Japanese automakers enjoy a significant production-cost advantage over their U.S. counterparts--by as much as $1,500 per small vehicle--largely because the Japanese companies are better-managed, according to a National Science Foundation report released yesterday.
The report said U.S. auto productivity is hurt by a management style that basically is adversarial and control-oriented and, as a result, is not geared to getting the best results from its workers.
The report noted with "cautious optimism" that some beneficial labor-management changes are taking place. But it said that these developments--such as establishing "quality-of-work-life circles" designed to give workers more say on the plant floor--are fragile infants in comparison to Japanese programs.
"Changes in the character" of international competition in the auto industry, in which foreign manufacturers have captured 30 percent of the domestic market, "have highlighted the weaknesses" of the traditional U.S. management style, the report said. The adversarial approach "inspires no loyalty or commitment, and it fails to tap information and experience in the work force," the report said.
Ralph L. Miller, one of the study panel's 12 members and a Rockwell International vice president, said at a news conference yesterday: "The way we teach people to run businesses in this country doesn't work very well in comparison to the Japanese model."
He said the U.S. system incorporates "too much control" in which "we have checkers checking checkers." That kind of duplication creates "too much nonvalue-added work," which contributes to U.S. production costs, Miller said.
In that light, Draconian white-collar work-force reductions by The Big Three automakers--by as much as 25 percent at Chrysler Corp., No. 3, and Ford Motor Co., No. 2--are necessary, Miller said.
"If we don't do it--make those kinds of cuts--nobody is going to be employed. The net result is that we're going to have many fewer people employed in the auto industry if we're going to be competitive," Miller said.
Panel members Donald F. Ephlin, vice president in charge of the United Auto Workers Ford unit, and Ford Vice President James K. Bakken, agreed with the panel's finding that "something close to a cultural revolution" is needed to change traditional labor-management relationships and other important aspects of the domestic auto industry.
But they preferred to emphasize "positive changes," such as the recent concession agreements--or "cooperation contracts," depending on one's viewpoint--between the union and domestic car producers.
"The Japanese have taught us some things that we can do. We finally learned that the work force is a total work force," Bakken said.
The 190-page report was based on a two-year study of the domestic auto industry's competitive posture. The panel included academicians, industry, management and labor experts.
"This is not another government study cranked out by 90-day wonders," said William J. Abernathy, a Harvard business professor who chaired the panel. Abernathy said many of the report's findings "are diametrically opposed" to conventional thinking that the now weakened U.S. auto industry can be revived mostly through large infusions of capital.
"Too many business leaders are holding on to that bombed-out theory," Abernathy said. He said such an approach is the equivalent of "throwing money after a problem."
The report said that several elements of the Japanese management technique in which workers participate in production decisions and execution "are refinements of practices developed in the United States." But it said "certain critical aspects" of the Japanese approach "are accorded much less emphasis in the U.S. practice." The "policies and procedures connected with work-force management are a case in point," the report said.