ROBERT SIEGEL, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
And we begin this hour with an ending. On the surface, it's a familiar story about the fall of the American auto industry. Next week, a factory in Fremont, California, will close its doors. But this is no ordinary plant.
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SIEGEL: Our story starts back in the mid-1980s. In a unique partnership, Toyota took over the Fremont plant, one of GM's worst factory known for sex, drugs and defective vehicles. Practically overnight, Toyota turned the plant into one of GM's best. They called in NUMMI for New United Motor Manufacturing Inc.
In revamping the plant, Toyota even shared its production secrets. But GM would take another decade and a half to begin seriously implementing those lessons in its own factories, and that was too long.
In a co-production with WBEZ's This American Life, NPR's auto reporter Frank Langfitt looks at what might have been, why it took GM so many years to learn the lessons of NUMMI, and what those lessons say about the problems Toyota faces today.
FRANK LANGFITT: In the mid-1980s, GM and Toyota needed each other. GM had to build small cars, but they were lousy and lost money. Toyota had its own problems - the company was facing import restrictions from the U.S. Congress, so it had to start building cars in the United States. It wanted a U.S. partner who would teach it how to deal with American workers. Toyota settled on the rough bunch in Fremont.
Mr. BRUCE LEE (Director, Region 6, United Auto Workers): It was considered the worst workforce in the automobile industry in the United States.
LANGFITT: That's Bruce Lee. He ran the western region for the United Auto Workers and oversaw the Fremont plant.
Mr. LEE: And it was a reputation that was well earned. Everything was a fight. They had strikes all the time. It was just chaos constantly.
Mr. RICK MADRID: A lot booze and wine, it was just to me. And as long as you did your job, they really didnt care.
LANGFITT: That Rick Madrid. He began working at the plant in 1955. He built Chevy trucks.
Mr. MADRID: When I was mounting tires, we drink. You know, I'd bring a thermos of screwdrivers with me.
Mr. MADRID: Love it.
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LANGFITT: Did you ever have sex at the plant?
Mr. MADRID: Yeah.
Mr. MADRID: I wasn't that fortunate.
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LANGFITT: If you're wondering how people kept their jobs, well, under the union contract, you practically had to commit fraud to get fired. Some workers hated management so much they sabotaged the vehicles. They put Coke bottles inside the door panels, so they'd rattle and annoy the customer. Absenteeism was absurd. Billy Haggerty worked in hood and fender assembly. He says so few workers showed up some mornings, managers couldn't even start the line.
Mr. BILLY HAGGERTY: They brought a lot of people off the street to fill in when they didn't have enough people.
LANGFITT: Who would they find?
Mr. HAGERTY: Go right across the street to the bar and bring up people out of there and bring them in.
LANGFITT: In 1982, GM had had enough and put the Fremont factory out of its misery. Two years later, GM and Toyota reopened the factory with incredibly most of the same workforce. But first, they sent some of them to Japan to learn the Toyota way. The key to the Toyota production system was a principle so basic it sounds like an empty management slogan: Teamwork.
At Toyota, people were divided into teams of just four or five. They switch jobs every few hours to relieve the monotony. A team leader would step in to help when anything went wrong. At the old GM Fremont plant, the system had been totally different, and it was one cardinal rule that everyone knew. This is Billy Haggerty, Rick Madrid and Bruce Lee.
Mr. HAGGERTY: The line could never stop, never stop the line.
Mr. MADRID: You just don't see the line stop. I saw a guy fall in the pit and they didn't stop the line.
Mr. LEE: You saw a problem, you stop that line, you are fired.
LANGFITT: The result? Tons of defects. Billy Haggerty saw all kinds of mistakes go right down the line.
Mr. HAGERTY: We had Monte Carlos with Regal front ends and vice versa, and they would just stick it on, run it up at the yard and then change.
LANGFITT: There were cars with engines put in backwards, cars without steering wheels or brakes. They fix them later, sometimes doing more damage to the vehicle.
At the NUMMI plant, a worker named Earl Ferguson showed me Toyota's solution to this: a thin nylon rope that hangs on hooks along the assembly line, the andon cord.
Mr. EARL FERGUSON: These set of cords hanging down, that's the andon cord. It will stop the line. If people use the andon cord, then this light is going to come on right here. Then they will show up on the screen that this location is down.
LANGFITT: The first pull summons a team leader. Workers try to correct the problem on the line. If it takes too long to fix, the line stops. The andon cord also plays a surprisingly cheerful little song that workers can select.
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LANGFITT: For GM workers, all this was a revelation. When Rick Madrid trained in Japan, he saw workers stop the line to fix a bolt.
Mr. MADRID: That impression - it was, I said: Gee, that makes sense. Fix it now so you don't have to go through all the stuff. That's when it dawned on me that we can do it. One bolt. One bolt changed my attitude.
LANGFITT: The Americans returned home, put the Toyota system to work. And in December 1984, the first car rolled off the assembly line in Fremont, a yellow Chevy Nova. UAW representative Joel Smith was one of the speakers.
Mr. JOEL SMITH (Representative, General Motors): For too long, the American worker has been maligned, criticized, called bad names for building lousy cars. And Mr. Toyota, if you would please deliver this challenge to our friends in Japan, we intend to build the best quality car in the world. Thank you.
LANGFITT: Early on, the numbers coming out of the NUMMI plant were astonishing. This is Jeffrey Liker, author of "The Toyota Way."
Mr. JEFFREY LIKER (Author, "The Toyota Way"): The best measure they use is how many defects are there per 100 vehicles, and it was one of the best in America. And it was the same for the Toyota cars that were made in California as the Corollas that were coming from Japan, right from the beginning.
LANGFITT: GM had sent 16 rising stars to help start NUMMI. Now, they hope to spread the lessons of NUMMI through the rest of the company to improve quality. Two Wall Street Journal reporters later dubbed them the NUMMI commandos.
Mr. STEVE BERA: We were ready, we were fired and we had the mental condition that says we're going to do this, we're going to change the world.
LANGFITT: That's Steve Bera, one of the commandos. After NUMMI was up and running, Bera says he and the other 15 waited to be deployed elsewhere for the next phase of their mission. But the company didn't seem to know what to do with them.
Mr. BERA: Instead of coming back to the 16 of us and saying, there's some secret sauce here. What is it? How can we use this to our advantage? No one ever asked us that question.
LANGFITT: Frustrated, Bera quit after two decades at General Motors. The next year, GM did try to do NUMMI again, 400 miles south of Fremont at a plant in Van Nuys. But from the start, workers were skeptical. Unlike workers at NUMMI, they'd never lost their jobs and they didn't think they would.
Mr. LARRY SPIEGEL: The lack of receptiveness to change was so deep.
LANGFITT: Larry Spiegel was another NUMMI commando who tried to change Van Nuys.
Mr. SPIEGEL: There were too many people convinced that they didn't need to have to change.
LANGFITT: Hasn't General Motors threatened to close the plant?
Mr. SPIEGEL: They didn't believe it.
Mr. SPIEGEL: It's not logical, they just didn't.
LANGFITT: Quality at Van Nuys didn't improve. And in 1992, GM closed the plant. Executives tried to push the NUMMI concepts across General Motors. Geoff Weller's job was to help convert the company factory by factory. But GM was sprawling, highly decentralized, and the plant manager was king. Weller says some managers were receptive, but others weren't.
Mr. GEOFF WELLER: Here I was asked in one plant to leave, because they were not interested in what I had to sell.
LANGFITT: And what did you do?
Mr. WELLER: I left because, you know, I was in his home, so to speak, his territory, his plant.
LANGFITT: Now, whatever happened to that plant manager who asked you to leave?
Mr. WELLER: That plant manager eventually retired.
LANGFITT: This may sound like a naive question, but why didn't the CEO pick up the phone and said you're fired?
Mr. WELLER: Well, it's a big company and I'm not sure that, you know, it doesnt work that way.
LANGFITT: Over the years, GM executives studied NUMMI and eventually it caught on. By the early 2000s, the company had developed a production model based on Japanese principles that would go in every plant. And although GM quality still lags behind the Japanese, it eventually improved a lot.
Mr. JAMES WOMACK (Co-Author, "The Machine That Changed the World"): Well, one of the ironies of GM was that in the moment it went bankrupt, it was probably a better company than it had ever been.
LANGFITT: That's James Womack, co-author of a seminal book comparing the Toyota and GM production systems, "The Machine that Changed the World."
Mr. WOMACK: The company that failed was actually doing better than it had ever done, but it was too late. And that really is sort of hard to forgive, that if you take 30 years to figure it out, chances are you're going to get run over, and they got run over.
LANGFITT: In the end, the great recession sank GM, it destroyed the car market. And in 2009, General Motors became the largest industrial bankruptcy in U.S. history, costing taxpayers more than $50 billion.
Mark Hogan was one of the NUMMI commandos. He rose to run GM's small-car division in the U.S. I asked him: If GM had adopted NUMMI earlier, could it really have changed things?
Mr. MARK HOGAN: Definitely. I think if General Motors had moved in the late '80s to implement this system across the board, it may very well have saved GM from going into bankruptcy.
LANGFITT: Explain that.
Mr. HOGAN: Well, I just think the productivity and the quality changes that come with that would have been so profound that this ever-increasing loss of market share would have been stopped.
LANGFITT: GM declined to talk for this story. And, of course, quality and reliability weren't the only reasons GM failed. Over the years, General Motors negotiated such generous contracts with the UAW that they crippled the company. And at first, some at GM dismissed hybrids like the Prius as a publicity stunt.
Today, the makers of the Prius have problems of their own.
Unidentified Woman: Toyota's national nightmare will not end. It seems today, the world's largest automaker recalling its prized Priuses. That took the stock down...
LANGFITT: And Toyota execs suggest it's because they made one of GM's old mistakes: stressing quantity over quality.
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LANGFITT: For the last quarter-century, the NUMMI plant has pumped out vehicles, 6,000 a week on average. When GM went bankrupt, it pulled out of the joint venture, and Toyota says it didn't want to go it alone. So next Thursday, NUMMI will produce its very last car, a Corolla; 4,500 people will lose their jobs.
Mr. HAGGERTY: I look at cars, and I see a lot of the cars that we built.
LANGFITT: That's Billy Haggerty. He says just the other day, he saw a NUMMI car from the 1980s.
Mr. HAGGERTY: And I just looked at it, and I said boy, that one's old. And I looked down, it was a Corolla. I know we built it right there. So, it's still running.
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Mr. HAGGERTY: It's still kicking. It makes me feel good.
LANGFITT: This is also NUMMI's legacy. In the end, it's not just a symbol for so many things that went wrong with GM and Detroit. It's also a really good car plant, one that turned out nearly eight million, high-quality cars and trucks.
Frank Langfitt, NPR News.
SIEGEL: This weekend, you can hear a more-detailed version of Frank's story on This American Life, produced by WBEZ in Chicago.
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SIEGEL: This is ALL THINGS CONSIDERED from NPR News.
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