Toyota Squeezes By GM

This morning brought us the news we’ve been expecting for several years:

Toyota Overtakes GM As Top World Auto-Maker

Whoopee.  Who cares?  Toyota is actually a little afraid of being number one.  But the reason this is so meaningless is because sales and volume don’t really matter.  Unfortunately GM doesn’t get that and remains focused on pure volume.  The reason sales and volume are meaningless, especially to a lean company like Toyota, is given in the original article:

Toyota dwarfs its rivals in almost every other measure including profits, market capitalization and cash reserves.

As those of us who have started and run a new company know, you can very easily sell yourself out of business.  Profit and especially cash flow is what matters.  I would much rather be in a tiny company that makes money than a huge company that’s losing money.  Of course I’d rather be in a tiny company than a huge company anyway, but that’s a different story.

To GM’s credit, they are trying to improve.  They have several lean initiatives, but the depth is questionable.  And they continue to do battle with customers, suppliers, and employees.  It’s dicey, but I’m not willing to write them off quite yet.  And the situation could become very interesting, especially with today’s news that the UAW may even attempt a buy-out of GM.  Of course presumably they would then go back to the old strict work rules and convoluted job structures that cripple the flexibility required by lean manufacturing.  But an interesting angle none the less.