What Toyota knows that GM doesn’t

Post written by Chris Spagnuolo. Follow Chris on Twitter 325 comments
Toyota Production Line
Toyota Production Line

Do you know how many hourly jobs GM has laid off from 2006 to July 2008? Take a guess. How about 34,000? And now, they’re talking about another 5,500 layoffs. And they’re asking you and your government for a bailout to end their troubled, outdated, low quality, wasteful production system. But, let’s not focus on fixing GM’s problems with an infusion of cash. There’s something even deeper going on here that’s really wrong.

OK, here’s a better question. How many hourly jobs has Toyota’s American production system laid off in the same time frame? Zero. That’s right. ZERO. How? Isn’t Toyota experiencing the same slow down in auto sales as GM is? Yes, it is. And yes, Toyota has halted production at its Texas and Indiana plants for the past 3 months. But the 4,500 people who work at those plants have not been laid off. What!?!?! How? Why?

The answer: Toyota has a special culture, deep-rooted values, and respect for their workforce. Toyota’s tradition is to NOT lay off employees during hard times. This tradition hasn’t really been put to the test until now. And Toyota has stuck to its guns and its values.

“This was the first chance we’ve really had to live out our values,” says Latondra Newton, general manager of Toyota’s Team Member Development Center in Erlanger, Ky. “We’re not just keeping people on the payroll because we’re nice. At the end of all this, our hope is that we’ll end up with a more skilled North American workforce.”

Interesting. But what does that last line mean? “At the end of all this, our hope is that we’ll end up with a more skilled North American workforce.” It means that while these employees were not manufacturing automobiles, they were in training. They were doing safety drills, participating in productivity improvement exercises, attending presentations on material handling and workplace hazards, taking diversity and ethics classes, attending maintenance education and taking a stream of online tests to measure and record their skill improvements. Toyota is shifted the Texas and Indiana workers temporarily to Toyota plants whose assembly lines were moving at full speed, such as the Camry assembly plant in Georgetown, Ky. In addition to all of this, the workers also spent some time painting the plants and even helped build Habitat for Humanity homes. And they were getting paid.

Wow! So what is this costing Toyota? The estimate is at least $50 million dollars, plus the loss of revenue of shutting down production. Why is this value and tradition worth so much to Toyota? Why would they be willing to spend $50 million rather than lay people off? It’s because Toyota believes that its people, yes, its PEOPLE are its greatest investment and its greatest asset. You hear so many companies say that, but would they really put their money where their mouths are when the rubber hits the road (no pun intended)? In Toyota’s case, the answer is yes they would.

So what does Toyota get out of this? When, not if, the plants return to full production, Toyota will have well trained employees on the front line, ready and able to meet the demand for their vehicles. And not only will they be well trained, they’ll be happy and motivated to work. Because Toyota is willing to go to the mat for their people, their people will be willing to do the same for Toyota.

The lesson here: Unlike their counterparts GM and Ford, Toyota has always taken a long-term strategic view about their employees. Toyota understands that laying off thousands of employees for slowdowns or plant retooling is counter productive. They wisely utilize the time to redistribute their workforce to understaffed plants, provide additional training for the new products, and leverage their workforce to speed the transition for newer products. Their philosophy has avoided labor disputes and staffing shortages. It has kept the company as a leader in quality and profitability over its shortsighted competitors.

So, the message for you in all of this: Really commit to upholding the value that your people, let me repeat that, your PEOPLE are your greatest asset. Treat them with respect and dignity. Do everything in your power and your imagination to keep them on the payroll during the rough times. If you don’t, you may not find those people again on the upside of the downturn. And if you do, you’ll have hyper-productive, motivated teams delivering quality because they’re committed on a deeper level to your company.

Note 1: If you really want to understand why the Big 3 are losing big time compared to Toyota in terms of market share, take a listen this excerpt from Public Radio International’s “The World” report from last Friday (Nov. 14, 2008) describing why Toyota and other Japanese manufacturers seem to have a leg up on their American counterparts (for the complete report, from The World, click here).  After reading this post, you might not be so surprised when you hear that the employees being laid off by the Big 3 are now working at Toyota.  Click here to listen to the excerpted report.

Note 2: From Forbes online: At American companies, finance guys and marketers rise to the top.  Not at Honda.  Read the whole article here.

Note 3: Another Japanese leader shows the way to be a true leader: When Japan Airlines JAL slashed jobs and asked older employees to retire early, their CEO cut every single one of his corporate perks, and then for three years running slashed his own pay. In 2007, he made about $90,000 U.S., less than what his pilots earn.  Compare that to United Airlines CEO Glenn Tilton: In 2006, Tilton’s compensation alone exceeded $39.7 million ($38 million in stock and options) in a year the company emerged from bankruptcy and employees were forced to accept painful cuts!  Read the rest of the story about JAL and United here.

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  1. Chris said,

    There is a huge comment stream with over 450 comments happening on concerning this post. Check it out there or leave a comment here.

    Reddit link:

  2. Dennis Forbes said,

    “And now they’re asking you and your government for a bailout to end their troubled, outdated, low quality, wasteful production system.”

    Thanks for making your ignorance and extraordinary bias evident right at the outset of the article. Saves having to read the rest.

    The efficiency of the various car makers is virtually a toss up. Right now the most efficient automaker is actually Chrysler, but then it’s a minute difference to the other makers.l

  3. Kevin Wood said,

    Build the things people really need not necessarily what they want or tell you what they want.

    The “Build it and they will come” business model is great when there is not a lot of choice i.e. buying a car in the 50′s or when “needs” can be subliminated into high concepts (bigger, faster, sexier) by advertising and subsidised by cheap credit..

    But the decision matrix facing a consumer in the current economic environment collapses back to requiring the essential need for a reliable, functional and economic solution for getting from A-to-B.

  4. Peet said,

    @Dennis Forbes: If you had read the rest of the article you would not look as stupid as you do right now.

  5. bmsterling (Benjamin Sterling) said, Some good ideas if you are running your own company.

  6. bmsterling (Benjamin Sterling) said, Some good ideas if you are running your own company.

  7. bmsterling (Benjamin Sterling) said, Some good ideas if you are running your own company.

  8. Randy Kemp said,

    Easy! One thing is Six-Sigma is used throughout their processes and procedures. This has been done for many years, long before GM ever experimented with it, and everyone at Toyota is grounded in Six-Sigma. There are other factors, but I will comment on this one.

  9. Brian Hall said,


    Toyota does not know anything that GM does not already know. you are not matching apples to apples. GM got stuck with the UAW and all the BS that comes with having to avoid strikes if they do not get what they want.

    If the union is ever able to force it’s self in the Toyota or Honda Plants, give them 25 to 50 years and the same will happen.

    The saying that the Japan does not create or invent things, but just copies them is somewhat true in this industry. They took the automobile made it cheaper and better using lower wages, very little benefits and other tactics to get where they are today. Right or wrong, that is the facts.

    As we saw with Chrysler, Mercedes could not turn them around or make a better product which shows the strength of the UAW.

    You can come up withe the best designs, faster and better vehicle, but if it is not profitable the share holders will not approve. If you have followed the JD Powers ratings, you will see that even the top end cars are having more issues every year. One could probably trace many of the issues to US plants. Having pride in your job and your position regardless what you do is very hard to find today. Something that the overseas people take very serious (could be due to threat of lost job, embarrassment to family name, etc.).

    If you have ever worked in a US auto plant (I have worked in 2), you would have a better picture or better experience of what goes on in there that causes US vehicle to have the issues that they have.

    The talent pool of engineers and skilled workers in each company are the same, it’s the production works attitude or lack of that makes the difference. If gas prices would not have shot up as fast as they did, would GM still be in this issues….yes, to an extent due to the monthly retirement payments they make. However, they would be selling more profitable SUVs that would bring the funds that they need to pay these benefits.

    Toyota and Honda’s sales are both down to historic lows, and they have laid off people, just not in mass numbers like GM. They also have 10 times (actually more) the reserves that GM had and can slow down production without the threat of a strike.

    Honda has gone public in the past saying that if the UAW were to succeed in forcing representation in their Plants in the US, they would shut them down (Marrysville, Ohio).

    So I would say that Toyota knows that the UAW is a bad thing….but GM already know that.

  10. Renato Geribello said,

    Basically their entire line of products, including Lexus, are based on 6 platforms. That is the main difference.

  11. Douglas O'Donnell said,

    I think old school vs. new school is the short answer. I think GM has not been able to pivot as fast in reacting to market fluctuations in demand. Whereas Toyota has always been proactive and flexible. They have predicted the future more accurately. They also handle customers, owners, suppliers much more efficiently.

    For instance, Toyota comes out with and markets the Prius. You can buy it, it’s ready. GM advertises the Volt and their hydrogen technology cars as, coming in 2010 or later. All that does is piss people off. I heard a GM radio ad just this morning that said, if you see one of our hydrogen powered trucks on the road, you can’t buy it yet, but you can applaud. What?

    I still feel American car companies are a few years away from ‘getting it’.

  12. Dennis Forbes said,

    >@Dennis Forbes: If you had read the rest of the article you would not look as stupid as you do right now.

    After reading the rest of the article, I have to agree…no, actually, the rest of the article undermines the core point even further.

    As they say, none of us is as stupid as all of us, and to read the same herd nonsense again and again gets a little tired. Try thinking for yourself.

  13. Corey O'Donnell said,

    Toyota knows that car-buying is an emotional decision for most people, and there’s nothing more important than a positive brand image. Toyota, Honda, Nissan, all began as ‘cheap’ import alternatives, but took the time over the last 4 decades to build solid reputations for quality, reliability, and attention to design.

    GM and other American car-makers took the buyer for granted, releasing gas-guzzling, unreliable, poorly designed cars until their wake-up call in the 90′s. They’ve been trying to overcome their poor image ever since. Perhaps nothing illustrates that more than simply looking at the odometer of an American car vs. a Japanese car in the late 80′s; most American vehicles had odometers that went up to 99,999 miles; the Japanese cars had odometers that expressed an optimism that you’d actually reach over 100k on your vehicle, and went to 999,999 before resetting. The Japanese car makers knew that people would buy a new car not just because of ‘planned obsolescence’ (a.k.a “build it so it will break and they have to buy a new one”) but because of style and a desire for the latest gadgets.

    Now, GM appears more as a follower than a leader. Their opportunity for survival lies in ‘getting ahead’ of the competition, leading the way in new green energy designs. Most people who wouldn’t consider a traditional GM vehicle thanks to their soiled reputation would take a long look at a well-built, technologically advanced hybrid or plug-in.

    My recommendations for GM.

    - Cut your product line back to 4-6 vehicles.
    - Dump all the ‘alternative’ branding, release a car under one name.
    - Get green, fast.
    - Throw top technology (GPS, Bluetooth, etc.) into all your cars.
    - Stop using cheap plastics for your interiors.
    - Look at the iPod, not just the body, but the software, integration, business model (what makes people buy a new iPod?) and build it as a car. A futuristic, clean, technologically advanced vehicle.
    - Hell, just pay Steve Jobs and Jonathan Ive to design you a car that will actually sell.

  14. rappstar (Jordan Rapp) said,

    What Toyota knows:

  15. rappstar (Jordan Rapp) said,

    What Toyota knows:

  16. rappstar (Jordan Rapp) said,

    What Toyota knows:

  17. Guy Bacon said,

    The first paragraph really got me to read the entire article! The bloated structure of the big 3 is really killing their companies. You hear of worker layoffs but, where are the management layoffs? Toyota seems to take the higher road,which involves more management effort and not the lazy road of easily handing out pink-slips. Management commonly gets lazy and complacent, we all know that!! A company should retrain or relocate before they remove.

  18. Rudy Torres said,

    How to build a quality and good value car that customers want to buy in the most cost effective manner… ;-)

  19. rick said,

    The one factor of a free-market system that absolutely must be there for it to function is that of companies going under. Bankruptcy lets the worthy assets of these companies be sold and also for the bad assets and failed execs to be out of a job. Competition is allowed to catch up in the interim and then allow more businesses to create jobs and flourish.

    A bailout to GM would hurt tesla motors and any other startup with new ideas and, right now, enough room to run.

    Go toyota!

  20. Rich Shadrin said,

    Chris the analogy extends to the mindset of executives who only see through a bipolar lens; either grow the business from the top or cut from the bottom. They forget that training and nurturing talent in the middle will create a force of loyalty, not to mention agile excellence when business does, in fact pick up. To the contrary, should business not rise, even on a soft curve, these individuals can be the source of new product ideas, efficiencies and drive – paying back the investment the company made in them. As one who is in the OD/Corp Trng world, my argument continually is re-educating leaders to see beyond the next hill and take a chance. See that what they are doing is not working, one would think they might embrace such thinking. But those MBA’s who were trained to follow strict process models and set algorithms are presiding over the demise of many industries.

    In this case, playing out from the middle by providing education and ideation principles will create a cadre of multi-dimensional thinkers who can save the organization organically.

  21. josephjaramillo (Joseph Jaramillo) said,

    What Toyota Knows That GM Doesn’t (via reddit):

  22. josephjaramillo (Joseph Jaramillo) said,

    What Toyota Knows That GM Doesn’t (via reddit):

  23. josephjaramillo (Joseph Jaramillo) said,

    What Toyota Knows That GM Doesn’t (via reddit):

  24. Chris said,

    You know what Toyota doesn’t have? Large legacy costs. GM spends $4b/yr in pension costs alone. Sure GM has made more than their fare share of problems, but you are giving GM far too little credit and Toyota way too much. The 2010 union contracts/pension agreements virtually ‘solve’ this issue for GM. Back up 10-15 years ago. You think GM could’ve squeezed these types of concessions from the auto unions? Hardly. The fact is that the unions needed to ber weakened to their current state for GM to get these kinds of agreements. How is that GM’s fault?

    Check out jdpa’s initial quality survey and their vehicle dep. study (IQS and VDS) respectively. Look at the history of the all-too-important ‘entry level sedan’ market. You’ll find the Malibu ranks 1st-3rd on either or both or virtually every one for the past 5 years. Find the Camry. Just try. It hasn’t made either list in a decade plus! GM’s biggest hurdle is public perception (a bed they’ve made). Ignorant articles claiming “troubled, outdated, low quality, wasteful production system” w/o any hard numbers from trusted industry metric-gatherer’s (jdpa, pacific, etc). don’t do anything but reinforce the perception-reality gap that GM, Ford, and others face.

    You can talk all you want about ‘building vehicles that people want’ – but the facts tell the real story: GM was building millions of full-size trucks and SUV’s and selling them at a profit – for a decade-plus. If you think Toyota ‘reads the marketplace’ and forecasts any better, ask yourself why they brought a massive, 5.7l truck to the market when the full-size market was just starting to crash.

    Honda enthusiasts can stop from patting themselves on the back, too. Honda does it no better. Sure, they don’t have a V8, but they’ve juiced their 3.5l V6 engine in the Ridgeline to where it puts out V8-like gas-guzzling numbers; from a truck that is decidedly less-capable (and weighs less) than it’s full-size brethren. As it is, they are still probably to be admired the most; even though each generation Accord and Civic keep getting larger and more bloated. A Civic today is the same size as the Accord 10-15 years ago.

    The truth is that all auto-manufacturers were ill-prepared for the all-out collapse that is occuring. The domestics, through their legacy costs alone just don’t have the bankroll to survive.

  25. Julia Countryman said,


    How does the UAW keep GM from producing quality vehicles? Is it the pay scale that puts more money into the workers’ pockets versus being able to build cash reserves and put more money into development? It seems to me that if the workers were paid such high wages, then GM could demand more quality in design, hiring only the best most innovative engineers. Please explain.

  26. Bill Barr said,

    Both Toyota and Nissan in the US physically locate their design, marketing and engineering departments in their largest marketplaces (California and the Northeast). Also, GM, Ford and Chrysler have way too much management, union contracts are breaking their backs plus they all pay far too much attention to Wall St. and not enough to their long-term survival. Finally, they all rely too much on their financing divisions for profits at the top line instead of focusing on bottom-line quality which truly delivers value to customers. Delivering value to customers is far more important than delivering value to shareholders because without customers, there is no cashflow for shareholders.

  27. MikeLinPA said,


    What you are overlooking is that GM employees NEED a union to be treated fairly. (The unions often go too far in their demand and give too little effort in return, but that is the pendulum swinging the other way.) Toyota workers apparently do not need a union as badly as GM workers did 50 years ago. Not laying off workers as a first strategy is one heck of an incentive for the workforce!
    Just for the record, I have been both management and union. I support unions! I do not support whiney lazy workers who don’t work for their wages and benefits. Once again, common sense can be found, (gasp,) somewhere in the middle, not at either extreme. (My common sense is tingling!)

  28. Thomas Haines said,



  29. Paul said,

    One word: Legacy … look at GM’s issues, trace back to why they exist, understand why they don’t overcome them, and it’s usually that their history (unions, dealers, branding, engineering) has cemented a structure of inefficiency. They chisel away at the cement monstrosity with years of decisions to try to turn it around, but it’s always too slow. The cement boots never allow them to run, there’s always a “good” reason not to change as quickly as needed.

    And so they’ll struggle, and struggle, and struggle … bite size improvements when wholesale changes are required to affect the cost equation, new products, and customer focus …

    I believe a “bail-out” should be carefully crafted since providing a few meals to those that can’t feed themselves, is a very short term fix.

  30. PINGBACK said,


    …Quelle: What Toyota knows that GM doesn’t: Bei dieser Firma befürworte ich dieses Vorgehen – nicht etwa wegen meiner grossen Sympathien für japanische Unternehmen, sondern weil die Bude bewiesen hat, innovativ zu sein und Qualitäts-Fahrzeuge auf den Markt zu werfen. Wenn die Rezession durch ist, wird Toyota wieder Tausende von Fahrzeugen verkaufen. Bei GM bin ich mir da nicht so sicher …

  31. KR Chandrasekaran said,

    I think Toyota understands its target customers better than GM does – and it seems far more customer focussed than GM has ever been. So it makes better cars & vehicles that align better with customer needs & aspirations.

  32. mankuthimma (mankuthimma) said, <- This is the real CSR

  33. mankuthimma (mankuthimma) said, <- This is the real CSR

  34. mankuthimma (mankuthimma) said, <- This is the real CSR

  35. Matt said,

    Wow, Rich. That was a whole lot of buzzwords there. Care to translate into English?

  36. David Kutcher said,

    Ignore Six-Sigma and all that for a second.

    Look at the retirement packages. The ratio of current employees to pensioners is simply staggering. GM paid $4.6 billion in healthcare costs in 2007 making it the largest provider of healthcare. It’s white-collar retired employees have one of the best insurance plans in the US.

    The average compensation at GM is $75 an hour; at Toyota it’s $47 an hour.

  37. Don Mitchell said,

    Without getting into a lot of debate on management and manufacturing philosophy, it’s simple – Toyota knows how to build Prius Hybrids and WORK with labor. GM knows how to build Hummers and Cadillac Escalades and FIGHT with labor.

  38. Bart Scoble said,

    I think there is a huge difference in overall craftsmanship and quality in US made vs Foreign made cars. Not sold on that? Get into a car that 3-4 years old. A Toyota/Honda/Nissan still feel good, very few squeaks, little rattling, the engine still performs well. Now get into a US built car. It feels old. That is also reflected in BlueBook values. The foreign made cars hold their value much better than any US made car/truck. Even the small things like buttons, seats, radios, plastic, doors feel and work better in a Toyota/Honda/Nissan. And we wonder why we owe more than the car is worth after just 2 years?

  39. rdmorin (Rich Morin) said, – What Toyota knows that GM doesn’t

  40. rdmorin (Rich Morin) said, – What Toyota knows that GM doesn’t

  41. rdmorin (Rich Morin) said, – What Toyota knows that GM doesn’t

  42. Doug said,

    2 things they need to do:

    -Make cars that run on batteries and/or solar or else natural gas.

    -Make cars and driving safer. 40,000 people die a year in car accidents just in the US alone.

    Ralph Nader showed how dangerous cars are 40 years ago and 30 years ago we saw that our dependency on foreign oil was not sustainable, but like the smoking industry, the auto industry has done little to address these problems. So perhaps like the smoking industry they need to be left for the wolves.

    The Big 3 have also been acting like a monopoly, stifling competition for decades. See the movie Tucker for example:

  43. Greg Curran said,

    In addition, Toyota also clearly knows how to hire, train and motivate a work force. Even though the cars they, and other foreign carmakers, make are often referred to as imports, they produce many cars here in the USA, with American workers who produce excellent products.

    Some pundits try to reduce that issue down to one of “Union vs. Non-union”.
    But that’s far too simplistic. Sure, Detroit automakers suffer from legacy costs related to past union contracts, but their current problems are also greatly attributed to senior management right here in the present that’s just plain bad.

  44. Paul Sherland said,

    Randy, David, & Don all have valid points. The question now is whether an infusion of taxpayer cash would be effective in turning the GM/UAW ship around or whether GM and the UAW, with temporary financial support, would be willing to make the changes necessary to build a new, viable GM.

  45. Lynn Wheeler said,

    long ago and far away … in the wake of foreign import quotas, foreign companies learned how to efficiently build cars in the US … and a recent article:

    Dumbest People’ Industry Image May Cost Wagoner Job

    a couple quotes from above:

    “There’s the feeling that next to financial services, automotive execs
    are the dumbest people in the world”

    “It’s pretty clear that management has made some pretty bad decisions
    over the last 20 years”

    “Toyota generated pretax profit of $922 per vehicle on North American
    sales in 2007, while GM lost $729″

    … snip …

  46. Hermann Plank said,

    two huge differences imho
    1. typical short term profit thinking by GM to satisfy share holders on a monthly basis vs. long term planning of Toyota (and other Japanese firms)
    2. innovation and speed of execution

  47. Paul Milligan said,

    Toyota has for many years concentrated its production efforts into smaller engined and more economical cars. GM has ignored market trends and continued to pursue production of SUV’s, large engined uneconomical vehicles and trucks.

    Where are we today? SUV sales are down 54% since July 2007, truck sales are down 33% since July 2007. People are moving away from these and buying the smaller economical vehicles produced by Toyota and other Japanese makes.

    GM has also severely suffered having a highly unionised workforce offering voluntary redundancy to 74,000 workers. Toyota does not have a unionised workforce and has not been exposed to huge labour costs.

    Therefore Toyota are much more isolated and benefiting from the current market trends and GM & Ford are bearing the brunt.

    GM posted record losses of $39billion in 2007 and this year similar is expected. GM is expected to be out of cash by mid 2009 and is facing survival problems which I don’t believe they can do without being acquired or by the government bailing them out.

  48. notPaul42 (notPaul42) said,

    An interesting article on GM’s business model.

  49. notPaul42 (notPaul42) said,

    An interesting article on GM’s business model.

  50. notPaul42 (notPaul42) said,

    An interesting article on GM’s business model.

  51. David Kutcher said,

    Giving them money, loaning them money, etc. would only delay the inevitable: the Big 3 need to get out from under their crushing labor contracts and obligations and restructure into competitive entities, not entities that make cars so as to afford to pay their obligations.

    I’ve been trying to find information, but it doesn’t seem like any of the Big 3 have any plan to become profitable any time in the near future, let alone survive the next 2-3 years. As far as I can tell giving them money now would then require more money in 6 months, 12 months, etc.

  52. loveurmindnsoul (Thao Ly) said,

    Very happy I bought a Toyota Camry because they are socially responsibile.

  53. loveurmindnsoul (Thao Ly) said,

    Very happy I bought a Toyota Camry because they are socially responsibile.

  54. loveurmindnsoul (Thao Ly) said,

    Very happy I bought a Toyota Camry because they are socially responsibile.

  55. Dave M said,

    The author is sorely misinformed. When GM first started losing market share they agreed to pay employees full wages to report every day and do nothing in the “jobs bank” that still exists today. The logic was very simple — they valued their workers and their ability to perform many skilled tasks.

    This is no different than Toyota’s program today. It’s also basic knowledge for anyone involved in the auto industry. The real test will be when Toyota’s sales reflect a need to cut 10,000 jobs.

  56. WookieeBoy (Shawn Parker) said,

    No wonder the US auto makers are getting stomped:

  57. WookieeBoy (Shawn Parker) said,

    No wonder the US auto makers are getting stomped:

  58. WookieeBoy (Shawn Parker) said,

    No wonder the US auto makers are getting stomped:

  59. nelz9999 (Nelz) said,

    @BarackObama – can we enforce some of this on the Big 3?

  60. nelz9999 (Nelz) said,

    @BarackObama – can we enforce some of this on the Big 3?

  61. nelz9999 (Nelz) said,

    @BarackObama – can we enforce some of this on the Big 3?

  62. John Smithers said,

    Not to unionize. The main problem with the Big 3 are the Auto Maker Unions. They negotiate for non-merit raises, pensions, etc. Whereas Toyota, Honda, and the other Asian players give only merit increases in pay and give you a 401k. Makes a huge difference.

  63. Karl Schmieder said,

    I’ll give you one example of what works with Toyota.

    A friend of mine bought an FJ-Cruiser last year. Within a week of driving off the lot, he was invited to join a group for FJ-Cruiser enthusiasts. The invitation came with a fairly expensive scale model of the car he bought. He joined the group because he is into the car. He told me he gets updates and information a couple of times a month, along with news from the dealership and the salesman that sold him the car.

    So, Toyota might not sell him another vehicle for several years, but because of their customer relationship management, they are keeping themselves top of mind with him.

    I’ve had the same experience with a Honda I purchased two years back. I get letters from the SALESMAN four or five times a year, not to mention the monthly communication I get from the dealership. I know that when the time comes to buy another car, Honda will definitely top the list.

    I’m sure there are individual salesmen and dealerships within the Big 3 that operate the same way, but it is not something corporate is encouraging (or requiring).

    I would be disappointed if any of the Big 3 went bankrupt (it’s about the repercussions and the psychological impact more than anything), but am very ambivalent about a bailout. Here’s three companies that sold pickups and SUVs while lobbying against CAFE standards.

    I’m with recent WSJ and Thomas Friedman editorials requiring the car makers to change their ways if they accept bailout money.

  64. Matt Lukens said,

    I’m disheartened by the amount of propaganda that seems to be out there regarding just how devastating it would be to our economy if one of these companies failed. I think it’s important to keep in mind that Toyota is still profitable. For every automaker that fails, there is an opportunity for another to thrive.

    Even within GM or Ford there are inherent marketing problems. Brands compete with each other. GM trucks and Chevy trucks, for example. There are just too many models. The chevy cobalt, saturn ion and pontiac g5 compete with each other. For Joe Consumer, the brands don’t mean what they used to. Jeep has been terribly diluted with off-brand vehicles catering more to scrapbooking moms than to outdoor enthusiasts. For the life of me I can’t figure out why the Mercury brand even exists.

    I certainly don’t want all 3 of the big 3 to fail, but I believe that we’re at a point where there needs to be some brand consolidation. The foreign automakers will continue to have success with building cars here don’t have the legacy costs that the big three have. And, as David points out, without an alternative to business-as-usual I just don’t think federal money should be put into the automotive industry right now.

  65. Chris said,

    @Dave M: Right, the jobs bank. Even if GM did pay people to stay idle, they didn’t offer them training or use the down time to retrain retool or rethink. They did as you said “agreed to pay employees full wages to report every day and do nothing in the “jobs bank” that still exists today.” That’s exactly the problem!

  66. Alison Fraser said,

    Ten years ago I met with one of the Big Three to pitch them on some marketing consulting services.

    I presented information to them to suggest the following:

    That they had too many models and the geographic distribution would no longer work in the new economy. Meaning that they should consolidate models to one USP per price point. And that they really needed to think about ONE brand.

    That they needed to dramatically change the dealership environment to make it much easier and more pleasant to buy a car.

    That they needed to market much better to women who directly purchased or influenced the purchase more than men did.

    I got offered employment, but what I really wanted was to see that big change and certainly as one person, I couldn’t have made much difference. I don’t see all that much has changed in 10 years for any of the big 3. Our last 2 cars are Fords — but Volvos.

  67. JP said,

    @ Chris- “If you think Toyota ‘reads the marketplace’ and forecasts any better, ask yourself why they brought a massive, 5.7l truck to the market when the full-size market was just starting to crash.”

    They brought a massive 5.7 L Truck into the market, because they wanted to show that they can compete with the US car makers when it comes to bigger trucks. The Tundras are incredible trucks and there is always a need for these vehicles. Perhaps not daily drivers, but people always need work trucks.

    As far as the reliability of “American” vehicles goes, look at any transmission shop in the country, and you will see what cars are getting the $2000 repairs. 90% domestic. I personally have know dozens of people that have had to put transmissions in their American Cars under 100,000 miles. I have never put a transmission in any of my Japanese cars.

    I would like to buy American cars. I really would. But I can not justify taking on the risk of a potential huge repair bill. I will continue to drive my 8 year old Tundra that drives like the day I bought it, and starts up every time.

  68. S.o.G. said,

    yawn. why do we need these articles? Just say “the difference between Toyota and GM is that GM is american” and everybody already knows everything else in the article.

    The difference between democracies and a “democracy” that has a higher imprisonment rate than almost all non-democracies? The “democracy” is american.

    The difference between a normal democracy and the democracy that has double the violent crime? we only need the word “american” and every one gets it.

    Katrina aid fiasco? need only say it happened in america, and everyone understands how & why.

  69. James Woods said,

    Wow dude, no way man that is CRAZY!


  70. Shailesh Joshi said,

    GM failed to recognize what the customers really need. It has also failed to recognize the direction that fossil fuels (gasoline, diesel) will take on the economy. Toyota has detected the need and hunger for small, fuel-efficient and reliable vehicles. That is their key to success.

  71. Jimbo said,

    This is great in theory but when your “people” are represented by unions that are not remotely concerned about the financial health of the company and concerned solely with getting the best pay and benefit packages for their members, it is easy for management to view the “people” not as assets but as liabilities.

  72. Joy'll Cambridge said,

    Since Toyota also has SUV’s and trucks in its model lineup, I don’t think we can solely blame the fact that GM has focused on those 2 categories for it failures. I believe that where GM failed beyond question is in QUALITY. Japanese automakers are known for their quality control & how well they support their warranties. When you fail as strongly at this as GM has in the past people are more inclined to speak to others & pass the word on about your failures. I believe the reputations of American car companies are the primary reason they are in the situation they are in. When they improve their quality control processes & personnel people will look to GM as a provider of great quality vehicles & a company that services what they sell. Right now, you can ask nearly anyone, they are NOT viewed in such a manner. YES, their does need to be a rescue plan in place which focuses on GM’s ability to repay the debt & they need new management from the top down. There are plenty of personnel out there with fresh, innovative, profit generating ideas that will be much better suited to help the company grow, repay its debt, & keep it a solid link in the American Automotive Industry chain.

  73. Paul Milligan said,


    Toyota does have SUV’s and a very small truck offering but it has not been their focus. Toyota have developed the very well selling Prius and their focus has been on smaller economical eco friendly based engine models. Meanwhile GM has continued to move head long into larger engined and SUV focused models for 3/4 years longer than Toyota.

    I also did not blame GM’s troubles solely on the large engine focus. I pointed out their unionised workforce has cost the company huge amounts of cash (74,000 voluntary redundancies & paying workers to stay at home) which has contributed significantly to their own forecast of running out of cash mid next year. Toyota has not implemented any voluntary redundancy programmes that are known publicly.

    Quality is a factor but the cost of ownership in heavy fossil fuel GM models and the trend towards ecological friendly models which Toyota has adopted so successfully are major factors. Market research surveys back these facts up.

  74. fff said,

    With the Big 3 U.S. Automakers circling the drain, here are 10 solutions to the current crisis and none of them involve sticking your head between your legs and kissing your rear goodbye.

  75. JOEL KIRSTEIN said,

    Toyota is number 1 in their category because they work harder like they are still number 4 like they were once were. They make cars that are relevant to the American driver and most of all they overcame the stigma that came with being an import brand, especially Japanese. When Chrysler almost went under in 1980, they sort of got it and gave their collective heads a shake and changed how they did business. Ford and GM still act like they are the heavyweight champions of the world and don’t “get it” that their “business as usual” practices will be their death sentence, because they lack meaningful product relevance. The retail component is the biggest hurdle. Going into a dealership has become a toxic experience that most Americans dread and avoid like the plague. That has to change to a climate and landscape that makes the consumer want to engage in the process. The “Death of Detroit” is squarely the responsibility of bad, detached-from-reality, senior management that has squandered decades of responsibility and opportunity to get it right like they used to in the 1950s and 1960s. The workers should not get blamed for fighting for and winning a better deal… The blame belongs to the mismanagement of the Big 3!

  76. Chris said,


    1) I’m not saying that The Tundra isn’t a wonderfully competitive truck. I’m using it as an example that Toyota did no better with their forecasting/product timing than anybody else.

    2) The transmission thing I’ll completely dispute you on. Honda’s 5-speed transmission had a 3-year period of it grenading itself. To Honda’s credit, they stepped in as necessary and took care of it – prior to it becoming a public relations issue. GM’s transmissions have been notoriously bullet-proof; really one of the strong points of their powertrain. They supply 5-speed automatics to BMW (and have for years). BTW, the reason GM was ‘late’ to the more-than-4 speed market was an ‘exclusivity’ clause in their arrangement to supply BMW. A huge mistake on GM’s part – and one that was only overcome recently with their 6speeds (something Honda doesn’t have, btw). GM’s common-place car transmission (the 4T65) and the truck transmissions (4L60) origins are both >15 years old: a credit to their original designs. GM’s updated them through the years, but you can’t dispute their longevity. Toyota purchases a bulk of their transmissions from Aisin.

    Take GM’s (now-retired) 3.8L mated with the 4T65 could well be expected to last 200,000-300,000 miles with just routine maintenance. It’s a point that could easily be echo’d about GM’s 5.3l/6.0l truck motors and the 4T65′s. I’ve got a friend who I grew up with that became an auto-mechanic. His comment on the 3.8l? “Make sure you like the car a whole lot — you’ll be sick and tired of it long before the powertrain gives you any problems”.

    Face it: all manufacturers have had their issues and their successes. GM/ and Ford’s cavalier attitude in the past continues to haunt them today, but if you take a look at the independent studies (jdpa, pacific, harbour, etc); they will all tell you the same thing: whether it be initial quality, durability, or efficiency, domestic manufacturers are competitive and have closed the gap.

  77. John Friedman said,

    We need an infusion of accountability – when the government ‘gives’ money it should come with preconditions, like a turn-around plan. Avoiding chapter 11 to protect the shareholders makes sense. But requiring management to come up with a plan to become economically viable and self sufficient must be a requirement. Otherwise, market forces will prevail and we’re just temporarily staving off the inevitable.

    I found it interesting to watch the Saving GM special on MSNBC last night. Some take aways:

    Bob Lutz said the biggest thrill he got from driving the new Volt was ‘that it works’ – not ‘that it works so well’ or ‘that it’s even better than I thought.’ He was thrilled merely that it did not FAIL to work. And that says a lot about culture.

    Then he got into his private helicopter (true) and flew home …

    GM has said ‘our Quality is as good or better than Japan’ regularly since the 1970s – but they want us to believe (the last gasp of the truly desperate) “this time is different.”

    GM employees themselves believe that management has lost touch with the consumer and that streamlining – including closing of plants – is inevitable (and even appropriate) for the survivability of the company.

  78. top_regional (top_regional) said,

    usa: What Toyota knows that GM doesn’t |: while these employees were not manufacturing automobil..

  79. top_regional (top_regional) said,

    usa: What Toyota knows that GM doesn’t |: while these employees were not manufacturing automobil..

  80. top_regional (top_regional) said,

    usa: What Toyota knows that GM doesn’t |: while these employees were not manufacturing automobil..

  81. Edward Joell said,

    There has been a lot of bashing of the UAW going on inthese comments. However let us remember that itg was the UAW and well as the other industrial unions of the CIO that enabled most of the people reading this blog to do so. Your grandfathers fought long and hard to acquire the benefits that we as the American Middle class take for granted. 70 years ago there were no sick days, no vacation day, no Health Insurance, no care for workers injured on the job. If you got hurt and could not work then you were on the street. If your grandfather got the flu, he was lucky if he had a job to return to when he was better and if he did he probably had to start over at the bottom. The living wages won by the unions before and during WWII caused such prosperity in the 50′s that people who could have never gone to college were able to send their kids to college, who could then get jobs as professionals and form the bases of the Middle class. These worker were for the first time able to buy their own homes, their own cars, move to the suburbs and make the American standard of living the envy of the world. Today’s Unions know that American industry needs to operate more efficiently and economically to remain competitive in today market place. They object however to the entire burden of this effort falling upon the workers while manager are getting multi-million dollar bonus for the sacrifices made by their employees even as the company is falling into bankruptcy. Anyone who thinks Union representation is obsolete should ask the McDonalds worker who got fired for being 5 minutes late once. Ask the farm workers who plant and harvest your food for pennies an hour, ask the children making pennies to sew the clothes you buy at Walmart. Ask minimum wage workers who work as hard as anyone in America only to find themselves falling further into poverty. There is a big todo now about the 15 per cent of the American population with out Health Insurance. Before this was won by the UAW and the other CIO unions this number would have been more like 90%. There was considerable concern in the recent financial collapse about the losses suffered by retirement funds. Before the unions there was no retirement. You worked until you couldn’t then hoped your children would care for you. If not you died. So before you start bashing the UAW you need to look at everything they and the other cIO unions have done for you.

  82. John Friedman said,

    GM has small, economical cars in Europe and Asia that sell well. I saw no valid reason for them not bringing them here.

  83. PINGBACK said,


    …I read this wonderful little article on why Toyota beats the pants off of GM, and the essence is the same – in the context of growing their company, in making better products, and retaining their skilled employees (I’ve only ever had one employee quit in almost 6 years), they are spending their dimes in a way that makes sense. Sure they lose a large chunk of money ($50-100 million according to this), but since they are still making a good solid profit, there was no reason to be reactionary…

  84. PINGBACK said,


    …Big news this week is anticipated word of a bailout for the “Detroit 3″, General Motors, Ford, and Chrysler. The notion proposed by these three and their proponents is that they have had falling sales and risk going bankrupt, and that if the government doesn’t fund them with multi-billion dollar loans they will collapse and cost something like 3 million US jobs between them and their suppliers and support economies. When you hear news about “the failing auto industry”, that auto industry is mostly these three, and they are all part of the US United Auto Workers union (UAW)…

  85. a7an (Alan Le) said,

    @cwoodruff sorry abused is the wrong word. I was referring to this article:

  86. a7an (Alan Le) said,

    @cwoodruff sorry abused is the wrong word. I was referring to this article:

  87. a7an (Alan Le) said,

    @cwoodruff sorry abused is the wrong word. I was referring to this article:

  88. Dennis Forbes said,

    “I personally have know dozens of people that have had to put transmissions in their American Cars under 100,000 miles. I have never put a transmission in any of my Japanese cars.”

    My Honda Odyssey blew out the 2nd gear and had to have a full transmission replacement at about 90,000km. I’ve never had to do *anything* with a domestic transmission.

    Surely this anecdote can be used as some broadly applicable rule, right? Groan.

  89. Matt Lukens said,

    John – to the point about the small, economical cars in other markets not sold in the US – It’s my understanding that many of our regulations would require quite an overhaul of these models. Some simply don’t meet our safety standards as is. Also, they wouldn’t be profitably. Just because the size of the vehicle is smaller doesn’t mean that the labor costs in manufacturing the vehicle are smaller. And importing them doesn’t work because of the added costs there.

    I do believe that GM and Ford are now doing more to bring in cars that have been successful overseas. Saturn as that new re-badged Opel, Pontiac has a few models based on their Australian cars, and Ford has the Focus and will soon have it’s Transit Connect van/truck thing. Chrysler, meanwhile, is like the child that isn’t good at academics, or sports, and you’re not sure if they’ll even graduate, but you have to applaud them for getting out of bed every morning and having a positive attitude.

    I’m not convinced that the Volt will work here. Cheap 4-bangers sell. Toyota and Honda haven’t been profitable here because of their SUVs and trucks – it’s because of the Avalon, Corolla, Camry, Civic, Rav4, Prius, CR-V, Fit, Accord, etc. Hyundai and Kia have also exploited that niche to their advantage, while the Big 3 largely avoided it altogether.

  90. Dennis Forbes said,

    “Here’s three companies that sold pickups and SUVs while lobbying against CAFE standards.”

    You mean like Honda, who also argued against CAFE? Toyota tacitly argued against CAFE by giving their moral support to the automakers who were opposing, basically knowing their input wasn’t even needed.

    Really this is all such farce. A lot of people have bought into a lot of mythology about the Japanese car companies, and they’re the classic case of confirmation bias or seeing only what they want to see. Sorry, prior poster, but I find that most Japanese cars feel junky to sit in on *day one*. A Camry feels like a super low end econobox. The Accord, if you get it with the upgrade options, feels nice, but absolutely nothing special. Some of these mythologists will hop in and imagine that they’re sitting in pure engineering bliss, when really it’s just more of the same.

  91. Richard Chiswell said,

    My belief, and this could be widely out of date and inaccurate and border line stereotypical, but I believe Toyota (like many Japanese companies) aim for the market share and employee loyalty. They may be hurting financially at the moment keeping the staff on (I don’t know if they are or not), but when the market picks up who will the staff want to work for and who will get the most out of the staff? They could have also built up larger cash reserves and just know the market and have forecast this months/years ago when other companies were undergoing massive expansive they could have just kept things ticking over.

  92. Matthew - said,

    I agree with this article. Treating people better is the way to win and Toyota is doing a great job. I still think it is important for Americans to buy “Made In USA” products, but we shouldn’t blindly buy from the big three just because they’re made in the states. Toyota is made here, too, and is doing a much better job.

    But please, do intentionally spend on “Made In USA” products:

  93. ToyoDriver said,

    “If the union is ever able to force it’s self in the Toyota or Honda Plants, give them 25 to 50 years and the same will happen.”

    18 more months till Toyota hits the 25 year mark. My grandmother’s ’91 Corolla, my wife’s ’03 Vibe, and my ’08 Tacoma were all made by UAW workers at the NUMMI plant in California.

    According to

    “NUMMI and UAW Local 2244 signed their first collective bargaining agreement in June 1985. Both parties committed to resolving problems together and seeking ways to improve quality, efficiency and the work environment. This commitment to NUMMI’s future continues today.”

  94. frank senbaynes said,

    there’s actually a LOT more to this story…go to

  95. adamruddermann (Adam Ruddermann) said,

    Toyota halts auto plants in TX & IA, trains up workforce instead of doing layoffs. Intelligent capitalism in America?!

  96. adamruddermann (Adam Ruddermann) said,

    Toyota halts auto plants in TX & IA, trains up workforce instead of doing layoffs. Intelligent capitalism in America?!

  97. adamruddermann (Adam Ruddermann) said,

    Toyota halts auto plants in TX & IA, trains up workforce instead of doing layoffs. Intelligent capitalism in America?!

  98. adamruddermann (Adam Ruddermann) said,

    Toyota halts auto plants in TX & IA, trains up workforce instead of doing layoffs. Intelligent capitalism in America?!

  99. adamruddermann (Adam Ruddermann) said,

    Toyota halts auto plants in TX & IA, trains up workforce instead of doing layoffs. Intelligent capitalism in America?!

  100. adamruddermann (Adam Ruddermann) said,

    Toyota halts auto plants in TX & IA, trains up workforce instead of doing layoffs. Intelligent capitalism in America?!

  101. Carol Ellard said,

    We have a Toyota manufacturing plant in the next county. When they saw the need to change their product to a more successful line they didn’t layoff their workers while they retooled. And they don’t pay them to stay at home and wait either (unlike the Big 3)
    They are using the time in a productive way. Go through the factory and you will find workers sitting in classrooms, repainting hazard areas, lifting weights, completing dexterity drills. Keeping them sharp so they will be ready to start up that new line.
    Those who were not involved in the actual retooling and weren’t sent to other plants were sent out into the community. That’s right, they did community service. Toyota knows how to market themselves to the community.
    This not only benefits the community but also gives the workers a sense of pride and accomplishment.
    They know how to make things work.

  102. Jude said,

    “GM has small, economical cars in Europe and Asia that sell well. I saw no valid reason for them not bringing them here.”

    I believe the reason is that a lot of those cars run on diesel which is more expensive here in North America. I think the perception that diesel is dirty is another reason they don’t bring those cars here. But Saturn did bring one. The Astra, which runs on diesel. It’s a good example of GM making a good quality and relatively stylish vehicle.I was planning to buy an Astra myself, but with GM going bankrupt I will hold off for a while. I’m uncertain if I would lose my warranty if they do go bankrupt or if they would honor it.

    Anyways GM and Ford has come a long way in terms of quality, but they’ll never be able to over come poor perception and their huge legacy costs. That’s why I think bankruptcy protection is the best course of action for them now. In fact it’s the only way unless the government is willing to take over the company’s legacy costs, which is definitely not what taxpayers would want their money to be used for. I think when GM and Ford come out of their bankruptcy protection they’ll be smaller yes, but more capable of taking on the Japanese companies. As Forbes said Jdpowers is a good source for information.
    Looking at the cars I suddenly want to buy a Malibu.

  103. Jude said,

    Kudos to Carol. I also think it’s great what Toyota is doing for the community that they are operating in.

  104. Stephen said,

    I’m Japanese, and even I think this article is stupidly one-sided. The difference right now is that the big three are facing bankruptcy. If Toyota were in the same financial situation, i.e. struggling to survive, they’d throw their values out faster than you could write another article retracting your praise. Good values can’t save a failing company, that’s just ridiculous. They need to produce cars that people will actually buy and turn a profit from it. Good on Ford for deciding to bring the European Fiesta to the states (so long as they don’t uglify it in the process), that’ll eat some of mazda’s and toyota’s market.

    Are you trying to land a PR job with Toyota or something? This sentence is utter rubbish:
    “…you’ll have hyper-productive, motivated teams delivering quality because they’re committed on a deeper level to your company”

  105. GPS said,

    There are a lot of good arguments and opposing views as to why the Big 3 are having their issues but I am going to allie (ally?) myself to Randy Kemp and ToyoDriver’s comments. No matter what name you want to tag onto Toyota their success is based in the manufacturing culture they have created, in both their union and non-union based environments. They have union employees at what once was a GM engine plant (now a Toyota facility/supplier) so they have the same issues to deal with as the Big 3 (NUUMI in Southern California). It doesn’t matter whether you call it Six Sigma, lean manufacturing, or the Toyota Production System it is THE system they have in place and it has been flogging Detroit. All three “buzzwords” are four letter words to both Detroit and the UAW. Putting all 3 together (the Big 3, UAW, and lean/six sigma) is the same as gas, heat, and oxygen. Marginally compatible when separated or even when any two are together but highly volatile when all three are joined to the point they are perceived as completely incompatible and unable to work in conjunction with each other.

    Toyota is very people oriented to the point the line operator owns the process he or she does, even to the point of changing it. They do not lay off. They typically do not need unions as they tend to hire for life. You have to decide to leave either by word or action. This could change as times change but historically they have not. There is a lot less stress or need to organize if you know you’ll be working the next day for a decent wage and benefit. They pare from the top down – bonuses, raises, etc, rather than cut from the bottom. They also understand their customer not only from what their forecasted projections are but from what their buyers are telling them. What they do is a marriage of that. They look for the savings you can glean from eliminating the waste in all of their processes (storing inventory and the subsequent multiple handling costs, supplier costs, waiting time, producing anything to no demand, over or excess processing, and refects/rework). Nothing could be further from the truth as saying labor issues are the cause for failure. It could be ONE of a string of things wrong but not a factor by itself. How are they doing with all of the other factors?

    W. Edwards Deming is the person that helped Toyota (and Japan) focus this culture in their workplaces following WW II. It was so successful and ingrained into their manufacturing culture that the Deming Award is now the most sought after awards in japanese industry. So much for the history lesson. He went to and told GM what they needed to do as late as the ’90′s before he died. He even held 3 day seminars for thousands of their managers and it was mandatory they attend. They only used the bits and pieces that would immediately benefit them and threw out the rest of the tools. They never tied the whole program together and are paying for it today. They got caught by a combination of poor forecast, unknown or badly applied buyer input, and little in the way of internal cost savings or controls on waste other than labor. Face it – there are a lot of savings to look at other than the labor costs no matter how high or low they are. It was compounded by the unexpected change in fuel costs and the resulting affect on all of the economy and the public’s collective change in purchasing habits. The tools still work even in a world of higher labor costs. They just need to be applied.

    I’ve read many articles on how the Big 3 are “restructuring” (plant closures, layoffs, etc) to counter the potentially inevitable bankrupty actions. I have read nothing as to what they are doing to really save costs and subsequently their companies over the long term as survival measures other than to ask for a handout. They never learned to use the model and create the culture of survival. Instead they are still pointing fingers based on the only business model they fully understand.

  106. PINGBACK said,


    …So, I drive a Toyota Prius. I am extremely happy with it as a car, but it was not the car that I truly wanted. I wanted a Chevy Prius. No such car existed. Not even stretching my imagination as far as it could go. I just could not get an American car that even remotely fit the bill. So I settled and ended up with perhaps the highest quality vehicle I’ve ever owned…

  107. PINGBACK said,


    …Toyota’s hasn’t laid off anyone. “Production has been halted but do you know what the employees are busy doing?”…

  108. Garry G said,

    Obviously this is post has started quite a convesation… but agree with one of the comments that there is a lot more to this story. I don’t think it’s as simple as Toyota loving its people or that they are in hybrids, or other reasons you hear around the web.

    Namely legacy costs associated with Big 3 labor issues, vs Toyota’s move into the US in late 1990s in places with very favorable labor conditions. Not to mention lower pension liabilities, et al.

    Glad your post has sparked a conversation— at the end of the day – for me the only way forward is to kill the combustion engine and shift towards a leaner manufacturing platform based on wheel based electric motors – and a combination of energy storage systems based on batteries, fuel cells and capacitors. It’s about how you build the car, not fuel it that matters!

    Garry G
    The Energy

  109. dude said,

    Don’t listen to the guy about them using six sigma. They don’t. They use the Toyota Production System, which six sigma only tries very unsuccessfully to mimic. They value their customers, they value their employees, they use lean manufacturing techniques, they also plan a lot up front before they jump into production which prevents a LOT of waste. Toyota also values training and broad spectrums of skills rather than niche specialties. They also promote engineers with a knack for management. Not management from MBA only programs who only know how to attempt to maximize quarterly profits rather than building a corporation that builds great customer, employee, and management relationships. They value their customer first and that produces the $$’s rather than trying to maximize quarterlies which is short sighted but unfortunately the current trend in business

  110. baldis (baldis) said,

    what Toyota knows that GM doesn’t –

  111. baldis (baldis) said,

    what Toyota knows that GM doesn’t –

  112. baldis (baldis) said,

    what Toyota knows that GM doesn’t –

  113. dan burbank said,

    It is amazing how may of the comments miss the point. Treat your people good and they will treat you very good. I have lived through this several times in my life. I have worked for people I would do anything for.

    Toyota knows that if you have a workforce that you respect, they will give it back to you ten fold. If you have a happy workforce that cares about the product, it shows in the product.

  114. PINGBACK said,


    …It’s no secret the US auto industry has been hurting for years. While quality from GM and Ford has slowly improved over the past few years, US automakers have been able to shake the “poor quality” image. Tack on other issues, such as paying lifetime retirement benefits for former workers and large amounts of debt, and the auto industry has their ticket for disaster…

  115. Jim Kayalar said,

    They know Kaizen & Kaiban.
    They make cheaper, more reliable, fuel efficient cars which people want to buy.
    Their manufacturing processes are streamlined as are their quality systems.
    They innovate faster and cheaper both incrementally/extrementally.

    GM,Ford,Chrysler make a loss of $3000-$5000 per car. Alone the cost of healthcare for retired workers is $1000 per car.

    I am writing a case study on how Japanese commercial manufacturers Isuzu and Mitsubishi compete. Send me an email if you want a copy.



  116. vipsy (Vipul Solanki) said,

    #niceread What Toyota knows that GM doesn’t.

  117. vipsy (Vipul Solanki) said,

    #niceread What Toyota knows that GM doesn’t.

  118. vipsy (Vipul Solanki) said,

    #niceread What Toyota knows that GM doesn’t.

  119. Michael Kremliovsky said,

    There are quite a few things they know. First, they knew that they cannot commit to unions, because such move will jeopardize their flexibility. Secondly, they know the difference between push and pull development models: you have to create a product people will learn to want (push), not the other way around (pull opinions and build SUVs and trucks). Third, they did not corrupt management ranks with excessive perks rewarding for poor performance. Quite contrary, they created a culture of responsibility almost to a samurai’s degree. And then, there was a great deal of small things: quality, innovation, and pragmatisms. Were they perfect? Not exactly. They still failed to give us an electric car. It was (is) entirely possible. However, in my opinion, they underestimated Americans: they probably thought that we are negligent to an astronomic proportion. Partially, they are right, but a leap of trust in us would not hurt…

    And, yes, I completely agree with you: it was people, it is people, and it always will be people. Look how much irrelevant politics we have allowed into our corporate world? It all plays off in the long run…

  120. newmediazoo (Fumi) said,

    What Toyota knows that GM doesn’t –

  121. newmediazoo (Fumi) said,

    What Toyota knows that GM doesn’t –

  122. newmediazoo (Fumi) said,

    What Toyota knows that GM doesn’t –

  123. larzshinobi (Larz Shinobi) said,

    What Toyota knows that GM doesn’t

  124. larzshinobi (Larz Shinobi) said,

    What Toyota knows that GM doesn’t

  125. larzshinobi (Larz Shinobi) said,

    What Toyota knows that GM doesn’t

  126. Palani Balasundaram said,

    Really Interesting to see the points.
    This is the same old question, when we are all able to see this, why is the BIG3 Not able to see?
    In a recent TV report here in India, it was reported that Indian arm of GM has learnt its lesson well and having a better time than the Bankrupt US head…
    Any Product that satisfies the needs of the customer, which is of high quality and affordable, will rule the market. Examples ipod, walkman, GOOGLE, Sony, NOKIA.
    I think GM has to work fast on the Alternate Energy Segment, though it is way behind the Japanese Giant.

  127. andybelike (Andy Face) said,

    toyota’s secret: never lay off workers. no matter what.

  128. andybelike (Andy Face) said,

    toyota’s secret: never lay off workers. no matter what.

  129. andybelike (Andy Face) said,

    toyota’s secret: never lay off workers. no matter what.

  130. Solid Snake said,

    The post is really cool and informative

  131. 1rick (Rick Martin) said,

    Reading: What Toyota knows that GM doesn’t

  132. 1rick (Rick Martin) said,

    Reading: What Toyota knows that GM doesn’t

  133. 1rick (Rick Martin) said,

    Reading: What Toyota knows that GM doesn’t

  134. budip (Budi Putra) said,

    Reading: What Toyota knows that GM doesn’t RT @1rick

  135. budip (Budi Putra) said,

    Reading: What Toyota knows that GM doesn’t RT @1rick

  136. budip (Budi Putra) said,

    Reading: What Toyota knows that GM doesn’t RT @1rick

  137. PINGBACK said,


    …As much as we all love free market capitalism, there’s still much we can learn from other economic models, as the Big Three are discovering from the likes of Toyota and Honda…

  138. Gourav Marwah said,

    Just to add to what has been mentioned above, the Americans were aware of all the practices that Toyota later implemented. But still, the Americans learnt the hard way … learning from toyota .. so its a very strong vision, belief and commitment to quality at most affordable prices that sets Toyota apart from GM.

  139. sasxjb (Jeff Bailey) said,

    Talk about different culture. Toyota is amazing. GM is history.

  140. sasxjb (Jeff Bailey) said,

    Talk about different culture. Toyota is amazing. GM is history.

  141. sasxjb (Jeff Bailey) said,

    Talk about different culture. Toyota is amazing. GM is history.

  142. Ola Fjelddahl said,


    Lean and Agile have much in common.


  143. Kevin Wood said,

    The essential need for a reliable, functional and economic solution for getting a business from A-to-B.

  144. charliebucket (charliebucket) said,

    Stadium Arcadium, Coffee, News, Reading this – (from @baldis)

  145. charliebucket (charliebucket) said,

    Stadium Arcadium, Coffee, News, Reading this – (from @baldis)

  146. charliebucket (charliebucket) said,

    Stadium Arcadium, Coffee, News, Reading this – (from @baldis)

  147. PINGBACK said,


    …Great article. A must read…

  148. PINGBACK said,


    …I wonder if the quarterly wringing every last penny of profit out of the US car companies has really led so such a corporate culture difference as this…

  149. Ed Anderson said,

    You sound like a “Lean” evangelist, as am I. Let’s get linked directly. My email is eanderson@ . Maybe we can talk on the phone about mutual business opportunities.
    Ed Anderson

  150. fredrikeliasson (Fredrik Eliasson) said,

    The reason the Big Three are suffering is not money – it’s a cultural problem:

  151. fredrikeliasson (Fredrik Eliasson) said,

    The reason the Big Three are suffering is not money – it’s a cultural problem:

  152. fredrikeliasson (Fredrik Eliasson) said,

    The reason the Big Three are suffering is not money – it’s a cultural problem:

  153. mgroves said,

    Two words: creative destruction

    Let these companies go under! It will be okay, I promise!

  154. Frits Bos said,

    Chris, the difference is not what one knows vs, the other, but what they then do with that knowledge. Not only the quarterly forecasting, but the continuous improvement and quest for excellence, not to mention a work force committed to making it so rather than to enforcing its entitlement until it is over. There is nothing new about US auto makers closing shop: that makes it worse for not learning from it. GM has simply run out of rope, but it was hanging itself all along: the secret is that you can only count what you sell, not what you make and store in inventory. This was what killed Massey-Ferguson decades ago, and it is part of the self-deception selling model facilitated by an accounting mentality that consistently overstates asset values instead of asset potential. Product for sale is potential: it is a liability until sold. Steaming ahead in any industry while increasing inventory levels is suicide, but with generous layoff payments GM figured it might as well continue production in hopes of better sales next month. When the production line is lean and efficient you can put processes in place to balance production to actual sales, to manage orders, even backlog in times of plenty. There is nothing miraculous about that, but the US auto makers have negotiated themselves into a corner of extinction.

  155. Kensel Tracy said,

    Toyota sells 5 models based on the use of the car. The first question asked by a sales rep, is what are you going to use your car for. Once that is established they have a model that fits those needs. The car is sold on psychographic profile not age. So customers develop a relationship with the car.

    Build a good car, make it affordable and make it easy on gas, give the customer the feeling that the car is well made and you have a loyal customer.

  156. PINGBACK said,

    PINGBACK from

    …I’ve read two articles in the last couple days about Japanese automakers — Toyota and Honda. Both were complimentary about their training and engineering practices. Both are worth reading:

    Engineers Rule: At American auto companies, finance guys and marketers rise to the top. Not at Honda.

    What Toyota knows that GM doesn’t …

  157. John Meharg said,

    Sarcasm Post:

    I think the GM business model is pure brilliance. “If you’re a senior exec.”

    First you need to build a failing business model to force bankruptcy in order to fire all your heavily unionized and highly paid workers.

    Then you hover the company on the brink of collapse while building a strong government lobby effort to attract job support/creation fundraising strategies designed to access billions in free money from national governments.

    You place these billions in free money, into well-structured investments that have nothing to do with company profits or sustainability or job creation, and then reward handsomely all the execs with big bonuses. And why not, they have figured out a way to access free money with no strings attached and no work required.

    The convincing logic is an old one, government employment laws in North America and unions do not allow for our companies to compete fairly with foreign companies with low wages and no unions. So this mess is all the governments fault. So they should pay.

    I buy it!

    The street beggar in a blue suit business model is pure genius. If you’re an executive making millions every year.

    Maybe Toyota has some crazy business model that incorporates that forgotten business concept. What’s that called again?


  158. PINGBACK said,


    …I’ve owned four cars, and they’ve all been Toyotas. By now it’s a brand loyalty. I don’t want a Honda or Nissan, let alone a Ford or Chevy. Nope, my car problem is solved. Given that, this is exactly the story I want to be telling myself about my car:..

  159. Kenneth Lin said,

    The simple answer is in Principle #1 of the Toyota Way: “Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.”

    To a certain degree, the other 13 principles also helps!

    Note, Toyota Prius wasn’t a overnight success. It took many years of investment into R&D and market research before it was a hit.

  160. Robert Moore Bernardos said,

    I can´t agree more with Frits and Ken: but sadly, it is not limited to the auto industry. the short-term vision of quarterly results makes mid and long term strategy useless.
    The focus on the mid term, while simply managing the short term, is what makes Toyota, and others, stand out, survive and prosper.

  161. skollie said,

    I agree with mgroves, let GM go under for goodness sake! Why should we have to deal with the added burden of another bailout, when they need to learn from their mistakes? It’s tough to say (my job aint on the line), but that’s how innovation is spawned.

    Hopefully then they can re-invent themselves for the better and come back fighting even harder.

  162. Marty Wells said,

    Simple…GM’s cost structure is way out of line with Toyota’s Cost structure because of UAW concessions/pay/benefits. The problem they have is that they are handcuffed to shed this weight directly, so they have to lay off a ton of extra people to prevent themselves from being seen as anti-union.

    I used to do projects at GM back in 1999 and to install software on PC’s, a millwright had to come escort my tech to the PC. Stand there while my tech did the work, then escort them offsite. This drives the overhead of the business to absurd levels.

  163. Luke Brown said,

    John Z. DeLorean laid it out in his book, “On A Clear Day You Can See General Motors”. DeLorean disects GM’s attitude and mentions the problems being discussed today that have existed since at least the 1960′s!

    I worked for GM in the late ’70s and the following exchange between me and a general supervisor says it all. He asked me a question to which I replied, “I think…” He immediately interrupted me and said, “We don’t pay you to think.” His attitude wasn’t uncommon among management.

  164. Rodrigo Monaco said,

    Based on my experience in Brazil, Toyota and also Honda, they did an intensive marketing research, basically based on the habits and the necessities (quality and prices) of the Brazilian customers, to define the cars to be produced locally, the Toyota Corolla and the Honda Fit.

    They did not define the cars to compete with their local competitors, but to attend the necessity of their future customers.

    Regarding the production, Toyota has a smart, flexible and highly outsourcing supply chain, consequently, they can almost eliminate the size of their stocks and they can also have a fast productive process.

  165. Devesh Dwivedi said,

    I believe its what Goldman and Morgan Stanley knew but Lehman and Merril didn’t… ;-)

  166. PINGBACK said,


    …Maybe become like Toyota – Invest in your employees…

  167. Marilyn Jess said,

    Dear Chris,
    Wonderful article and links. Thank you for sharing. may I add…..

    To Toyota a few months paid training and non-manufacturing time is an investment that they know pays off in more motivated and skilled workers.

    Me too car lines, such as those that GM makes, are not only wasteful and inefficient, they also confuse consumers.

    I read a few years ago that Toyota actually has a movement underway in their company to totally rethink how a car is made–no assumptions, just redesign what we think of as a car–what it’s made of, how it runs, etc. Toyota has a goal to be #1 worldwide. That’s another reason they will be and in some cases are already #1 –they truly think globally.

    Honda seems to be ahead on the cleaner air front, though, so I have just bought my first one. Our garage has a Camry as well–best of both.

  168. Scott Hoffmann said,

    Marty – YOU WIN THE PRIZE!!! Forget what everyone else has posted – the UAW is like pancreatic cancer – you may be able to battle it for some time, but in the end it WILL unfotunately be your demise!

    Unions in America as a whole are cancerous. Unions had their place during the 40′s-70′s. Today, along with greedy stockholders, they ruin a company. If the employees of Walmart are successful with establishing a Union under the new “union friendly” congress, then the days of Walmart as a viable and successful company are numbered!

    America needs to re-invent itself. We are no longer a viable option in the manufacturing of goods, mostly in part due to the extreme labor costs in our nation. Our nation is in need of a shake-up. We need a new direction, a new focus.

  169. Farzad Wafapoor said,

    Be loyal to your customers by listening to them.
    Understand their needs and wants, manufacture/create products that fit those specific cultural and social needs.

    - Farzad

  170. top_dedist (top_dedist) said,

    d: What Toyota knows that GM doesn’t |

  171. top_dedist (top_dedist) said,

    d: What Toyota knows that GM doesn’t |

  172. top_dedist (top_dedist) said,

    d: What Toyota knows that GM doesn’t |

  173. top_web (top_web) said,

    delicious: What Toyota knows that GM doesn’t |

  174. top_web (top_web) said,

    delicious: What Toyota knows that GM doesn’t |

  175. top_web (top_web) said,

    delicious: What Toyota knows that GM doesn’t |

  176. Richard Ouellette said,

    I have done work at Toyota’s Kentucy, California, and Ontario plants and they run a top notch production facility. I agree with everyone here especially on the union issue. The UAW is most responsible for the predicament that the big three are in now. The big three should all file chapter 11, and reorganize and renegotiate their contracts. The unions have been too greedy for too long and it’s finally coming home to roost.

    As a merit shop contractor, we are thriving in today’s economy as companies are looking for a more cost effective way of getting what they need without paying the outrageous rates that union contractors demand. And the trend keeps growing…

  177. Ricky C Polden said,

    Outside of the “lean” and six sigma principals at Toyota, they also do one thing better than the competition. They listen to their customers and the market!!!
    Here in Australia we have been asking for a local “cleaner” car, only to be told by GM and Ford that we really don’t want one??? Who’s the customer?

  178. Brendan said,

    Just want to add a little dissent from the Toyotathon of praise here…

    I live in Kentucky and know people who work at Georgetown.

    Toyota utilizes a ton of temps for work that is actually long-term. It creates a level of fear among “real” employees. People end up missing time with kids, working injured, etc., to work overtime that’s assigned to them because they feel like asking out will put them into the temp bid.

    I know a lot of folks would argue that Toyota needs that sort of flexibility, and that’s a valid argument. But please keep in mind that this “loyalty” to workers from Toyota is largely fictional. They manage by anxiety and doubt, not through love and trust. They don’t “listen” — they command. One metric: injury rates are significantly higher at Toyota than Ford or GM.

    And it should also be kept in mind that this has a price. Quality has plummeted at Georgetown and other Toyota plants in the US.

    The latest Consumer Reports auto rankings observed that most Ford products now match or outpace Toyota on reliability. GM has some work to do, but it’s doing some good stuff, too. If you have driven both, you know that the new Chevy Malibu is simply a better car than the Camry. And JD Power and Consumer Reports mark it as competitive with the Camry.

    It’s true that Ford’s brand is seriously damaged, but for smart consumers this creates an opportunity. You pay a price for all the Toyota hype (see above). Ford makes some very strong products that are, if anything, underpriced compared to Toyota or Honda.

    Ford and GM make some amazing small cars in Europe. If they can stay alive long enough to undo their foolish bet on SUVs and full-size pickups, I suspect that in 5-7 years we will be reading “why is Toyota off track?” articles.

  179. Tony Zheng said,

    I fully agree Rich’s point of “focus on middle” – too many times we found executives view people as a cost center rather than an investment, and as a result, the failure to leverage the power of people became the root cause which is not realized in most of the cases.

  180. Igor Mandrosov said,

    All of the six sigma comments are good. However the problem is more financial then anything else… The root cause is very simple… GM is impacted by Union Contracts…
    Scott is right “Unions in America as a whole are cancerous.”

  181. Plex Meister said,

    When any vital entity repeatedly demonstrates its success and superiority over a lengthy amount of time, we as a people should embrace a larger view and hand the winning trophy and loyalty to the victor knowing full well we all be better off for it in the long run. Japanese, Korean, German, ( and soon to be Chinese) manufacturers should all be welcomed into our country with open arms. This IS a global economy, there are no boundaries, just metaphysical ones.
    They have all proven their superiority to USA automobile companies in just about every conceivable way. Throwing money into the mix will only fatten the wallets at the top, and stave off the inevitable, it will solve nothing. GM could no more restructure itself than it could design a car the people want, or keep out the UAW’s powerful influence. They (GM & the ilk) have proven time and time again they are unable/unwilling to take care of their work force, and design a competent product. The rating systems (like JD Powers) are as tainted as the Oscars or the Grammy’s- they have no credibility or relevance at all. Yes, there would be a terrible job loss crisis, but a temporary one. It would be VASTLY cheaper to provide pay vouchers for the unemployed auto workers until a new system was implemented and this cost would be shared by the foreign auto makers, and why not? It would benefit them to have work force in place that has experience.
    Put the American car companies out to die, its there time, its natural selection, its evolution.

  182. Brendan said,

    Just a little more dissent from the prevailing view here: I think there’s a risk of oversimplifying the “unions are a cancer” argument.

    Southwest Airlines is the most heavily unionized airline flying today, with some of the highest paid workers and pilots. UPS is heavily unionized and it’s a very solid company. AT&T Wireless is unionized and I’ve always had a surprisingly pleasant experience dealing with their workers.

    Overseas, Northern Europe has some very dynamic companies that are unionized. Germany’s per capita exports kick our ass. And they actually still make and build things. For the past 15 years we’ve been building fake wealth with the bubble and an even more damaging housing bubble driven by con men in mortgage originators’ boiler rooms.

    Also: last year the union agreed to take over the legacy costs for retirees starting next year. GM and Ford have made cars in the US for a century and have a lot of old workers. Toyota has only made cars in the US since the 1980s and has young workforce. The hourly labor cost difference between GM/Ford and Toyota is not that much — it’s the retiree costs that are the big difference. Again, if Ford and GM can make it to 2011, they will give Toyota a serious challenge in the North American market.

  183. PINGBACK said,


    …Normally, I’d be obliged to write my own material concerning the auto industry’s bailout (well, that’s for tomorrow!), but this piece (that was on the Delicious popular page) was way too good to pass up…

  184. Helena Vendrzyk Gordon said,

    I agree w/ the comments above. GM is burdened by a cost structure that they can’t sustain and they are delivering products that don’t meet what the customer wants. What is frustrating, is this has been the case for the last 30 years, and managment continues to make decisions that reinforce the status quo rather than investing in changes that would allow them to address the underlying problems.

  185. fozbaca (Brian Lauer) said,

    What Toyota knows that GM doesn’t

  186. fozbaca (Brian Lauer) said,

    What Toyota knows that GM doesn’t

  187. fozbaca (Brian Lauer) said,

    What Toyota knows that GM doesn’t

  188. Bob Michel said,

    Read the book, The Machine that Changed the World, then we can talk. The UAW didn’t ruin GM; every agreement the UAW has, GM executives signed.

    The pervasive attitude that GM had when they were the world’s number one manufacturer imposed 40-year old blinders on them and they let the best corporation in the world devolve into the brink of bankruptcy. GM became complacent and now the free market that Americans believes in is telling GM it is time to change. $25 Billion won’t do it. GM needs a bankruptcy and restructuring, and yes, that involves the union, too, but take a look at NUMMI if you think the union is the problem… NUMMI is successful with the same union.

    Lean manufacturing is the key that Toyota has that GM doesn’t. Lean is the machine that changed the world. GM never learned this, until now.

    Last year, it was interesting to see GM and Toyota competing for the world’s number one auto maker. Now it is clear who won.

  189. bobdenny (Bob Denny) said,

    What Toyota knows that GM doesn’t

  190. bobdenny (Bob Denny) said,

    What Toyota knows that GM doesn’t

  191. bobdenny (Bob Denny) said,

    What Toyota knows that GM doesn’t

  192. pauldax (Paul Dax) said,

    Interesting article: What Toyota knows that GM doesn’t.

  193. pauldax (Paul Dax) said,

    Interesting article: What Toyota knows that GM doesn’t.

  194. pauldax (Paul Dax) said,

    Interesting article: What Toyota knows that GM doesn’t.

  195. passitalong (Sean Howard) said,

    What toyota values that GM doesn’t. It’s people.

  196. passitalong (Sean Howard) said,

    What toyota values that GM doesn’t. It’s people.

  197. passitalong (Sean Howard) said,

    What toyota values that GM doesn’t. It’s people.

  198. dloo (darren) said,

    @AmandaMooney Here’s what I’m reading:

  199. dloo (darren) said,

    @AmandaMooney Here’s what I’m reading:

  200. dloo (darren) said,

    @AmandaMooney Here’s what I’m reading:

  201. Len Green said,

    Maybe it was more of a question about Toyota deciding where to compete and where to leave GM, Ford and Chrysler duke it out into oblivion? Consider this: the Detroit Big 3 had far more market share among grotesquely large, fuel guzzling vehicles that were going the way of the dodo. Toyota let them take that market segment because most of us know that the common sense world was going to smaller, more fuel efficient transport. Between the Big 3 marketers and the blind American consumer who was not going to give up his V-8 even if it meant importing oil from the Middle East, they sorta had it coming to them. Sad, but stuff happens.
    Also, Toyota does not have ridiculous retired employee obligations that were protected in defiance of the natural laws of economics.

  202. macphotography (macphotography) said,

    What Toyota knows that GM doesn’t

  203. macphotography (macphotography) said,

    What Toyota knows that GM doesn’t

  204. macphotography (macphotography) said,

    What Toyota knows that GM doesn’t

  205. Brenda said,

    All this union bashing is unbelievable. Most of these blogs want these workers to live on wages and benefits that would keep these employees near poverty or trying to make it with little benefits and pay. Try raising a family on 30,000 a year, with no health care and pension plan. Yeah, I can see the rich getting richer and the demise of the middle class.t It’s a shame. I am glad my family has been members of trade unions and has afforded us with a comfortable life, owning a home, putting my children through college and now retirement. Yes, they need a bailout to save the future of America.

  206. Frits Bos said,

    I worked for a unionized environment in Ontario Hydro as an excempt staff: the reality of a worker in a huge organization is that someone has to speak for the individual or there is no chance they are heard. It does cause inefficiency if a company is perceived as out to get around the union: my personal experience is of very little animosity with operating management. In many ways it is also beneficial for the company to deal with a representative team rather than with individual workers. As such the dealings with a union executive generally a bit more aware of business issues is easier than to deal with individuals and what might be major turnover problems. Companies that are fair to begin with might have no union strife whatsoever: unfair bargaining can be interpreted so that it results in strikes and worse. There are plenty of non-unionized companies that have a dissatisfied workforce, often the reason for certification to begin with. A hardball attitude in a world where the big 3 only focused on each other may be what ultimately drove them to where they are now, but the UAW has also played a part, even though the same union has better relationship with other employers. Perhaps the big 3 need to be broken up and restructured until a number of smaller, but more viable, companies result. It may eventually be a lot more human-friendly so as to improve the understanding between workers and management that the focus has to be on the consumer, and that their survival depends on delivering what the consumer asks for. There is a lot of history that will not go away overnight unless the existing companies fold. It is hard to see how that benefits the UAW, how producing to inventory can be healthy for GM, or how workers expect business as usual when products do not sell. While the players in the USA looked at each other in distrust, there were many other players that entered the market unopposed. Ignoring basic business governance responsibilities have positioned GM, Ford, and Chrysler in a spot where it is next to impossible to compete. There are no simple and painless answers: a bailout to avoid confronting reality will only postpone the inevitable need to examine the fundamental business that needs to deliver a suite of products that meet consumer demands. Is it that difficult?

  207. Tom Carlos said,

    Thanks everyone for the great comments. I must admit, I have not considered the impact of the UAW or Long vs Short term goals. But when I think of disasters and how GM (and even Ford) have shot themselves in the foot (or through the heart), the following comes to mind:

    (1) 4, 6, 8 Cynlinder engines of the 80s. An absolute disaster. These engines never worked. Yet, GM pressed on thinking they were a solution to our gas problem.

    (2) Diesel engines in luxury cars. Ah yes, another 80s blunder. The engines lasted no more than 46K miles and of course, the warranty expired at 45K miles.

    The list of manufacturing and marketing blunders runs on and on. And now if you believe GM, the new “Volt” is the car of the future? Does anyone trust a new version of “anything” put out by our big three? If history has it’s way, I’d say “no.”

    Oh, and for the record, I own a ’99 Avalon. Honestly, before buying that car, I seriously looked at the Big 3. But there was nothing close to what I was looking for; Comfort, Not a gas hog, and RELIABILITY. I have 130K miles on my car. I just replaced the front brakes, back breaks have 50% life on them. The only “repair” this car has needed is the starter. Not bad for 9 years.

    So hands down, Toyota is a clear winner. Why? Because other than a few body mods, their cars are basicly the same from year to year. So you know exactly what you are getting- no surprises.

  208. jaydendad (jaydendad) said,

    Reading: “What Toyota knows that GM doesn’t |” ( )

  209. jaydendad (jaydendad) said,

    Reading: “What Toyota knows that GM doesn’t |” ( )

  210. jaydendad (jaydendad) said,

    Reading: “What Toyota knows that GM doesn’t |” ( )

  211. PINGBACK said,


    …I read an interesting story about corporate culture at Toyota, even in tough times they don’t lay off workers, instead they train them, shift them to plants which are understaffed etc. In the last couple of years GM has laid off 34,000 workers, Toyota (in the US) ZERO…

  212. Thomas Hopper said,

    Those who claim that the UAW is to blame should re-examine the financials. The cost structures that GM is locked into–both with the unions and with dealers–make up a minority of the revenue disadvantage that GM faces. The bigger problem for GM is consumer’s perception of value; GM simply can’t sell the same car for as much as Toyota can.
    Filing for Chapter 11 will help GM with iits immediate position, but GM still faces a value gap that cost restructuring will not bridge. One might argue that the difference between Toyota and GM is that Toyota took Dr. Deming’s teachings to heart, while GM has not.

  213. Christophe Monch said,

    The game was lost for GM in the 90′s. For me there are two things to consider,the customer approach and the internal processes. On both ways the 2 majors were at the opposite.

    We can always say that rules caused the decline of GM but the force of a company and his management is to anticipate and take advantage of any rule (why did they not study low consumption car just after 1973 by eg?). An other thing is to look around you and see what happens. GM was mainly focus on his internal market when Toyota (for logical reasons) was more focus on exports (so they took care of each local specificities that helped to stick to market changes).

    At the end, I would say Toyota has developped its own methodology, the Toyota Production System, based on Lean Management and the Just in time process. They are on the way of never ending improvement whatever is the topic (knowledge, ressource efficiency, customer satisfaction, supply chain management, time to market…) and whatever is the function in the enterprise (Information System, Marketing, HR and so on). There is an excellent book describing it “The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer. By Jeffrey K. Liker”

  214. Michael Ortiz said,

    Everyone has made good points and offerred strong arguments to this topic. I’d like to offer another view point: What does the entire auto industry not know including GM and Toyota? The US market appears to be near full saturation, if not all ready fully saturated. Look on the roads in your Metro area and since almost every car maker in the world sells cars in the US, you will probably see their cars along your hometown streets. How many people drive cars in America? And if we can only drive 1 car at a time, how much manufacturing capacity can the automakers output without having left over inventory that doesn’t sell?

    GM has been selling cars in emerging markets and established International markets for years but now even International markets are in recession causing a slowdown in auto sales across the board. China is considered a major market with huge growth potential and the Chinese love American cars. So what’s the difference between China and the US?

    Is Toyota better than GM in forecasting business and market trends? Perhaps. Yes, I admit that Toyota has better brand awareness in the US and the perception of quality provides strong leverage in the minds of consumers when making an auto purchase. I personally drive a Toyota Tundra and considering to purchase a Chevy in 2009.

    I would offer that many US automakers have made management mistakes. Mistakes or misjudgements happens in the business. What do US and all other automakers do now? There’s a new dynamic in the US auto market, the key is who is able to change and adapt to this new dynamic?

  215. Scott Johnson said,

    How to listen to the consumer. There was a guy from the UAW on NPR the other day pushing for the bailout saying, “American cars are the best in the world, and American workers are the best in the world.” HELLO! Your customers have fired you. Why not face reality so that you can comprehend the reasons?

  216. Luis Sourdis said,

    Toyota knows the value Innovation…

    The big three, instead of innovating and adapting their labor force and products to the new market environment, they’ve been getting by lobbying US Representatives to change regulatory laws, warranties, labor contracts, fuel consumption, tax cuts, etc. Toxic relationship.

  217. Mapper99 said,

    Also, 50 million is a lot less than what the US carmakers are trying to get for their bailout!

  218. Noble Ackerson said,

    Toyota Adapts to the times.
    Whilst the big three were pushing out SUV’s and Minivans into production Japanese based automakers were pushing out alternative fuel vehicles out to the showrooms. Consumers follow trends so when energy becomes the looming issue GM suffers because they did not adapt to the times. Mismanagement, leads to loss in market cap, that loss leads to 34,000 layoffs.
    My 2 cents.

  219. Gina Granados Palmer said,

    Earlier adoption of Hybrid models. Earlier adoption of gas-efficient models. A top seller in the gas crunch market: Prius.

  220. Plex Meister said,

    The simplest explanation tends to to be the right one. In this case, lets face facts, we make crappy cars and have so since the late 70′s. They are clunky, ugly, boxy, and plastic. The seats are terrible, the frame floppy, and the handling atrocious. The rear ends are almost all ugly chrome and massive tail lights. The control panels look like something from a toy model car.They have poor resale value and have a relatively higher incident of mechanical breakdown. By comparison, our SUV’s are ugly clunky tanks and our trucks are bettered by Toyota, Nissan and Honda- no doubt. We offer nothing in the luxury department except for Cadilac, which even if you can get past their “big-boat” looks, their MSRP far exceeds that of comparable foreign models. Would you pay $84K for a Cadilac XRL when you can get a Lexus SC430 for 20K less? Would you buy a CRT when you can get a Genesis for 20K less? We make no high-performance cars of any size except the Corvette.
    The American buying public has grown up and many have got used to more refined and reliable vehicles they can re-sell. So, it really isn’t about the UAW or health insurance costs or even substandard business management. Its about product quality and design and the ego behind the real decision makers who under rate the buyers knowledge and desire.

  221. mikemeagan (Mike Meagan) said,

    What an amazing example for all businesses, not just the Big 3 Automakers.

  222. mikemeagan (Mike Meagan) said,

    What an amazing example for all businesses, not just the Big 3 Automakers.

  223. mikemeagan (Mike Meagan) said,

    What an amazing example for all businesses, not just the Big 3 Automakers.

  224. PINGBACK said,


    …So, I’m sure the other top auto makers are really suffering too right? Right, but some companies with integrity have decided to do things differently. How many hourly jobs has Toyota’s American production system laid off in the same time frame? Zero. (If you don’t believe me read this article)…

  225. Phillip Hanson said,

    Executive management at GM, Ford and Chrysler have allowed the UAW to control the benefits offered and the yearly increase in associated costs (i.e. personnel, who’s positions are no longer required, are allowed to sit in a room for 40 hours per week and still receive a paycheck). This is the primary difference between the Big 3 and foreign automakers.

    The foreign automakers have controlled their costs and are not in financial trouble. The Big 3 have not restrained the UAW for several decades, which has resulted in the current financial situation.

  226. Dimitrius Kloczko said,

    I have to say it is the American Automakers OWN FAULT. They have been regurgitating the same big, slow, dumb, useless vehicles while customers were interested in fuel economy and downsizing.

    The Big 3 have bought up patents that actually made sense then threw them into a dark well with no intention of adding those good ideas to their inventory. They crushed the little start up companies and established an oligopoly.

    They invested all their time and money in lobbyists to push for government to make stupid laws to protect their interests and the American people showed their disapproval by buying foreign.

    The UAW and Bush administration tout this ideal that the American work force is #1 and can do anything it sets its mind to. Those days are LONG OVER and its just sad to see them stuck on the mindset that because I’m American I would be a traitor if I didn’t buy American. The Amerigasm commercials with Toby Keith in sleeveless flannel singing ode to “Built Ford Tough” make me laugh. I’ve owned two Fords and both were really bad cars.
    They are inferior products riddled with design flaws and poor craftsmanship.

    One thing I am not overly proud to admit is I once had a car repossessed due to a job loss. I made a several late payments in a row and one day they repo’ed my car. I was under great duress and personal strife and needed my car to find another job. I tried to work something out with Ford Motor Credit and they played a really hard line with me. Inhumane and brutal. They didn’t care at all about my situation, they just wanted their money. They hit me with so many late fees and penalties it was impossible to come up with that amount in such a short time with no job or car to find new work.

    There were no government bail-outs offered when FMC came after me like a relentless doberman. They called my relatives, my job and my home every hour on the hour and harassed me to no end. No one gave me a handout because times were tough. No special baills were passed to help my situation. Ask anyone that has ever got behind on a payment if the Big 3 have offered them a bail-out.

    So I don’t feel sorry for them in the least. I have a good job now and I also now have a Japanese car. I will NEVER buy American again as long as I live.

  227. Susan Penny Brown said,

    Toyota is in tune with what its customers want. GM uses lobbyists to push its own gas-guzzling agenda. Toyota is leading innovation. GM has said flat out that they don’t think fuel efficient cars make a good business model. GM cries for a government bailout so they can innovate but their current execs wouldn’t know where to start. As sorry for I am for the crisis it would be to the factory workers who can least afford it, if the American auto industry wants to compete globally, the only solution I see is to let these companies fail, get rid of the current management, and bring in global-thinking execs with a broader, more open mindset.

  228. PINGBACK said,


    …Mientras muchas empresas se dedican a despedir a sus empleados para enfrentarse a la crisis, empresas como Toyota deciden enfocarse en disminuir la producción y aumentar la formación y las mejoras laborales mientras esperan a que vuelvan las ventas…

  229. jonkoman (jonkoman) said,

    mi admiración hacia Japon y los Japoneses no es solo por el manga y el anime. Aprended de ellos borregos, GM & CO

  230. jonkoman (jonkoman) said,

    mi admiración hacia Japon y los Japoneses no es solo por el manga y el anime. Aprended de ellos borregos, GM & CO

  231. jonkoman (jonkoman) said,

    mi admiración hacia Japon y los Japoneses no es solo por el manga y el anime. Aprended de ellos borregos, GM & CO

  232. Paul Misner said,

    Very insightful article. I wrote an article with a similar slant a while ago on my blog.

    A Car That I Would Buy… Some Lessons For the Auto Industry from Southwest Airlines

  233. Bob Muentz said,

    In my humble opinion; The key issue between the GM and Toyota is beyond commitment to eliminating waste, perhaps where the focus on waste elimination resides. A good example of this is the focus of waste elimination is at the manufacturing levels for both organizations. As you wrote, there are and will be reductions at the hourly levels for GM; however where is the focus with internal overhead reduction, inventory management and commercial direction at GM? Toyota has missed this, perhaps one time with their large truck in this oil market, however they adjust quickly.
    Perfect example; we read in the news today all of the big three CEO’s flew in on their private jets to meet with congress to ask for bailout relief.

  234. Saurabh Tandon said,

    It is really a thoughtful as i have worked with Toyota, would like to share my understanding in brief. Toyota philosophy is to develop process & strive for kaizen to better it off with everyone’s involvement without compromising on Toyota Values !!!

  235. wjhuie (wjhuie) said,

    @wolfc enjoyed the article esp. @ the end… thought you might enjoy this;

  236. wjhuie (wjhuie) said,

    @wolfc enjoyed the article esp. @ the end… thought you might enjoy this;

  237. wjhuie (wjhuie) said,

    @wolfc enjoyed the article esp. @ the end… thought you might enjoy this;

  238. Justin Tomac said,

    I believe US companies have not really understood the Toyota Production System (really Toyota Management System), instead we have continued to focus on its tools and that is how it is marketed (i.e. tool based like takt time, kaizen event, kanban, etc.). Not exactly sure as to why, probably part due to arrogance, short term thinking (e.g. layoffs are a short term fix to your balance sheet or earnings per share) and heavy reliance upon IT, instead of going to the floor to validate what they are seeing. My brief appearance working for one of the big 3 echoe’s Bob’s comments….politics, experience, wishing instead of fixing, etc. are all parts of the bigger problem.

  239. Stuart Ormsby said,

    For me it is very simple, and ask yourselves how many companies do this.
    Know what to do, when to do it, what to do in the event of an abnormality and the consequences of it not being done.There is no defined rocket science behind TPS, it is the worker is king and the Directors work for them. Coupled with Kaizen, which go hand in hand with the previous statement,how can it go wrong? 10 years service with Toyota showed me this.Our consulting practices are about getting people out of there offices, onto the shopfloor, and challenging what they see. Real value added Genchi Genbutsu!Feel free to contact direct for further discussion

  240. Lester Sutherland said,

    Actually, all of this reminds me of a Kabuki theatre. The automotive companies can’t make money, yet some can with a different style of management. The Big three executives fly in on their private jets and claim that they need to pay hundreds of times their workers’ salaries to themselves because otherwise they won’t get the best management. Yet Toyota pays much less and appears to be better managed. The Financial houses get multi-billion dollars to bail them out, yet they claim the must give 8 billion dollars of bonuses (from another pot) because their executives earned it…. I doubt Lean will help this situation much; there is a complete break with reality going on. To do Lean you at least must know what your customer wants, and these kabukimono don’t even know who the customer is, they think it is themselves……

  241. Richard Gurr said,

    I have worked for both GM and Toyota, and while it could be said that whatever Toyota has done, GM has done the opposite, GM has made significant strides in manufacturing, as have the other former big 2. The real demise is about not having consistent quality across all product models, and focusing as in GM’s case on what they did best for the past 15 or 20 years, once large cars were no longer in vogue, and that was to turn trucks into family cars. Not a good strategy if you believed that there was ever any risk of high oil prices, and that putting everything into one basket was dangerous. They gambled and lost. The more they lost car share to Toyota and Honda in the U.S. the more they spent and gambled on the profitable trucks. GM does have some great car products around the globe even now, including their newly launched Opel Insignia which just was voted best car of 2009 in Europe. The GM problem is the US product and market, and the losses they are now seeing that they did not prepare for, nor can offset from elsewhere. The answer around why Toyota has really made decisons and done so many things opposite to GM is to answer the puzzle of unrelenting short term demands from Wall Street,(you and me) and the the reality of how company leaders are rewarded and how often. Toyota has made many mistakes and learned from all of them. GM has learned also, but has just made too many critical errors over too many years. Not learning how to manufacture on line fairly efficiently with built in quality was not one they did make, though like others they were never able to implement all of TPS the way that we wish they had. All that said, GM, Ford, and Chrysler are in many ways 20 years ahead of other non-automotive manufacturing industries who have not yet faced the relentless Japanese competition, and have yet to truly adopt the TPS foundation principles.

  242. Paul Milligan said,

    Released today 20th Nov, is an interesting article on the demise of Detroit from Jorn Madslien the well respected BBC business correspondent.

  243. esteveg (esteve) said,

    today, tomorrow, toyota

  244. esteveg (esteve) said,

    today, tomorrow, toyota

  245. esteveg (esteve) said,

    today, tomorrow, toyota

  246. Sean Gharavi said,

    How to meet the needs of the market!

    What history tells us is that unless your company has a monopoly on a product that people can’t live without, you have to be better than the competition on providing a product that is priced, distributed and promoted “correctly” to your target market in order to win.

    I believe that other factors have only a minor impact compared to the fact that GM, Ford, etc… have generally been TERRIBLE at understanding and executing on the basic marketing philosophy that underlines all successful businesses.

    The silver lining of the economic downturn may be that meritocracies may emerge and business leaders who are the best will have an opportunity to rises to the surface.

  247. Stephen Myers said,

    Toyota doesn’t have to support 1 retiree for each car it sells. Every car that GM sells carries $1500 of legacy benefits for people that haven’t built a car in decades. The dollar cost for every employee that IS currently building cars is close to $80/hour including salaries and benefits – at Toyota it’s about $40.
    Toyota’s labor costs are less than half of GMs……..

    The problem ISN’T whether GM is building “good” cars or fuel efficient cars (same argument for Ford and Chrysler), they have essentially caught the Japanese in both quality and fuel efficiency, they have to overcome the perception that their vehicles aren’t of good build and fuel efficiency. Toyota, Honda, etc. have 2 car lines each – “consumer” and “luxury”. GM has 7 lines, Ford 3, Chrysler 2 – but little difference between them. GM should retire 5 lines and go with Chevrolet (or GM) and Cadillac. Ford should kill Mercury and Chrysler should either go to 1 line or establish some real differentiation in Dodge and Chrysler.

  248. Neil Robinson said,

    Ironically, I may be able to answer this by telling you an interesting marketing statistic.

    BMW needs to spend on average, $35 to sell one of their cars.

    Cadillac has to spend over $2,500 per car to get a sale.

    Which car do people need persuading to buy more?

    It’s not rocket science, guys…

  249. Marc J. Miller said,

    Whether it’s their car design, manufacturing process, or more motivated workers, if they fix their processes today it would still take at least 10 years to change the *perception* that Toyota and Honda make better cars than GM or Ford. Why? In total I’ve spent at least a week of travel time to the dealership + waiting time + traveling to the dealership to pick up my car when I or my parents owned GM and Ford cars and vans. That’s not maintenance (oil changes, filter replacements, etc.), that’s things gone wrong. Most of the problems were fixed for free under the manufacturer’s warranty, and that’s the defense most GM and Ford-loving car owners would take. They have a different definition of “reliable car”.

    How much time have I and my parents spent waiting for non-maintenance repairs on our Honda and Acura cars and SUVs? ZERO!! My time is not free, and this discovery was a welcome surprise. It redefined “reliable transportation” for me.

    Now, every time I buy a car I’ll be reminded of that fact. I’m likely to tell my children about it too.

    According to the Acura dealership where I bought an SUV recently, they haven’t experienced the economic downturn yet. People are still buying, and they’re not giving discounts.

  250. Robert Simonis said,

    The difference? Toyota has a planning horizon of decades while GM and most other US companies are focused on this quarter and next. Long range planning is anything more than next fiscal year.

    Note that Toyota is losing money in this economy also. Toyota also got caught in the concept that they could make big money on trucks and SUV’s. The difference? Toyota had billions stashed for a rainy day and they remained loyal to their employees (no full-time Toyota employees have been laid off even though the San Antonio truck plant did not build a truck for three months). Toyota has focused on the long picture, which means they need dedicated workers and loyal customers; GM will try to survive through slashing costs and laying off employees that they should never have hired and closing facilities that they should never have built.

    GM is paying for decades of mismanagement while Toyota is benefiting from decades of cost avoidance.

    P.S. – I just bought a new Chevy Suburban and traded in my Toyota Sienna because they do make a great vehicle at a good price.
    P.P.S. – do not confuse the vehicle maker with the dealer. Dealers are seperate companies that have their own set of problems.

  251. Tom said,

    It is very simple. The Big 3 need to go into bankruptcy in order to shed the vestiges of the UAW. Without change,s giving money to the Big 3, will be money down a rat hole.

  252. Arnold Dénes said,

    Thanks for this excellent question, Chris, and to all for contributing with such meaningful comments. In South-East Asia where my company provides Lean Management consulting services, I see every day the difference in mindset Justin underlined.

    Companies’ management say they want to go Lean because they know they have to if their businesses are to remain competitive. They are fine with implementing any of the tools of Lean, whether Kaizen, Kanban, Single-Piece Flow, Just-In-Time. The only thing they are NOT willing to do, and that’s the main reason why Lean initiatives fail: they are not ready to change their own ways.

    Managers have to stop thinking of Lean as a magic toolbox that applies to the factory floor or the offices, but not to management. It’s a business philosophy that redefines why people go to work in the first place, what is a customer and how we define the value we bring them. It’s a counter-intuitive concept that forces managers to un-learn what they know before adopting a new mindset.

    Those that have succeeded, like Toyota, know that laying off workers is the easy solution but does never solve the root problems. Front line employees make the bottom line: having them stand alongside their manager to face a crisis is the biggest competitive advantage any business can have.

  253. Demeron Skouson said,

    This is an interesting discussion. I also have been around both companies and even more deeply involved with Honda for the past 25+ years. I found that as a supplier it was much easier to sell to the US automakers because they did not demand nearly the same level of work in proving out robust product designs relative to their Japanese counterparts.

    If they can correct that, the US manufacturers will be able to turn around the trend of American consumers migrating toward Japanese autos.

    I recently authored a book outlining what the Japanese do that is different than what the US does, and how individual people working in a “Japan influenced environment” can adjust to compensate. The title is “Becoming Re-Successful” and is available at Amazon and at the publisher .

    email: jdskouson@ .

  254. PINGBACK said,


    …GM is laying off thousands of worker. Toyota: zero! What does Toyota know that GM doesn’t?…

  255. Stephen Myers said,

    So we have both a Honda and a Ford – build quality, reliability, economy are all pretty equal for the two vehicles. My wife’s Honda is most definitely a cheaply built economy car, my Ford has more room and a much more solid feel to it. But they are used differently and serve our needs well.
    I will tell you that we probably will NOT buy another Honda and it has nothing to do with the car, it was the dealership experience during the purchase process. She had put a deposit down to get the “next” car to come into the dealership (the car she chose is very popular these days). The car comes in and the dealer is using old-school Detroit negotiation tactics – her MINI Cooper was “not desirable” so they couldn’t give us even Blue Book trade in value for it, the new car was popular so they needed to get a premium for it, etc. The deal they offered us was more than if we’d have bought a new MINI Cooper – and that cost $10K more. We put a fair offer on the table and they laughed at us. We asked for her deposit back and planned to go get a new MINI. It took us nearly 3 hours to get the deposit and just before they were going to give it to us, came in with the offer (the one we thought was fair 3 hours before) that they should have given us from the start.
    We decided to take the car and it has been everything she hoped for, but the dealership soured us.

  256. PINGBACK said,


    …Next time someone tells you to “buy American” tell them to read this…

  257. Baller said,

    This is an amazing story, I can’t imagine risking the entire companies revenue to save their employees jobs. This is an example of a company that actually cares about there people working for them.

  258. Mike Bishop said,

    I was trained by Toyota in Japan about how to manage a tier one supplier using TPS. As mentioned before TPS is really a very simple system and can be practiced by most anyone. Similarly I think the difference between GM and Toyota is equally simple. GM is a financial company, Toyota is a manufacturing company.

  259. catchyourlimit (Catch Your Limit) said,

    What Toyota knows that GM doesn’t |

  260. catchyourlimit (Catch Your Limit) said,

    What Toyota knows that GM doesn’t |

  261. catchyourlimit (Catch Your Limit) said,

    What Toyota knows that GM doesn’t |

  262. David Lethe said,

    GM needs the type of cleansing that only chapter 11 bankruptcy can fix. Read below to see how corrupted the company is (and it has nothing to do with the UAW)

  263. Roshan Venugopal said,

    My 2 cents
    1. GM and the rest have huge legacy costs like Pensions, health care for Pensioners. The number of workers at GM is outnumbered by number of Pensioners.

    2. Healthcare in Japan is subsidized by Govt while for GM the healthcare cost per worker is more than the cost of steel used in Cars.

    3.Underinvestment in promoting its own Quality vis-a-vis others like Hyundai or the European imports.

    I feel that GM and the other American car companies are following the right policies but these factors have weighed heavily.

  264. Derrick said,

    Assuming GM got smart today, where would the money to pay the employees like Toyota is doing come from? Until you can address that question, this isn’t an interesting topic.

  265. Prashanth Venkatesh said,

    Thats an incredible stat.

    But truth be told, Toyota doesn’t have the same problems as GM when it comes to things like health care costs, pension costs etc. I am not justifying GMs position but that it is definitely one advantage of Toyota.

    But the failure to innovate and to forecast market conditions is probably their biggest mistake to date.

    Chris, I didn’t realize that was your article.. very well written.

  266. Allan Tsang said,

    Lean manufacturing :D ? I don’t know – just guessing.

  267. Keng Soo said,

    Toyota has been an excellent piece for business management writers and case study for students in many top business schools. There’re just too many factors, no matter how you “slice & dice” the company. The commentary on the deep-rooted culture of belief in its people applies across the board in most Japanese companies, not just Toyota. And in return, the company demands loyalty and dedication. We will learn more business survival techniques from the companies that are able to stay afloat during these troubled economic times.

  268. JK Saraswat said,

    Simply to regard its people and giving support and developement. When you recruit, it has to be in line with your growth plans and an insight to cyclic changes expected in future. Axing employees shall nowhere improve company’s health, in fact this would instill fear in existing employees, whose performance would definitely be affected. Perhaps Toyota had looked into future and potential cyclic change impacts and strategically planned inputs.

  269. Andy Clayton said,

    It makes interesting reading, but it’s not the full picture. Is this really to do with a culture perspective or perhaps Toyota are just better placed to survive the crunch – perhaps they’re better managed or perhaps they just simply have better cars?

    It’s been a while since I lived in the states, but don’t Toyota top the sales list constantly?

    Taking a look at the global picture, Toyota have just announced 3,000 job losses in Japan, 258 job losses in Thailand, are extending shut-down periods at their North American plants and are closing a factory in the UK. They also actually laying off 120 workers at their Buffalo plant by January 2009.

    Toyota are right in realising that people do matter, but perhaps they’re as ruthless as everyone else when deciding which people matter?

  270. Vivek Srinivasan said,

    To put it in one word – Strategy.

    GM is stuck in 1970′s when America bought trucks and SUV’s they need to change their strategy and start concentrating on smaller and lighter vehicles. The people at the top need to figure this and make a strategic shift. Till they do it, only US government can save them.

  271. Dan Hearsch said,

    In fairness, how many workers did GM lay-off in its first 40 years? Comparing Toyota now to GM now is not very meaningful. Toyota tried to enter the US market in the 1960s and failed miserably, had to exit and return again years later. Only the energy crisis on the 1970s opened the door for Toyota and similar companies.

    Further, Toyota has benefited from a protectionist government at home, while being allowed and even encouraged to expand to other countries like the US not only without penalty, but with a significant advantage in labor costs. Combine that with the fact that they are not supporting generations of retirees from its long history (an estimated $1500 per vehicle advantage) and now you can begin to understand why GM and Ford continue to rely on larger vehicles (which is one of their biggest problems and many people’s biggest criticisms of these companies) – they had to. With the uncompetitive labor situation and legacy costs, it becomes basically impossible for GM and Ford to make profit on inexpensive, small vehicles, so they targeted larger, expensive vehicles.

    I submit as evidence the fact that Toyota is not terribly successful in Europe, because they are playing on a level field there at best, and are at a slight disadvantage to the European companies at worst. Here in the US, the advantages described above are significant reasons Toyota has seen such success.

    I am not arguing GM or Ford have done a terrific job, but comparing these firms like everything is equal and they could have all made the same choices and Toyota just made better ones is inaccurate.

  272. PINGBACK said,


    …Do you know how many hourly jobs GM has laid off from 2006 to July 2008? Take a guess. How about 34,000? And now, they’re talking about another 5,500 layoffs. And now they’re asking you and your government for a bailout to end their troubled, outdated, low quality, wasteful production system…

  273. cruxwork (Cruxwork) said,

    What Toyota know’s that GM doesn’t PS the automotive beggars are heading back to DC

  274. cruxwork (Cruxwork) said,

    What Toyota know’s that GM doesn’t PS the automotive beggars are heading back to DC

  275. cruxwork (Cruxwork) said,

    What Toyota know’s that GM doesn’t PS the automotive beggars are heading back to DC

  276. PINGBACK said,


    …A Very interesting comparison of the work culture difference between the two major Automobile companies Toyota and GM. In This difficult times, where there is Job cuts every where Toyota has a special cultre, deep- rooted values, and respect for their workforce…

  277. fsbrainstorm (fsbrainstorm) said,

    : US auto industry does not need bailout: and what Toyota knows that GM doesn’t: Compelling reads.

  278. fsbrainstorm (fsbrainstorm) said,

    : US auto industry does not need bailout: and what Toyota knows that GM doesn’t: Compelling reads.

  279. fsbrainstorm (fsbrainstorm) said,

    : US auto industry does not need bailout: and what Toyota knows that GM doesn’t: Compelling reads.

  280. Greco Cruz said,

    Toyota adopted to the market while it is still hot and our US companies decided to do what they think the people would want and then when it did not work followed. The good thing is Toyota, Honda and Nissan are still employing Americans.

  281. zmottie (zmottie) said,

    @unclespeedo @juvengroovin buy a toyota, they don’t lay people off!

  282. zmottie (zmottie) said,

    @unclespeedo @juvengroovin buy a toyota, they don’t lay people off!

  283. zmottie (zmottie) said,

    @unclespeedo @juvengroovin buy a toyota, they don’t lay people off!

  284. pvillega (Pere Villega) said,

  285. pvillega (Pere Villega) said,

  286. pvillega (Pere Villega) said,

  287. e_shep (Ed Shepherd) said,

    -Check this out!

  288. e_shep (Ed Shepherd) said,

    -Check this out!

  289. e_shep (Ed Shepherd) said,

    -Check this out!

  290. wjhuie (wjhuie) said,

    @roonoid I doubt they are usually. Would they be compatible? Toyota thinks so;

  291. wjhuie (wjhuie) said,

    @roonoid I doubt they are usually. Would they be compatible? Toyota thinks so;

  292. wjhuie (wjhuie) said,

    @roonoid I doubt they are usually. Would they be compatible? Toyota thinks so;

  293. cheezo (Chirag Jog) said,

    What Toyota knows that GM doesn’t

  294. cheezo (Chirag Jog) said,

    What Toyota knows that GM doesn’t

  295. cheezo (Chirag Jog) said,

    What Toyota knows that GM doesn’t

  296. cipher 34 said,

    How many Toyota workers are full time employees? ~ about 2/3′s. Benefits?
    What benefits? What about Vietnamese and Chinese workers at their Toyota plant in Japan? What about the Burmese connections to their parts business that are shipped here to Kentucky? Yes, just what we need the Toyota form of business here in the U.S. A few years ago we all but crucified Kathy Lee for her clothing business and child labor in Guatemala, but Toyota with a business in Burma~ that’s okay, it is helping the American economy ~ what hypocrites!
    Check out the story better the next time ~ I’d rather deal with the UAW, at least the UAW fights for the U.S. worker.

  297. JimD said,

    So, how much money does Toyota America pay to retiree’s pension and health benefits?

    Answer – not much. Much of GM’s costs is to pay for the pension and health of their retirees. Maybe they were too hopeful in years gone by, and they have changed the new employess to 401k plans, but they still have the legacy costs.

    Same as an airline such as JetBlue – they have no legacy costs to contain.

    Can GM do a better job – hell ya, but it is not an apples to apples comparision.

  298. cspag (Chris Spagnuolo ?) said,

    The giant automakers that couldn’t: More about what Toyota knows that GM doesn’t:

  299. cspag (Chris Spagnuolo ?) said,

    The giant automakers that couldn’t: More about what Toyota knows that GM doesn’t:

  300. cspag (Chris Spagnuolo ?) said,

    The giant automakers that couldn’t: More about what Toyota knows that GM doesn’t:

  301. PINGBACK said,


    …I came across an interesting article, What Toyota knows that GM doesn’t, while going through my daily blogs and it made me think about the millions of jobs lost and the persons who have lost their jobs over the last 12 or so months. This article really hits home for all businesses that are laying people off just to “save and little money”. Are you really saving money in the long term? I know people who have been laid off by the big mainstream companies and vow to never purchase another product or service they offer. OUCH! So the real question is, how much is saved to imitigate short-term funds lost versus long-term loses? If you found out that you were laid off and it could have been prevented, would you look at your company different?…

  302. JackPark (Jack Park) said,

    What Toyota knows that GM doesn’t

  303. JackPark (Jack Park) said,

    What Toyota knows that GM doesn’t

  304. JackPark (Jack Park) said,

    What Toyota knows that GM doesn’t

  305. cspag (Chris Spagnuolo ?) said,

    Stiglitz wants bankrupcty for the big 3: and What GM can learn from Toyota:

  306. cspag (Chris Spagnuolo ?) said,

    Stiglitz wants bankrupcty for the big 3: and What GM can learn from Toyota:

  307. cspag (Chris Spagnuolo ?) said,

    Stiglitz wants bankrupcty for the big 3: and What GM can learn from Toyota:

  308. Dustin said,

    Worthless article.

    1. yes all companies should take price in their workforce and I agree you should aim to continually train and improve employees, it will allow you to promote from within which is always a better choice.

    2. layoffs are not the cause of GM’s problems. You did not mention the fact that the Unions have such a stranglehold on GM that the hourly wage of GM workers is double Toyota’s. You did not mention that Toyota does not have job banks of laid off workers collecting FULL WAGE for not working.

    3. the ‘big 3′ stopped designing cars that American’s wanted as well. So on top of having horrible overhead (thanks Unions) they also lost market share to the companies that created smaller, more effecient cars.

  309. j12 said,

    i couldnt care less if Detroit goes under. The big 3 (at least 2 of them) will be asking for money fiscal quarter after fiscal quarter if the government gives it to them once. Mark my words. Once they get a free hand out without giving any concessions, the cookie jar is open and the American Taxpayer will bear the brunt.

  310. dallasdude said,

    Word is that all the part time employees are gone. POOF, gone and layoffs are on the way, oops already begun.

  311. josepjc (Josep Jordana) said,

    como afronta la crisis Toyota

  312. csanchez (Carlos Sanchez) said,

    people is your biggest asset, learn it the toyota way

  313. juleniturbe (Julen Iturbe) said,

    Etiquetado What Toyota knows that GM doesn’t | EdgeHopper: Lo que hace Toyota ante la crisis

  314. abhijitgore (AbhijitGore) said,

    What Toyota knows that GM doesn’t ? while GM has laid off 34,000..Toyota laid off ZERO…answer lies in Values and Assets

  315. rafaelfrias (Rafael Frias) said,

    Toyota invierte en sus trabajadores en momentos de crisis. Olé!

  316. Brad said,

    Good article, I think we could all benefit from a little eastern culture.  One comment I must add, I really hope Toyota doesn’t consider their employees an asset.  An asset is something you own.  Investment, sure why not.  I own both GM and Toyota vehicles and I think GM is falling because they are not following their roots.  Detroit is a bad place to be right now and I wish all 3 good luck, they have a lot of good competition- Toyota, Subaru, Honda just to name a few.  One interesting note about Toyota; they measure and match their main bearings to their crankshafts.  This is a reason why they last longer than the other guys and why mine has 200K and still going strong.

  317. Auto Blog said,

    Great read – keep up the great work!

  318. Mohan Rai said,

    Oh! We have to appreciate the Toyota’s systematic work style

  319. Chris said,

    HA HA!
    Toyota is paying billions fixing a simple problem.  How is being responsible for 52 deaths and still not being able too make a safe car good business?
    We need to stop paying millions to get these companies to build in the US.  It isn’t worth it.
    GM is stronger than Toyota could ever be.  Yes they did lay off a lot of US workers, more than the total number of employees that Toyota has in the US.  However, GM still employ over double the amount of Americans that Toyota does.
    Also, 5 Best Buys!  That’s kinda strange for a “terrible” company.

  320. matt said,

    whoever wrote this is a moron and needs to get their facts straight. are you an american>? so act like one and stop loving on a worthless company like toyota.. their cars are absolute crap that are killing americans. gm has been around for over 100 years. were the biggest automaker for about 60 years.. they arent a jap crap company that gets to get around all of our free trade taxes and fees because we blew up their country 60 years ago and for the next 100 years in the treaty of versies we signed with them they get to sell whatever they want without strict saftey regulations and huge taxes. sticky gas pedals anyone? or was it the mats? no,, the harness.. oh wait not that .. the tps.. no  the bcm..  no.. cant be.. maybe the ecm.. toyota morons.. cant even figure out a simple problem.. how about peoples tocomas frames rotting in half? no..   well back to the point. bc gm has been around for so long.. and have so many retirees and pay so much in taxes and medical and 401ks.. on every sale about 5 grand of every chevy goes to retirement funds and medical…  toyota … try like 200 bucks.  toyota is a young company with no retiree funds….  there is also alot of other reasons.. why does gm have to pay almost 4 grand a car to manufature it here>? so they have to move to other countrys to avoid that tax.. toyota.  no tax..  treaty….  same with germany.. we blew them up…  so audi..vw.. bmw and mb gets alot of the same easy walking ….politics… so to the idiot that wrote this… do some research.. and not on liberal sites or wiki..  look beyond the bs.. and figure it out.  toyota is slowly killing this country and everyone that buys a jap car sends all there money to japan…  the japs hate us..  so why give it to them.. keep the money in our country…   thanks

  321. matt said,

    correction.. not versillas.. the treaty of peace.. read it.. 1951.. its bullshit..

  322. Mini i9 Black said,

    Your do have some unique ideas here and I expect more articles from you.

  323. baidu said,

    Very well written,thank you share.
    <a href=””>baidu</a>

  324. Joseph Zapatero said,

    I like Ones New style boss

  325. Made America said,

    ((((matt)))) love it matt I was just thinking the same thing people like that are the reason for Americas short fall what a Japanese butt kissing loser

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