The Japanese Automotive Industry: Model and Challenge for the Future?

At the time of the U.S.-Japan auto conferences in March 1983, the hoped-for economic recovery as manifested in auto sales had revealed itself quite modestly. Three months later, the indicators were more robust and certainly long overdue for those whose livelihood depends on the health of the industry--some of whom are university professors. With Japanese import restrictions in place until March 1984 and drastically reduced break-even points for domestic manufactures, rising consumer demand holds great promise for the industry. The rapidly rising stock prices of the auto-makers captures well the sense of heightened optimism, as do the various forecasts for improved profits. While the news is certainly welcome, it nevertheless should be greeted with caution. As Mr. Perkins noted at the conference, "we have a tendency to forget things very quickly. If we have a boom market this year, there is a good chance that a lot of things we learned will be forgotten." To put the matter differently and more bluntly, with growing prosperity there is the risk that management will fall back into old habits, making impossible the achievement of sustained quality and productivity improvement. Similarly, the commitment to develop cooperative relations with workers and suppliers will weaken. The union will be under membership pressure to retrieve concessions rather than to take the longer-term view. This longer-term view recognizes that "up-front increases" and adherence to existing work rules increasingly come at the sacrifice of future job security. Government policymakers will turn their attention away from the industry. This may not mean a great deal given how weakly focused their attentions has been during the last three years and how mixed and contradictory government auto policies have been for over a decade.

The mood of the first U of M U.S.-Japan Auto conference in January 1981 could only be described as electric. People wanted to know what our problems were and how we could begin to solve them. Inherent in the latter issue was the questions, what could we learn from the Japanese? One left the conference with a sense that there was a call for action, a mandate to address the problems facing industry. The mood, about a year later, at the March 1982 U.S.-Japan Auto Conference was far more subdued. While undoubtedly this reflected the stream of statistics confirming the continually depressed state of the industry, another dynamic was possibly operating as well. Whereas the 1981 conference was "electric," a state of mind which flowed from a certain frustration at seemingly overwhelming difficulties and often vague expectations of what we might learn from the Japanese, the 1982 conference was more "workmanlike" in the sense that speakers discussed specifically what progress was being made in addressing problems. This more subdued, pragmatic approach continued throughout wand was reinforced by workshops held the day after the main conference. Instead of discussing the virtues of the Just-In-Time system in Japan, speakers addressed the practical problems of introducing such a system in the U.S. firms. Instead of railing about the benefits or failings of regulation of the industry, they discussed what we could reasonably expect from regulation. Instead of exhorting the industry to adopt Japanese practices willy-nilly, they focused on some of the limitations of the Japanese model in a range of different areas. Instead of trying to identify some magic key to Japanese success in the automotive industry, they discussed the interrelationships among various factors. At the same, they continued to explore the basic issues transforming the auto industry worldwide. In this connection, they sought to unravel some of the complexities associated with the internalization of the auto industry and trade obligations under the GATT.