New York Times Rediscovers Japanese Car Story

One of the tragedies of the American media is that it has bled out an entire generation of reporters and writers who actually remember how certain issues got started and how they were resolved–or not resolved.

The U.S.-Japanese auto imbalance is just one of those issues, as evidenced by this piece in today’s Times. There is no easy fix to this problem, which has been developing for more than 30 years. It was 1985 when we at Business Week wrote the first story about the emergence of Toyota in a cover entitled, “Toyota’s Fast Lane.” We invented the issue.

The first way the Americans tried to respond to the Japanese auto influx was to ask, why are these guys building cars that are better than ours? What secret sauce do they possess? I chronicled this, as have others, in my book, “Why GM Matters: Inside the Race To Transform an American Icon.”

The auto industry could not figure out that the Japanese were using lean manufacturing techniques and were simply making more reliable cars. They embraced their workers as part of that system whereas Detroit was at war with its workers. So the industry, with help from Washington, came up with this idea: let’s “force” the Japanese to manufacture in the United States and have to deal with our lousy workers. That will end the Japanese competitive advance.

Of course, it didn’t. Starting with the NUMMI plant in Fremont, California, the Japanese got along great with American workers. Their expansion into Ohio, Kentucky, Tennessee and other cheaper locations merely turned up the competitive heat on Detroit.

The next showdown took place in 1995 with the Clinton Administration threatening to impose duties on Toyota’s Lexus division if the Japanese did not open their market to American cars. There was a big buildup to the confrontation but in the end, Clinton declared victory and marched away. Nothing changed. We discovered that Americans wanted their Japanese cars so much that it was politically impossible to impose tariffs on them.

All throughout this period, American manufacturers have calculated that there is little point to creating expensive distribution networks in Japan or in adapting their products to the Japanese market. Case in point: Americans drive on the right side of the road, but the Japanese drive on the left side, like the British do. Japanese roads also are very narrow, much too narrow for many of the bigger SUVs and pickups that Detroit pumps out. Does anyone believe that significant numbers of Japanese are going to drive vehicles with the steering wheel on the wrong side? Does anyone believe that the Japanese can maneuver a Cadillac Escalade or Lincoln Navigator through their tiny lanes and streets?

Of course not. So President Trump is waking up to a situation that has been in the making for more than 30 years. To bring about any significant shift would require at least a decade of sustained focus and cooperation between Detroit and Washington, which is a contradiction in terms. So Trump can generate all the headlines he wants but in the end, he has not the slightest idea of how deeply embedded the Japanese auto industry is in the very fabric of the American economy.


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