Something is going on with a few lean companies in India that bears keeping an eye on. The greatest fear American manufacturers have – or at least they should have – is the combination of lean management and Indian labor rates, but there seems to be a hole in the equation somewhere. A Toyota plant in southern India has been on strike (technically it has moved from a strike to a lockout) for a week now. It was no gentlemanly difference of opinion either. It was a full blown, violent parting of the ways with employees barricading themselves into a power plant and threatening to blow the whole place up, and armies of Indian police having to restore order. What makes it even more interesting is that it nearly duplicates the situation at a Honda plant in India last summer. The information coming out is way too sketchy for anyone to put their finger on the problem, but either Toyota forgot their vaunted ‘respect for people’ principle, or it simply does not resonate with the younger Indian workers. In any event, lean manufacturing seems to be amiss in India.
Elsewhere in Asian news, Harley Davidson is opening its first dealership in China. No big deal about that – GM and Ford report good sales in China too. The difference is that Harley does not plan to make anything in China. In fact, other than an assembly plant in Brazil, Harley has been quite profitable manufacturing in places like Kansas City and Milwaukee. Their MAN (Materials As Needed) manufacturing system is HD lingo for lean manufacturing. So Lean manufacturing in the U.S. yielding very high quality and even higher profitability, and selling in the Chinese market, …hmmm… or GM manufacturing like it is still 1955, cranking out mediocre quality, building plants in China, and unprofitable. I wonder if there is a lesson in that somewhere?
On the subject of GM, Bob Lutz, GM Vice Chairman, gets my nomination for the most out of touch with reality manufacturing guy on the planet. GM’s performance caused him to lose his bonus and stock options, reducing his paycheck to a paltry $4.4 million last year – this for a key member of the team that took GM to the brink of insolvency. Responding to the suggestion that his paycheck ought to be trimmed a little more, Lutz said, "Here’s where people get this wrong: They say, ‘Why are executives paid so much? You have to ask: Why are professional athletes paid so much?" I dunno Bob, maybe because they are good at what they do? What gray haired, overweight executives at bankrupt companies have to do with professional athletes is something Bob didn’t explain. I hope he is not suggesting that he can rebound with Darko Milicic, who plays across town for the Detroit Pistons and makes the same $4 million plus change as Lutz. Lutz may be good – I’ve never seen him play – but Milicic is seven feet tall and I gotta believe he’d dominate Lutz in the paint. More important, Milicic’s team wins most of the time, while Lutz’s is a perennial loser.
When Babe Ruth asked for and got a higher salary than Herbert Hoover in 1930, he justified it by saying that he "had a better year than Hoover". The bench player on the worst professional sports team had a better year than any GM exec.
Lutz went on to say, "The capability of successfully trying to turn around an unsuccessful automobile company is a very rare and highly sought after skill set. And you do the shareholder no good whatsoever by reducing compensation to the point where everybody leaves." The problem is that Bob and the rest have not shown that they have that ‘very rare and highly sought after skill set’. What they have is a skill set that is very common and not much in demand – the demonstrated ability to turn one of the world’s greatest manufacturing concerns into a junk bond investment. Perhaps ‘reducing compensation to the point where everybody leaves’ is exactly what the person who suggested the pay cut had in mind. I am the most anti-union guy I know, but I’d join the UAW in a heartbeat if I had to work for Bob Lutz.
Finally, I thank God for the Fortune list of the 100 Best Companies to work for – they are a Who’s Who of lean manufacturing and they provide all the inspiration we need to keep the faith. And I thank God for the Dow Jones Industrials – they provide all of the inspiration I need to keep laughing and blogging.