Carla I. Koen. Comparative International Management

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emphasis is on how particular societal constellations tend to encourage the development

and reproduction of distinctive kinds of work organization, and control and discourage

antithetical ones. This chapter discusses the USA, Japan, Germany and Sweden because

the societal contexts of these nations have contributed to the development of major pro-

duction systems. Speciﬁcally, Taylorism and Fordism developed within the US societal

context from where they spread to Europe. Toyotism, which developed within the

Japanese societal context, Uddevallaism, which developed in Sweden, and diversiﬁed

quality production, which developed within the German context, were all inspired by the

ﬂexible production of high-quality products. With the dissolution of the Taylorist–Fordist

production control systems in the 1980s and 1990s, these three ﬂexible models were seen

as the future production models.

The next section explains the key characteristics of these production systems. This

discussion is targeted especially at readers who do not have a background in production

or operations management. Inevitably, the information in this section might not be new

to all readers. Readers who already have some knowledge of production systems and their

features can turn immediately to the subsequent section, which can be read entirely sep-

arately from the ﬁrst section. It provides an explanation of the connections between the

features of the production systems that are described in the ﬁrst section and the societal

contexts in which these systems developed.

7.2 Characteristics and Types of Production

System

Taylorism, or scientific management

(1890–1911)

At the turn of the century, a US engineer (and former worker) called Frederick Taylor

undertook the ﬁrst systematic steps in the area of production management. As Taylor’s

ideas (referred to as scientiﬁc management, or Taylorism) have remained highly inﬂuen-

tial up to the present day – albeit often in a vulgarized or adapted form – they merit closer

examination (Lane, 1989: 140).

Based on his long experience as a worker, ﬁrst-line supervisor and manager, Taylor held

a somewhat low opinion of workers, although he was not anti-worker. He made a distinc-

tion between what he termed the ‘ﬁrst-class man’ and the ‘average man’. In Taylor’s view, a

ﬁrst-class man is highly motivated and pushes forward with his work rather than wasting

time or restricting output. Ideally such men should be selected for the appropriate task and

supported by management through ﬁnancial incentives. In Taylor’s experience, restriction

of output was the norm in the many workshops he had encountered and he described the

phenomenon as ‘soldiering’ (Sheldrake, 1996: 15). He further classiﬁed soldiering as either

natural – or the tendency of the average man to take it easy and to work slowly through lack

of incentive and through peer pressure – or systematic – the tendency to reduce output with

the deliberate objective of keeping employers ignorant of how fast the work could be done.

Taylor’s response to these problems was the application of what he termed a ‘system-

atic and scientiﬁc time study’, breaking each job down into simple, basic elements and

MANAGING RESOURCES: PRODUCTION MANAGEMENT 311

This section is based mainly on Sheldrake (1996), chapter 2 and Lane (1989), chapter 6.

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working out precisely what kinds of body movement were required by able workers to

execute individual tasks in the shortest possible time without increasing the intensity of

labour. Timings of the basic elements were then placed on ﬁle and, with appropriate

weightings built in, used as the means to construct standard times for various jobs (ibid.).

Task management also stimulated management’s ability to take greater control of all

aspects of production, including tooling, machines, materials, methods and job design,

thus enhancing the continued replacement of skill with the standardized approach

favoured by US production techniques (Sheldrake, 1996: 16). ‘Central to Taylor’s system

was the desire to rationalize and standardize production techniques in the interests of the

economy, efﬁciency and mutual prosperity’ (Sheldrake, 1996: 23). As Lane explains,

‘Taylor’s advocacy (though not invention) of the principle of maximum decomposition of

work tasks implied the minimization of skill requirements – deskilling – in the resulting

manual tasks and introduced two new kinds of division of labour. The ﬁrst, and most

insidious, is the separation of mental labour (or conception, planning of labour) from

manual labour (or execution, doing); the second is the divorce of direct from indirect

labour, i.e. the production tasks from those of setting up, preparation and maintenance’

(Lane, 1989: 141).*

Taylor summed all of this up in three central principles:

1. ‘the substitution of a science for the individual judgement of the workers;

2. the scientiﬁc selection and development of the worker, after each has been studied,

taught and trained – instead of allowing the workers to select themselves in a hap-

hazard way, and

3. the intimate cooperation of the management with the workers, so that they do the

work together in accordance with the scientiﬁc laws that have been developed,

instead of leaving the solution of each problem in the hands of the individual worker’

(Sheldrake, 1996: 18).

Taylorism demonstrated that expert knowledge of the technical means of produc-

tion, coupled with time study and ﬁnancial incentives, could substantially improve

efﬁciency levels. Tayloristic forms of production management have gained huge increases

in productivity, achieved both directly and indirectly through enhanced control over the

labour process. Taylor was aware that the greater the level of technical complexity, the

greater the need for managerial control and the less autonomy required for the individual

worker. Ironically, the greatest publicity has been given not to Taylor’s management of the

interface between complex technology and the worker but to the situation where the level

of technical complexity is negligible and the attributes of the worker limited to brute

strength and stamina (Sheldrake, 1996: 19).

Taylor’s insight into the general logic of industrial work was combined with par-

ticular assumptions about human psychology and a particular approach to the problem

of incentives (Sheldrake, 1996: 22). He argued that the goals of the worker had to be

brought into line with the goals of the enterprise. This problem was to be solved by

gearing the worker’s wage to his production output through a system of incentive wages.

‘He suggested that this problem could be solved if management used the following two

312 COMPARATIVE INTERNATIONAL MANAGEMENT

* Reproduced with permission of C. Lane.

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MANAGING RESOURCES: PRODUCTION MANAGEMENT 313

‘motivators’. First, the workman has to be given precise standards as to what amount of

labour is expected of him in a given timespan so that he can judge his progress and

achieve satisfaction in the attainment of his target. But Taylor believed in the natural lazi-

ness of workers and, therefore, recommended close supervision throughout the work.

Control of work is, of course, made easier by the fact that tasks are simple and contain no

indeterminate ‘mental labour’ requirements. Secondly, Taylor postulated that individuals

would be willing to work in this way if their pay was made to rise with the amount of

effort they invested. Taylor thus propagated a view of human nature which, with its

exclusive emphasis on extrinsic rewards and its implied a high degree of toleration of

monotonous and meaningless activity’ (Lane, 1989: 141).*

Criticism and opposition notwithstanding, because of the tremendous advantages this

approach brought to management, the insights and techniques of Taylor’s work steadily

became popular. Taylorism spread from the USA all over the industrialized and industrial-

izing world, and was widely accepted by European management from the 1930s onwards.

‘The subsequent world-wide diffusion of Taylorism has not always entailed the adoption

of all its elements and frequently involved a merging with elements of other management

philosophies and/or techniques of work organization to suit speciﬁc national traditions or

economic conditions’ (Lane, 1989: 142).* A legitimate deﬁnition of Taylorism, therefore,

should be precise and should include its main features in order to avoid confusion and

dispute about the true nature of the system. The following criteria are widely accepted as

constituting such a working deﬁnition of Taylorism:

a high degree of division of labour

a low degree of worker discretion

close task control

a minimum-interaction employment relationship, based only on the cash nexus.

‘Diffusion of Taylorism was aided by the internationalization of technology – which

was usually accompanied by American management techniques, and by the spread of

multinational companies’ (Lane, 1989: 144–5).* Important to the widespread accept-

ance of Taylorism was the emergence of vast mass markets for industrial goods, in the

more advanced industrial countries, from the 1930s onwards. ‘The principles of

Taylorism are, of course, particularly adapted to the production of large quantities of

standardized and relatively cheap goods by special-purpose machinery’ (Lane, 1989:

145).* ‘This was ﬁrst spectacularly demonstrated by Henry Ford in the ﬁrst decades of this

century with his mass production of Model-T cars, based on assembly-line technology

and the labour of semi-skilled operatives. A few decades later, European industrialists

such as the Michelin brothers strove to emulate him, and gradually Taylorism, or at least

Taylorist techniques became accepted in all three societies. But Scientiﬁc Management

has never penetrated the three European societies to the same extent and today still shows

a correspondingly different hold on their production organization. It had to interact with,

and adapt to, pre-existing national economic strategies, managerial culture, industrial

relations systems and, above all, with the extant qualiﬁcation structure of the labour force

and expectations of both managers and workers resulting from it’ (Lane, 1989: 145).*

* Reproduced with permission of C. Lane.

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314 COMPARATIVE INTERNATIONAL MANAGEMENT

Fordism, or mass production

Around 1914, Henry Ford’s adaptation of Taylor’s ideas to the operation of specialized

machinery further intensiﬁed both the division of labour and its intensity, which became

dictated by the machine. Ford developed a system, that he called mass production.

Mass production can be deﬁned as the manufacture of standardized products in high

volumes using special-purpose machinery and predominantly unskilled labour.

Mass production seeks to proﬁt from economies of scale. Higher levels of production

make possible a greater degree of task differentiation with commensurately lower

training requirements and qualiﬁcations for workers. Higher levels of production also

make it more attractive to produce parts in-house instead of depending on external sup-

pliers. There is, however, a downside to this approach. Lower levels of training of workers

also invite greater opportunities for human error. The complexity of the production

process increases as more items are manufactured in-house. To prevent errors from

paralysing the entire operation, extra reserves are stockpiled that function as buffers

between various departments. Similarly, parts from outside suppliers are stored to ensure

a consistently available inventory of suitable quality (Dankbaar, 1995).

Ford was able to dominate what soon became the world’s largest industry by

becoming the ﬁrst to master the principles of mass production, which made productivity

increase immensely. ‘Rather, it was the complete and consistent interchangeability of

parts and the simplicity of attaching them to each other. These were the manufacturing

innovations that made the assembly line possible’ (Womack et al., 1990: 27).*

‘The key to interchangeable parts, as we saw, lay in designing new tools that could

cut hardened metal and stamp sheet steel with absolute precision. But the key to inexpen-

sive interchangeable parts would be found in tools that could do this job at high volume

Box 7.1: The Main Characteristics of Craft Production

A workforce that is highly skilled in design, machine operation and ﬁtting. Most workers

progressed through an apprenticeship to a full set of craft skills. Many could hope

to run their own machine shops, becoming self-employed contractors to assem-

bler ﬁrms.

Organizations that are extremely decentralized, although concentrated within a single

city. Most parts and much of the vehicle’s design came from small machine shops.

The system is coordinated by an owner/entrepreneur in direct contact with

everyone involved: customers, employers and suppliers.

The use of general-purpose machine tools to perform drilling, grinding and other

operations on metal and wood.

A very low production volume – 1000 or fewer automobiles a year, only a small

number of which (50 or fewer) were built to the same design. Even among those

50, no two were exactly alike since craft techniques inherently produced variations.

Unless indicated otherwise, this section is based on Womack et al. (1990), chapter 2.

* Extracts on this page are reprinted with the permission of Rawson Associates/Scribner, an imprint of Simon and

Schuster Adult Publishing Group, from The Machine That Changed The World by James P. Womack, Daniel T. Jones

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with low or no set-up costs between pieces. That is, for a machine to do something to a

piece of metal, someone must put the metal in the machine, then someone may need to

adjust the machine. In the craft-production system – where a single machine could do

many tasks but required lots of adjustment – this was the skilled machinist’s job’

(Womack et al., 1990: 35 –6).*

‘Ford dramatically reduced set-up time by making machines that could do only one

task a time. Then his engineers perfected simple jigs and ﬁxtures for holding the work

piece in this dedicated machine. The unskilled worker could simply snap the piece in place

and push a button or pull a lever for the machine to perform the required task. This meant

the machine could be loaded and unloaded by an employee with ﬁve minutes’ training.

In addition, because Ford made only one product, he could place his machines in a

sequence so that each manufacturing step led immediately to the next. . . . Because set-up

times were reduced from minutes – or even hours – to seconds, Ford could get much

higher volume from the same number of machines. Even more important, the engineers

also found a way to machine many parts at once. The only penalty with this system was

inﬂexibility. Changing these dedicated machines to do a new task was time-consuming

and expensive’ (Womack et al., 1990: 36).*

As indicated, these dedicated machines allowed Ford to eliminate the skilled ﬁtters

who had always formed the bulk of every assembler’s labour force. In fact, what had been

a handicraft form of production was transformed into a series of divided, repetitive tasks

marked by extremely restricted autonomy and great physical burden. Indeed, Ford not

only perfected the interchangeable part, he perfected the interchangeable worker. Ford

took Taylor’s division of labour to its ultimate extreme. ‘The skilled ﬁtter in Ford’s craft

production plant of 1908 had gathered all the necessary parts, obtained tools from the

tool room, repaired them if necessary, performed the complex ﬁtting and assembly job for

the entire vehicle, then checked over his work before sending the completed vehicle to the

shipping department.

‘In stark contrast, the assembler on Ford’s mass-production line had only one task –

to put two nuts on two bolts or perhaps to attach one wheel to each car. He didn’t order

parts, procure his tools, repair his equipment, inspect for quality, or even understand what

the workers on either side of him were doing’ (Womack et al., 1990: 31).*

‘Someone, of course, did have to think about how all the parts came together and just

what each assembler should do. This was the task for a newly created professional, the

industrial engineer. Similarly, someone had to arrange for the delivery of parts to the line,

usually a production engineer who designed conveyor belts or chutes to do the job.

Housecleaning workers were sent around periodically to clean up work areas, and skilled

repairmen circulated to refurbish the assemblers’ tools. Yet another specialist checked

quality. Work that was not done properly was not discovered until the end of the assembly

line, where another group of workers was called into play – the rework men, who retained

many of the ﬁtters’ skills’ (Womack and et al., 1990: 30).*

‘With this separation of labor, the assembler required only a few minutes of training.

Moreover, he was relentlessly disciplined by the pace of the line, which speeded up the

MANAGING RESOURCES: PRODUCTION MANAGEMENT 315

* Extracts on this page are reprinted with the permission of Rawson Associates/Scribner, an imprint of Simon and

Schuster Adult Publishing Group, from The Machine That Changed The World by James P. Womack, Daniel T. Jones

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slow and slowed down the speedy. The foreman – formerly the head of a whole area of the

factory with wide-ranging duties and responsibilities, but now reduced to a semiskilled

checker – could spot immediately any slacking off or failure to perform the assigned task.

As a result, the workers on the line were as replaceable as the parts on the car’ (Womack

et al., 1990: 31–2).*

‘In this atmosphere, Ford took it as a given that his workers wouldn’t volunteer any

information on operating conditions – for example, that a tool was malfunctioning –

much less suggest ways to improve the process. These functions fell respectively to the

foreman and the industrial engineer, who reported their ﬁndings and suggestions to

higher levels of management for action. So were born the battalions of narrowly skilled

indirect workers – the repairman, the quality inspector, the housekeeper, and the rework

specialist, in addition to the foreman and the industrial engineer. These workers hardly

existed in craft production. . . . However, indirect workers became ever more prominent in

Fordist, mass-production factories as the introduction of automation over the years

gradually reduced the need for assemblers’ (Womack et al., 1990: 32).*

‘Ford was dividing labor not only in the factory, but also in the engineering shop.

Industrial engineers took their places next to the manufacturing engineers who designed

the critical production machinery. They were joined by product engineers, who designed

and engineered the car itself. But these specialists were only the beginning.

‘Some industrial engineers specialized in assembly operations, others in the oper-

ation of the dedicated machines making individual parts. Some manufacturing engineers

specialized in the design of assembly hardware, others designed the speciﬁc machines for

each special part. Some product engineers specialized in engines, others in bodies, and

still others in suspensions or electrical systems’ (Womack et al., 1990: 32).*

‘These original “knowledge workers” – individuals who manipulated ideas and infor-

mation but rarely touched an actual car or even entered a factory – replaced the skilled

machine-shop owners and the old-fashioned factory foremen of the earlier craft era.

Those worker-managers had done it all – contracted with assembler, designed the part,

developed a machine to make it, and, in many cases, supervised the operation of the

machine in the workshop. The fundamental mission of these new specialists, by contrast,

was to design tasks, parts, and tools that could be handled by the unskilled workers who

made up the bulk of the new motor-vehicle industry work force’ (Womack et al., 1990:

32–33).*

‘In this new system, the shop-ﬂoor worker had no career path, except perhaps to

foreman. But the newly emerging professional engineers had a direct climb up the career

ladder. Unlike the skilled craftsman, however, their career paths didn’t lead toward own-

ership of a business. Nor did they lie within a single company, as Ford probably hoped.

Rather, they would advance within their profession – from young engineer-trainee to

senior engineer, who, by now possessing the entire body of knowledge of the profession,

was in charge of coordinating engineers at lower levels. Reaching the pinnacle of the

engineering profession often meant hopping from company to company over the course

of one’s working life’ (Womack et al., 1990: 32–3).*

316 COMPARATIVE INTERNATIONAL MANAGEMENT

* Extracts on this page are reprinted with the permission of Rawson Associates/Scribner, an imprint of Simon and

Schuster Adult Publishing Group, from The Machine That Changed The World by James P. Womack, Daniel T. Jones

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Flexible production

During the 1970s, the western industrial world was characterized by a revolt against

Taylorism and degrading work in mass production. However, it wasn’t until the ﬁrst half

of the 1980s that the debate on new forms of production and work organization took a

more dramatic turn in most advanced economies. The new developments in the organiz-

ation of production in advanced societies not only called into question Taylorist practices

of work organization but also presented a more comprehensive new industrial strategy in

which a new approach to product markets had coalesced with the emergence of more

sophisticated production technology and new forms of utilizing labour power (Piore and Sabel,

1984 as in Lane, 1989: 67). This new model of industrial production organization was

called ﬂexible specialization or ﬂexible production. The new model seemed to be able to attain

superior competitiveness in world markets through the sophisticated application of infor-

mation technology, a diversiﬁed product range, and non-price-competitive marketing

strategies, combining all these with high wages, skilled labour and a ﬂexible, non-

Taylorist organization of work.

The new strategy was regarded as a reaction to worldwide economic changes, which

rendered problematic the old form of industrial development – mass production of stan-

dardized goods with the use of special-purpose machines and semi-skilled labour. As

indicated, such production requires large and stable markets and, during the 1970s,

various economic developments combined to undermine this stability. The most

important of these was a shift in the international division of labour and world trade. The

emergence of industrial economies in low-wage East and South-east Asian and Latin

American countries, which produced standardized goods cheaper than the advanced

industrial countries, has forced the latter to reconsider their role in the international div-

ision of labour and to look for alternative markets. The production of specialized/

customized and/or high-quality goods, particularly producer goods, suggested itself as a

new strategy. This also applied to home markets, where the demand for standardized

goods was often saturated and where the development of more sophisticated tastes

required more individualized goods as well as more frequent changes in product.

This changeover to a new market strategy was facilitated – and sometimes stimulated

– by the emergence of new technology (Lane, 1989: 164). Micro-electronics was one of

the technical innovations to gain momentum in the 1970s, and the use of upgraded

micro-electronic applications has become particularly widespread since the late 1970s.

Since then, micro-electronic circuits have become increasingly integrated, information-

processing time has been reduced, and the price of switching functions has fallen

proportionally. Improved computer performance has led to the incorporation of com-

puters in equipment, installations and machinery in order to expand, improve and

accelerate processing capacity (Sorge, 1995: 270). Computerized equipment made pro-

duction more ﬂexible as it made possible the frequent conversion of machinery and its

adaptation to the production of small batches and/or individual customized products at

relatively low costs. It also made possible instant adjustments of machinery to changing

MANAGING RESOURCES: PRODUCTION MANAGEMENT 317

* Extracts on this page are reprinted with the permission of Rawson Associates/Scribner, an imprint of Simon and

Schuster Adult Publishing Group, from The Machine That Changed The World by James P. Womack, Daniel T. Jones

Unless indicated otherwise, I am indebted to Lane (1989) and Streeck (1991) for the information in this section.

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318 COMPARATIVE INTERNATIONAL MANAGEMENT

market demands – hence the term ‘ﬂexible specialization’ or ‘ﬂexible production’ to char-

acterize the new form of production. The computer-controlled machinery not only

facilitated the production of specialized goods at greater speed but also at a higher degree

of precision and thus to higher quality standards. In fact, products of a craft type could be

produced at a similar speed and price as were standardized mass goods. Further advan-

tages ﬂowing from the new technology are that the shorter production runs commit less

capital, and that its ﬂexible nature, making the enterprise less dependent on large and

stable markets, renders investment in machinery a less precarious matter.

In order to be able to analyse the alternative manufacturing policies that were

enabled by the new technology three variables are important: the degree to which prod-

ucts are standardized, the type of competition they try to meet, and the volume of output.

The ﬁrst two factors appear to be closely related in that standardized products are gener-

ally sold in price-competitive markets, whereas customized products tend to be

quality-competitive. This suggests a distinction between standardized price-competitive and

customized quality-competitive production, on the one hand, and low- and high-volume pro-

duction on the other. Crossing the two dimensions generates four alternative product or

manufacturing strategies (as depicted in Figure 7.1), two of which – the low-volume pro-

duction of customized quality-competitive goods (‘craft’ production) and the high-volume

production of standardized price-competitive goods (‘Fordist’ production) – were quite con-

ventional. Indeed, with some simpliﬁcation one could say that before the advent of

micro-electronic technology, these would have been the only production patterns possible.

This simple picture, however, became considerably more complicated as a result of

technical change. Among other things, new technology seemed to have lowered the

break-even point of mass production, both enabling traditional mass producers to survive

with shorter production runs and, perhaps, making it easier for artisanal low-volume pro-

ducers to achieve economies of scale and enter mass-type markets. At the same time, the

capacity of the new technology for fast and inexpensive retooling seemed to have made it

Figure 7.1 Categorization of work systems

Small

Standardized

Competitive prices

Specialized

component parts

Mass production

(‘Fordism’)

Large

Customized

Competitive quality

Craft production

Diversified

quality production

Small

Large

Volume of

output

Differentiation of output

Source: adapted from Sorge (1995).

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attractive for small component producers dependent on large assemblers to differentiate

their product range and move into an advanced form of craft production, so as to reduce

their exposure to price ﬂuctuations and monopsonistic demand (one buyer and many

sellers).

The most important impact of the new technology on manufacturing strategy,

however, seemed to be that it had created a new option for ﬁrms in the form of high-volume

production of customized quality-competitive goods. In many manufacturing sectors, micro-

electronic circuitry had eroded the traditional distinction between mass and specialist

production. The high ﬂexibility of micro-electronic equipment, and the ease and speed

with which it can be reprogrammed enabled ﬁrms to introduce a hitherto unknown

degree of product variety, as well as product quality. The result was a restructuring of

mass production in the mould of customized quality production, with central features of

the latter being blended into the former and with small-batch production of highly

speciﬁc goods becoming enveloped in large-batch production of basic components or

models. This pattern was what came to be called diversiﬁed quality production. It can be

approached by ﬁrms through two different paths of industrial restructuring: by craft pro-

ducers extending their production volume without sacriﬁcing their high-quality

standards and customized product design, or by mass producers moving upmarket by

upgrading their products’ design and quality, and by increasing their product variety, in

an attempt to escape from the pressures of price competition or from shrinking mass

markets.

As suggested, ﬂexible specialization or production also implied a new way of

deploying labour power. The operation of the more complex technology, and the frequent

changes required, were more satisfactorily accomplished by the utilization of skilled

labour and the organization of work along the old ‘craft’ lines. The Taylorist strategy of

designing high-specialization/low-discretion jobs or work roles was replaced by one

seeking a high degree of overlap between specialisms and ﬂexibility of deployment, as

well as the exercise of ‘craft’ judgement and skill. Thus, polyvalency of skill was given

particular emphasis in the new form of worker deployment. Workers were assigned

more holistic work tasks, had enriched jobs, and enjoyed greater autonomy and

responsibility.

During the 1980s, when ﬂexible specialization was in its developmental phase,

scholars were already debating the feasibility of adopting these new technologies, and

the new form of work organization they implied in all advanced societies. Some argued

that only societies with a surviving craft tradition (i.e. a tradition relying on skilled, all-

round workers, operating in a high-trust environment, free from detailed or continuous

management control) would be able to successfully adopt the new form of work organiz-

ation. They identiﬁed such remnants of a craft tradition in Germany, Italy and Japan, and

saw the new production concept emerging mainly in these societies. In the USA and

France, in contrast, they suggested, the extinction of this tradition, and the extant forms

of union and state control, respectively, militate against the adoption of the strategy of

ﬂexible specialization (Piore and Sabel, 1984). The next section elaborates on this argu-

ment and explains the difﬁculties of US manufacturers in shifting from mass to ﬂexible

production.

MANAGING RESOURCES: PRODUCTION MANAGEMENT 319

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Lean production

The widespread popularity of, as well as the many misconceptions regarding, lean produc-

tion explain the amount of attention that is paid to the concept in this chapter. Forced by

societal circumstances, Japanese producers were experimenting with ﬂexible production

techniques from the 1950s onwards. It all began when Eiji Toyoda, a young Japanese

engineer from the Toyoda family, and Taiichi Ohno, his production genius, after a visit to

a US Ford plant, realized that mass production could never work in Japan. The problems

facing the Toyota company were as follows.

1. ‘The domestic market was tiny and demanded a wide range of vehicles – luxury cars

for government ofﬁcials, large trucks to carry goods to market, small trucks for

Japan’s small farmers, and small cars suitable for Japan’s crowded cities and high

energy prices.

2. The native Japanese work force, as Toyota and other ﬁrms soon learned, was no

longer willing to be treated as a variable cost or as interchangeable parts. What was

more, the new labor laws introduced by the American occupation greatly strength-

ened the position of workers in negotiating more favorable conditions of

employment. Management’s right to lay off employees was severely restricted, and

the bargaining position of company unions representing all employees was greatly

reinforced. The company unions used their strength to represent everyone, elimi-

nating the distinction between blue- and white-collar workers, and secured a share of

company proﬁts in the form of bonus payments in addition to basic pay.

Furthermore, in Japan there were no “guest workers” – that is, temporary immi-

grants willing to put up with sub-standard working conditions in return for high pay

– or minorities with limited occupational choice. In the West, by contrast, these indi-

viduals had formed the core of the work force in most mass-production companies.

3. The war-ravaged Japanese economy was starved of capital and for foreign exchange,

meaning that massive purchases of the latest Western production technology were

quite impossible.

4. The outside world was full of huge motor-vehicle producers who were anxious to

establish operations in Japan and ready to defend their established markets against

Japanese exports’ (Womack et al., 1990: 49–50).*

In order to become a full-range car producer with a variety of new models, Taiichi

Ohno realized that neither Ford’s tools and methods nor its craft production methods were

suitable. He needed a new approach. From this tentative beginning was born what Toyota

came to call the Toyota Production System and, ultimately, lean production.

An important example, which demonstrates some lean production techniques, con-

cerns the production of the different metal parts of a car from sheet steel. Mass producers

of cars start with a large roll of sheet steel. They run this sheet through an automated

‘blanking’ press to produce a stack of blanks slightly larger than the ﬁnal part they want.

320 COMPARATIVE INTERNATIONAL MANAGEMENT

Unless indicated otherwise, this section draws on Womack et al. (1990).

* Extracts on this page are reprinted with the permission of Rawson Associates/Scribner, an imprint of Simon and

Schuster Adult Publishing Group, from The Machine That Changed The World by James P. Womack, Daniel T. Jones

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