My post the other day, "A Plague On Both Your Houses" stirred up a few folks – imagine that – me writing something that riled someone up! The gist of the post was that there is so much blame to be handed out in Detroit that many people are fed up with both management and labor.
A particularly riled up reader by the name of Rick Bohan called me a "right wingnut" for placing any of the responsibility for GM's demise on the union. Ironic that just last week I was being hammered for being against capitalism after having made a few caustic comments about Wall Street. In his comment Mr. Bohan wrote,
"Adult A gets laid off and sent to the job bank. Giant Multi-Gazillion Dollar Corporation B has no plan as to what to do with Adult A and, in effect, says "Sit there". But Adult A is an idiot.
BTW, do we know that Adult A, in fact, just sat there in spite of Corp B's poor planning? Do we know that he or she didn't sign up for courses at the local community college? Do we know he or she didn't use the opportunity to volunteer for something in the community? Do we know that he or she didn't use the time to help another family member with their start-up business? Or does it just suit the right wingnut mind set to assume that all union workers are lazy parasites? I'm thinking it's more the latter than any of the former."
His thoughts get right to the heart of the problem with GM, and with the most widely misunderstood principle of lean. He apparently thinks that it is GM's money that is being spent on the jobs bank, and that GM – the "Giant Multi-Gazillion Dollar Corporation" – should be in support of what many people agree are generally good things. If the Multi-Gazillion Dollar Corporation pays for employees to take courses at a local community college, doing some volunteer work in the community, or helping a relative start up their business, then that is an acceptable use of GM's money, and we should applaud the union for negotiating a deal that has GM spending it thus.
It would be a good thing, except for the salient point that the Multi-Gazillion Dollar Corporation doesn't really have any money and has never had any money, no matter what their balance sheet may have shown. The UAW folks seem to have missed that point, and so has GM's management. The money comes from customers. It is my money (yeah, I drive a Buick) Mr. Bohan – not yours and not GM's. The cost of the jobs bank – no matter what the people in it are doing – is passed on to me and everyone else who buys GM cars.
Please go back and re-read my post. That is my money that you want to take for doing things that do not make my car any more valuable to me. GM management does the same thing when the provide new company cars to 8,000 managers twice a year. They are spending money on things that do not add value – that is the definition of waste. It does not matter whether you or anyone else thinks that going to community college or helping your brother in law get his dog grooming business off the ground is a good thing. You are not getting the money to support these good things from a multi-gazillion dollar corporation – you are taking it from customers without giving anything in return. In terms of the value proposition it is the same thing as taking the money and tossing it in the trash. It is down the drain with no value to the customer to show for it.
When I wrote that the UAW and GM management had spent all of their time bickering over how to split up the pie, I meant exactly this. Mr. Bohan wants to fight with the Multi-Gazillion Dollar Corporation over the money to pay for him to do volunteer work in the community, and GM wants to get new cars for their managers every six months – and neither of them thought to ask the customers whose money it is they want to spend. They have both operated as though they had some birthright to my money. And now that people are no longer willing to send that money to them, they are pointing fingers at each other.
There is no "Giant Multi-Gazillion Dollar Corporation" any more Rick. The UAW and GM management killed it precisely because the union thought the money was theirs to take and management thought it was theirs to give. In the ultimate display of non-value adding waste, Management was so delusional they continued to pay dividends long after they stopped showing a profit – Wall Street apparently forgot whose money it was too. Everyone claimed a birthright to GM's customers' money without spending nearly enoughh time worrying about what the customer was getting in return.
Now Toyota is the Giant Multi-Gazillion Dollar Corporation precisely because they give more of the customers' money back to them in the form of value. They will continue to be a Giant Multi-Gazillion Dollar Corporation as long as they remember whose money they have and they spend it wisely. The day they start giving the customers money to employees for nothing of value to the customer in return, or the day they start doling it out for ridiculous management perks, or the day they start sending too much of it back to Tokyo is the day they will start heading for the same scrap heap upon which GM and the UAW can be found.
… and if you don't understand that, you don't understand lean manufacturing at all.