In 1973, the ‘Big Three’ automobile manufacturers in the United States controlled over 82 percent of the market. They now have less than half of the market. The major cause for this is Japanese automakers’ aggressive (and unexpected) entrance into the US market in the 1970s, led by Toyota.
Automobiles are cumbersome and costly to transport. That’s one of the reasons why the American market was taken aback when Toyota began offering Japanese-made automobiles at costs considerably lower than they could compete with. Because the automobile sector was such an important part of the US economy, one of the first responses from the government was to impose protectionist tariffs on all automobile imports, thereby making Japanese automobiles as expensive as domestically produced vehicles.
However, the strategy backfired. Within a few years, Toyota (and at this time, others) had established manufacturing units in the United States, removing the need to pay any of the new import tariffs. Initially, American automakers were unconcerned. Surely, by having to shift manufacturing to the United States, Japanese automakers’ production costs would climb to nearly equal those of local automakers. That, however, did not occur. Toyota continued to produce automobiles that were much less expensive than those produced by American competitors.
Their highly tuned manufacturing methods were so efficient and lean that they were able to outperform American automakers in their own backyard. The concept of ‘continuous improvement’ is undoubtedly familiar to you. Toyota is regarded as the forefather of this in the manufacturing industry.
The majority of corporate success stories you read, especially in the western world, include daring actions and stories of bravery against all obstacles. That is what distinguishes this narrative from others. Toyota spent years researching the manufacturing processes of American automakers like Ford. They were well aware that the American automobile industry was more sophisticated and efficient than the Japanese. So they sat and waited.
They studied their rivals and attempted to replicate what the Americans were doing so effectively. They used these techniques with their own skills to create something even greater.
Toyota demonstrated that understanding one’s own flaws may be the key to success – and one of the most effective corporate tactics ever devised.
That’s not everything. Can you name a single well-known Toyota executive? One of the reasons is that humility is Toyota’s top company value. Even the most senior plant executives have yet to designate their own parking places. From the CEOs to the assembly workers, the company is steeped in the humility that enabled them break into the US market.
