The End of Detroit (12 page)

He insisted that workers from the NUMMI plant travel to Japan to work for three weeks alongside their Toyota counterparts, a strategy meant to open their eyes to what was expected of them. Dennis Cuneo was on hand when workers, some of them grizzled veterans with 30 years’ experience at GM, boarded a bus for the airport. He was full of trepidation. “I remember watching and thinking, ‘How is this going to work? Are they going to survive?’” But the workers came home surprisingly enthusiastic. “I called them converted Catholics,” Cuneo said. The workers also discovered that they got the same message when they came home as they had heard in Japan. Both Cuneo and Convis had learned the Toyota Production System, then taught it to others at NUMMI. It was another big change from Detroit at the time, where bosses gave orders and workers were just supposed to comply without explanation. Once production began in 1985, the NUMMI plant quickly became one of the best within either the Toyota or the GM system, confirming Convis’s faith in American workers and reassuring Japanese management about American workers’ abilities. It also launched Toyota’s journey to eventually building vehicles on its own in the United States.

Toyota opened its first solely owned American factory, in Georgetown, Kentucky, a hamlet that was barely a dot on the map outside Lexington, Kentucky, in 1988. The executive that Toyota sent to run the factory was Fujio Cho, Ohno’s acolyte, and Dennis Cuneo’s instructor in TPS, who had become one of the company’s rising stars. Toyota had taken a deliberately conservative approach with Georgetown, choosing not to build a new vehicle there but to produce the latest version of the mid-sized Camry. Once again, Toyota was proceeding cautiously, hedging its bets. If for some reason it was disappointed by its American plant, it could replace the vehicles built at Georgetown with Camrys produced in Japan. Even so, according to Cuneo, “it was kind of a risky venture for Toyota.” It displayed faith not only in American workers but in the Camry, which was selling about 125,000 a year. The new Ford Taurus had raised eyebrows at Toyota, proving that American companies could compete if they really applied themselves. The Georgetown venture, which planned to build at least 200,000 Camrys a year, was Toyota’s response.

Cho was determined to make Georgetown successful. His faith in American workers was confirmed quickly. Soon after the Georgetown plant opened, northern Kentucky was paralyzed by a snowstorm that began during the day shift. Cho was not sure that enough workers would make it in for the night shift, so he asked for volunteers to work a double assignment. Virtually the entire shift offered to stay on, and to Cho’s surprise nearly all the second shift showed up, as well. Many of those workers drove in hours early because they were afraid they would be late due to the storm.

The episode showed the respect employees had for Cho, according to Sam Heltman, the plant’s director of human resources at the time. It was a respect he had cultivated with interest and determination. Though he barely spoke English at the time, Mr. Cho would walk the plant floor each day, talking to its 1,100 workers, using an interpreter when necessary, and listening to their complaints. “He acted as though he had nothing more important to do than to listen to this person and give them his undivided attention,” said Heltman. The conversations helped Cho understand the challenges of building vehicles in a foreign market, according to Takahiro Fujimoto, a professor of economics at Tokyo University who has studied Toyota for decades. Despite his background as an attorney, Cho had “a real shop floor knowledge about manufacturing vehicles, much as Dr. Ohno did,” said Fujimoto. Cho did more than just walk the plant floor. Every Wednesday night at 8 o’clock, workers and managers gathered to discuss Toyota’s philosophy, to go over new manufacturing methods and to allow workers to share their concerns. Initially, there was a significant Japanese presence in the factory. Japanese engineers and staff employees, called “coordinators” in Toyota parlance, sat next to their American counterparts to supervise what the Americans were doing.

Cho promised that as the Americans became more capable, the coordinators would go away, and today there is only a sprinkling of Japanese faces to be seen within the plant’s vast complex, which has grown to include two car factories and an engine plant, employing 8,000 people. The performance of the American workers under the Toyota system reassured executives in Japan that they had made the right choice in putting their faith in the United States. “It was absolutely the most exhilarating thing you can think of,” said Heltman, who is now in charge of human resources for Toyota Motor Manufacturing in North America. Cho helped Toyota lay the foundation for a series of factories that would eventually become the heart of its strategy in the United States and, indeed, the world.

In much the same way, Honda’s operations in Ohio were its stepping-stone on its own particular journey. Both Toyota and Honda proved that American workers could build great cars—on the West Coast and in the American heartland—that American consumers would embrace. They became the nucleus of a new American automobile industry. And whereas they would pursue different paths going forward, Toyota and Honda kept their focus squarely on their compass point: the customer. Marysville, for Honda, and the NUMMI plant and Georgetown, for Toyota, became launching pads for companies determined to serve the needs of American customers. To fulfill their promise, they had to venture out beyond the Accords built at Marysville and the Civics built at East Liberty, the Corollas built at NUMMI and the Camrys built at Georgetown, into new parts of the market. By leveraging those factories, the people working in them and the vision of the companies’ founders, they have grown dramatically. Toyota is shaping up to be the Japanese equivalent of a Detroit company—focused only on producing reliable vehicles, profitable operations and consistency throughout its approach. Honda is taking its place as a company that puts engineering before everything, selecting its new ventures very carefully. In the process, they are providing Detroit with more competition than it ever imagined.

CHAPTER FOUR

JOURNEY FROM
THE INSIDE OUT

HONDA IS A COMPANY
that charts its own course. It fiercely prizes its independence, and that applies not only to its status as an automobile company, approaching the market without partners, but to the way it develops its automobiles. It keeps control of every step of the engineering, design and manufacturing process, starting with the very first inkling of an idea. Honda’s approach is a rare thing in an industry where the creation of a car can seem like shopping at a bazaar. About the only thing a car company really needs to do anymore is dream up a name for its vehicle. Gone are the years when American automobile manufacturers oversaw every phase of their vehicles’ features. In the modern automobile industry, automakers can outsource the design of their vehicles to independent studios. They can buy engines from their competitors, including Honda, which sells 1 million engines a year to other companies, including GM. They can contract with suppliers like Lear Corp. to produce entire portions of the car, such as the interior compartments that Lear is designing for GM. And they can even have their automobiles built by somebody else, as the Canadian auto supplier Magna does in Austria for BMW. Honda keeps all of this in-house. Its goal with the vehicles that it creates is to meet the needs of its customers succinctly and squarely on target. It wants to build the best vehicle in every segment in which it competes. Honda was not always able to do this. It had to turn to Isuzu to assemble its first big SUV, the Passport, because it wasn’t ready yet to build trucks on its own. But while the Passport filled a space in the market, Honda figured out how to do an SUV—and now has not one, but three.

Honda’s single-mindedness leads to very specific vehicles that are aimed primarily at the customers it knows best: its own. Hondas do not appeal to everyone, and for years they have perplexed the Big Three, who couldn’t figure out why people were so enamored of such unadulterated cars when they could have something much flashier. But anyone who buys a Honda knows that the secret is that Honda is consistent and knows its business inside and out. Moreover, it keeps reinventing itself. Every new vehicle is an opportunity for improvement and to learn something new. It is a philosophy that has its roots in Japan, and that is spreading to the United States as Honda entrusts its employees here with more responsibility. It is an approach that leads to something reliable, dependable and thoroughly researched, inside and out. In all aspects of Honda, there is an attention to detail that manages to escape Detroit, but that its customers have come to value and expect.

Deep within Honda’s vast Research and Development Center in Tochigi, Japan, hidden by an avenue of cherry trees, Honda engineers prepare for their latest crash test as meticulously as doctors map out how they will perform delicate surgery. Nothing is left to chance by the teams of studious men and women, clad in immaculate white coats and trousers, the Honda equivalent of hospital scrubs. The 200 people on staff here have been trained to spot the minutest differences in results each time a vehicle comes barreling down one of the pathways in this building and careens into its target. That happens an average of twice each workday, or about 500 times a year, at what Honda calls its real-world, multidirectional testing center. A pristine white, two-story building an hour north of Tokyo, it is constantly in use, day and night, as one of just two such indoor collision laboratories in the global auto industry. The other sits a continent away in Sweden, where it was built by safety-obsessed automaker Volvo and has since, like its creator, been taken over by Ford. There are no such indoor testing centers in the United States, where, as they have for decades, auto companies perform a number of their crash tests outdoors. This means that weather conditions, darkness and environmental impurities can all play havoc with testing. To be sure, American auto companies have added computerized tests to the mix, crashing vehicles into one another in simulated collisions, and they have indoor testing labs where they can perform some kinds of crashes, such as those in which a car smashes into a fixed barrier. But despite the fact that they dwarf Honda in size, neither GM nor Chrysler has invested in a place like this.

Making Honda’s test center even more distinctive is the fact that in Japan, automobile companies don’t have to do their own crash tests. They have always relied on data from the Japan Automotive Research Institute, which performs government-required tests for them. Thus, this center is yet another reminder of the fact that here, as elsewhere throughout the company, engineers rule. You see them in virtually every Honda building, whether its Tokyo headquarters or its factories or its design centers, distinguished by those white outfits. Their requirements have become paramount through the years, as Honda has expanded from focusing primarily on automobiles to a full lineup with everything from luxury cars to big SUVs. In the mid-1990s, tired of waiting for data from the government, Honda decided it needed to have its own testing center. In 2000, it opened this place, which can best be described as an engineering heaven. “We are serving the customer even better,” said the personable director, Tomiji Sugimoto, a veteran of 25 years as a safety engineer and the prime force behind this showplace. As one walks inside, the first thing that comes to mind is that this would make a truly awesome hockey rink. The testing floor is 40,000 square meters in size and shaped like a fan, with the runways as its spokes and garage doors where each vehicle enters for its test. Here, working 24 hours a day, Honda can crash vehicles at up to 80 kilometers an hour (about 50 mph), from any conceivable position, beginning at 15-degree angles and ranging up to 90 degrees, the equivalent of a head-on crash. It can perform crashes from the side, stage rear-end collisions and, significantly, measure what happens to pedestrians when they are struck by cars. While not so much a major subject in the United States, car–pedestrian collisions are an issue of huge concern in crowded Japan, where 28 percent of all fatal accidents each year involve pedestrians. As if to illustrate the point, a family of dummies, from a babe in arms to a full-grown adult couple, sits in chairs next to the testing area. They are so lifelike that on a day when a visitor didn’t get too much sleep, or imbibed too much sake the night before, it’s more than easy to mistake them for real live people.

The dummy collection, which marks the second generation of such pedestrian stand-ins, lends a humorous touch to a place where data collection is serious business. A bank of 36 cameras overhead, at the side of each runway and in the floor beneath record 280 types of information. Hanging over the collision point is a control room, staffed by a half-dozen engineers sitting at computer screens, or standing to watch the proceedings. Before each test begins, six engineers fan out around the vehicle or the dummy that is to be the subject of that day’s test. Today, a male dummy will be struck by a white HR-V sport utility, a popular Honda vehicle in Japan and similar to the small CR-V sport utility sold in the United States. The test, which is being recorded by a film crew from the Discovery Channel for a documentary on automotive research, touches on both of Honda’s biggest concerns: injuries to pedestrians that result from crashes, and the kind of damage that minivans, SUVs and pickups can wreak both on other vehicles and on people. Honda never had good data on the latter in the past, because its lineup focused exclusively on cars. Now, however, it vitally needs the information. Its American lineup has three sizes of SUVs—the luxury Acura MDX and its twin, the Honda Pilot, the Element and the CR-V—plus the big Odyssey minivan. It doesn’t build a pickup truck, but it is rumored to be considering one. In fact, Honda has been shipping Chevrolet and Dodge pickups from North America to this site in order to see what happens when they run into another vehicle or into one of Honda’s dummies, storing up data it may use in the future.

As the engineers hang the dummy from a cord that descends from the ceiling, a bank of red lights blink in the minutes before the test is to begin, signaling the direction from which the vehicle will be coming. A whistle blows, and a verbal countdown in Japanese from 10 begins. As the numbers get smaller—
“san, ni, ichi, zero”
—the engineers step well away and then the HR-V begins its trek down the runway on a rail beneath the concrete floor. Watching from above in the control room, the group of onlookers, including Sugimoto and the film crewmembers, is quiet. The HR-V reaches 40 kilometers per hour, draws closer and closer, and then slams into the dummy. The impact brings a gasp from the assembled watchers. The dummy’s body goes soaring off to the right, landing squarely on a canvas-covered mat, losing a sneaker when it hits the ground. (The engineers and crewmembers had been taking bets on whether the dummy would land on the canvas, and there are some quiet grins as the thunk is heard.) The HR-V comes to a stop, its front end dented and the hood askew. The windshield is cracked and the wiper blade is broken.

The collision is captured on Honda’s video cameras, by the Discovery Channel film crew and by still cameras. Within seconds of the completion of the test, the engineers are checking the data that the collision has yielded. Walking over to the front of the HR-V, the center’s director, Sugimoto, points out how the body hit the dented front end. First came the thigh, then the hip, he surmises. The dummy was thrown onto the windshield, where its head collided with the glass before the body was tossed aside. The whole episode took less than five seconds. What was different about this test? Well, says Sugimoto, he can’t remember a previous test in which a shoe came off. Sugimoto has a long history here, having joined the company in 1977. One of his first assignments was working on airbags, more than a decade before they became commonplace in automobiles. He is bluntly not a fan of the devices. Although an airbag offers protection in a high-speed, head-on crash, when it comes to overall safety, “a seat belt is more effective,” Sugimoto declares during a lunch of sandwiches, seafood salad and custard.

Sugimoto said the results of the tests conducted here can already be seen on Honda’s vehicles, which are scoring high marks on government crash tests in North America and elsewhere. In one instance, data collected here during a crash between a small Honda Civic and a luxury Acura RL led Honda to make changes to strengthen the front end of the Civic, a vehicle of which Sugimoto is very fond. “The cabin integrity is so nice,” he muses.

But he is concerned about the growing popularity of SUVs, from purely a safety standpoint, and he said that even with a facility like this, Honda can’t change the facts of physics, which are that something heavier tends to smash something smaller. “It’s difficult to control the mass weight itself,” Sugimoto says. That won’t stop these engineers from their tasks. Already they have set up for another crash test, and repeated calls to his cell phone summon Sugimoto from his hasty lunch. But before he leaves, he offers a prognosis on the dummy damaged in the morning collision. His leg was hurt, and there is an 85 percent chance that he suffered a head injury—or would have, if he were a real person. But, says Sugimoto, smiling, there’s only a 15 percent chance that he died. Not bad news at all.

Halfway across the world, in Honda’s North American research and development center in Marysville, Ohio, Charlie Baker is sprinting to get to his next meeting. Lanky, with glasses and a quick smile, Baker is the brain of Honda’s American engineering operations, having been named vice president here in 2003. In his hands rests the most important vehicle in Honda’s American lineup, the mid-sized Accord, which has been the linchpin of Honda’s lineup here for the past two decades. Baker delights in giving a visitor a teasing look at the nerve center of this vast facility. He swipes a security card that unlocks a door and unveils a wonder: a room, stretching for nearly a quarter of a mile, that houses Honda’s American engineers and product development teams. They each sit at a desk, without dividers or walls, the only private spaces being a row of conference rooms along the farthest end of the building.

Nearly all of the faces are American, with some Japanese colleagues sprinkled among them, men and women who, like their colleagues in Tochigi, wear white trousers and jackets with their names embroidered over the breast pocket. The vastness of this place mirrors that of Tochigi, and it and the Marysville facility are only two of three such centers that Honda has worldwide. The third, just as impressive and even more sprawling, sits in Torrance, California, an hour south of Los Angeles. These three automotive research centers form the nucleus of how Honda brings its vehicles to life for the United States. And engineers from each of them played a role in the development of an automobile that was a milestone for Honda in terms of its influence in the U.S. market—the second-generation Odyssey minivan, which was tailored by Honda to appeal to American families.

More than any other vehicle, the Odyssey exemplifies a strategy that import auto companies are using with great success to torment the companies from Detroit. By offering excellent products, with innovative features and a top pedigree of durability, reliability and quality, the imports are able to attract the most desirable portion of customers in any single market, whether for cars, minivans, SUVs or pickup trucks. “The story here really is one of the domestics losing out because the imports are suddenly competing in areas that were the privy of the domestics, and the imports are doing a wonderful job,” said Ron Pinelli, an auto industry analyst with Autodata, based in Woodcliff Lake, New Jersey.

Moreover, these customers become ambassadors for their vehicles, posting enthusiastic missives about them on Internet message boards, telling their friends, family and neighbors about their new automobiles, and prompting them to go out and buy them. In short order, the reputation of the vehicle is made, its profitability generally assured, and Detroit is left, once again, to scramble after customers more attuned to the aspects of a deal than the attributes of the vehicle that the companies are trying to sell. When this strategy is used successfully, an import automobile company can become a leader, selling 100,000 vehicles or so, enough to establish it as a real competitor and sufficient to cover investment, but scarce enough so that customers believe that they own something rare and special.