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A lot of conversation in the current discussions on the auto bailout focus on labor cost comparisons between union and non-union plants. The labor rate issue should not absorb too much of our attention. It likely represents less than 1/3 of the cost difference between U.S. and Japanese manufacturers.
The real challenge comes confronting the different business models followed by the US manufacturers, compared to the Japanese. Generally speaking, in a U.S. plant, contracts define job security. In a Japanese plant, job security emerges from a continuous commitment to learning.
This difference explains why, in Indiana, U.S. manufacturers are in trouble, while Toyota, Subaru and Honda are not as severely damaged by the economic downturn.
Take a look at U.S. auto contracts.
Compare practices at Toyota's Princeton, IN plant.
Watch Toyota Workers in a Slowdown in News Online and How to Videos | View More Free Videos Online at Veoh.com
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