Few business-world events have so captured the public's interest as the joint venture of General Motors Corp. and Toyota Motor Co., the world's No. 1 and No. 3 auto companies, to produce a subcompact car in Fremont, Calif.
Nothing else--neither the massive penetration of Japanese cars into the American and European markets nor the incessant clamor of American car makers and the United Auto Workers for protection of one sort or another--has so confirmed the fact that, when it comes to making quality small cars, the Japanese have no superiors.
It is a classic replay of the pragmatic advice: If you can't lick 'em, join 'em. For GM, it's an inexpensive way of keeping its customer base as it phases out its inadequate Chevette. For Toyota, it's a relatively easy way of defusing "local-content" and other protectionist legislative pressures from Washington.
Already the GM-Toyota deal has brought complaints of unfair competition from Chrysler and Ford, and an emotional warning from the UAW that the Toyota management (which apparently will be in charge at Fremont) had better give first priority in hiring to laid-off GM workers.
Shoichiro Toyoda, Toyota's president, isn't making any such promise. But he's a realist: He will have a revolution on his hands if most of the 3,000 new jobs to be created don't go to workers who once labored on the Chevette.
Open questions are how the pay at Fremont is going to compare with the scales in Detroit and just how productive those workers will turn out to be. The question of how to deal with a confrontational union is precisely what has kept Toyota and Nissan out of American passsenger-car operations until now.
In an interview last year with The New York Times, Toyoda observed that in a pilot project for making truck beds near Long Beach, Calif., Toyota achieved only 70 percent of the productivity per worker that it experiences in its Japanese plants.
But there is such a disparity between American and Japanese productivity that even a 70 percent score would give GM incredibly better results than it could get on its own. Japanese productivity, measured by the number of cars produced per worker per year, is so much better that if anything like it is achieved in the joint operation, it will shake the UAW to its core and make UAW President Douglas Fraser wonder why he ever demanded that Japan build cars here.
Back in 1981, I cited Japanese sources claiming that the average Japanese auto worker produced 33 cars in 1977, against 26 per American auto worker. A recent productivity study published by Harbour Associates of Berkley, Mich., shows that by 1980, the Japanese output per worker had soared to 50, whereas the American output had dropped to 24.
These are crude measurements that may overstate Japanese productivity because so much work is contracted out by the main Japanese assembly plants, while American factories have a much higher degree of vertical integration. But these productivity comparisons give a sense of the enormous advantages Japanese management and labor have been able to achieve together.
Now, no one supposes that Toyota will be able to achieve anything like these productivity ratios in its joint operation with GM at Fremont. When I visited Nissan auto plants in Tokyo and Yokohama in 1981, I saw that the relationship between management and labor, so rooted in the Japanese culture, was a key element in Japanese automakers' phenomenal successes. "I am a member of the company, not just the union," an auto worker proudly reminded me.
The Japanese auto industry has another enormous advantage: the now-famous "just-in-time" delivery system that reduces inventory costs to a bare minimum. Despite the kind of traffic congestion that exists in the 50-mile corridor between Tokyo and Yokohama, suppliers deliver parts exactly on schedule, literally minutes before they move onto the lines.
So Toyota, in combination with GM, won't be able to do exactly what it can do alone in Toyota City, or what Nissan can do in Yokohama.
But Toyota-GM can probably fall short of that standard in Fremont and still do well. For some American car buyers, it provides a way of getting Japanese quality under a Chevrolet label and of having access, therefore, to the network of Chevrolet dealers. (That best-of-both-worlds advantage has helped American Motors, with its new relationship with Renault, sell its popular Alliance.)
Harbridge House, a private consulting firm in Boston, finds that some Americans, even when acknowledging superior foreign quality, would really prefer to stick to a domestic label. Thus, the Fremont hybrid is likely to sell even if it doesn't fully match a Toyota in quality: It just needs to be better than the Chevette.