and the importance of keeping an eye on the rear.

In a recent interview, incoming president of Toyota Motor North America, Inc., Jim Press, told the Associated Press that despite Toyota's surging growth, "We have to keep understanding what got us here. We've got to keep paranoid."

It may seem disingenuous today for a Toyota executive to speak of his company this way. But Press is right on. Consider, for example, how vastly different things might be for General Motors or Ford if they had practiced a little paranoia way back when. It might be the GM Prius drivers were now lining up to buy. Instead, these stalwart organizations have ceded great portions of their respective sales kingdoms to companies that didn't even register on their corporate radars until it was too late.

But we're talking hindsight now, which is not to be confused with paranoia - though I'm sure both are in great supply in Detroit at this moment. No doubt these perspectives helped inspire some of the improvements among U.S. automakers documented in the 2006 Harbour Report released this month. This annual state-of-the-auto-industry update shows that the Big Three are making strides in their efforts to maintain distance from the Japanese. They've all shaved the time required to build a vehicle, for example, especially DaimlerChrysler who improved assembly productivity by 6% from 2004 to 2005.

Some of the Big Three's plants are also named the most efficient in North America. However, in what can only be viewed as an exasperatingly typical turn of events, one of these most-efficient facilities - Ford's Atlanta assembly plant - is slated to close under previously announced restructuring plans. According to the Harbour Report's publishers, this single plant "set the benchmark for labor productivity" with a measure of 15.37 hours per vehicle - far exceeding the average 28.46 hours per vehicle attained by overall winner Nissan.

So while the Big Three are becoming more efficient and are making better use of capacity by shutting down plants, are they learning anything? Will these efforts be enough to keep them strong?

I guess it will partly depend on how effective reactive strategy is compared with proactive. Clearly, the Big Three are in reactive phase, up against Toyota and others that have been pushing the envelope for some time. And when you consider the time Toyota has had to learn and grow from the array of continuous-improvement techniques the world is now learning about - lean manufacturing, JIT, kanban, poka-yoke, kaizen events, Six Sigma - the conclusion might seem foregone.

But I'm certain Toyota North America's new boss has not counted anyone out of the game, and we shouldn't either. Now that U.S. auto manufacturers are getting better production grades, maybe they'll learn something else from Toyota and put it to good use: the value of paranoia.

rlcarter@reedbusiness.com
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Publication:Industrial Maintenance & Plant Operation
Date:Jun 1, 2006
Words:562
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