TPS and American Industry The American automobile company had been attempting to implement to tps with varying

level of success since 1980s and the Toyota and GM JV, NUMMI (New United Motor Manufacturing Inc.) was the best example. There were many theories explaining the failure of The American automobile manufacturers to achieve successes with TPS but were debunked on many grounds. As an example, Japanese culture was thought to be better suited for the worker but from the empirical study and common experience it was found that it was Toyotas corporate culture was driving force behind the success. According to another theory, U.S. manufacturer has structural disadvantages resulting from having to deal with unions and financial burden of retired employees pensions and healthcare. Even with such unions the U.S. autoworkers earned slightly more than their Japanese counter parts. Additionally the average labor cost of manufacturing a vehicle was only about 10% of average vehicle cost. Another reason why organization fail to realize the benefits of TPS was that they viewed the system as mearly a set of techniques to be implemented rather than one requiring a radical change in corporate culture which is inclusive of the human work culture. Among other impediments was the manner in which many organizations approached the process improvement by taking an episodic, goal oriented approach. This was in sharp contrast to TPS which Toyota was doing every single day in every single department. Add to it, problem identification could be addressed because it became imperative and exciting at the Toyota plants. The U.S. has been Toyotas most significant market generating more than half of the companys profit. In order to avoid political and cultural risk in U.S., such as perceiving to be harming the U.S. companies, Toyota built plants there to produce and sell its cars in U.S. market. The companys first U.S. plant (after NUMMI) was established 1986 in Georgetown. The NUMMI was rated as the 2nd best automobile plant in 2001. Some of the other plants set up were in Princeton and San Antonio. By 2006, it had 10 factories in U.S. that built both vehicles and parts, of which the latter was the most significant facilities producing the Tundra which was central to Toyotas U.S. strategy. Since the U.S. truck market was its largest and most profitable automotive segment, Toyota had to dive into this segment as trucks were viewed not only as practical tool for work and recreation, but also a symbol of patriotism. Although Toyota had successfully taught TPS in its American plants, the setbacks in the process posed challenges for it as it grew its operation in size and scope. The most significant was a lack of managers with TPS experience. To meet it, Toyota pulled its more experienced coordinators (those with more than 20 years of TPS experience from the Georgetown to the other plants. This was necessary because TPS was based on mentoring relationship and its ethnic Toyota culture. Another problem was that in order to handle the production volume at Georgetown plant require promotion of employee to middle management level, who were not sufficiently train in TPS. The training was also hindered by language difficulties. Toyota took 2 important steps to respond these challenges. First being the creation of TPS manual in2001, though it was unclear TPS could be taught without hands on mentoring.

Second, creating the Toyota institute for preparing its executive to become world class leaders by learning some of the most prized management secret in corporate Japan. This was opposed to the informal Japanese teaching methods of word of mouth. Upon arriving at the institute, the trainee would be inducted to a weeks programme, starting with lectures about the Toyota way from the companys president. The students would work late night on group presentations summarizing the key learnings and the ways to apply them to actual problems. Some of the practices that were encouraged were seeking out problems and then solving them by breaking them into smaller, more manageable pieces. Others included effective consensus building and respect for people. Later on trainee might spend a few month at some designated place doing independent projects.

Toyota achieved many milestones during its TPS journey. While it manufacture 215 units of Toyopet model in 1947,

The US market has grown by 9.7% in 2005 and 12.5% in 2006, over the previous years. In contrast, Japan has shown a negative growth of 2.6% and 1.2% for the same period.