The Secret Ingredient of American Manufacturing: Some Japanese Flavor

If you’ve heard that American manufacturing is in decline, consider this: The real output of U.S. manufacturers has nearly doubled in the past 30 years.

Automation can claim only part of the credit. The gains should also be attributed to the introduction of new management practices, many of which first took hold in Japan.

University of Michigan management professor Jeffrey Liker says Japan is a leading influence on the development of manufacturing quality practices in the U.S. “You can find the roots of activities such as kaizen, Six Sigma and lean manufacturing in Japan,” says Liker, author of Developing Lean Leaders at All Levels.

Historically, the exchange of manufacturing practices between the two countries is longstanding. In the aftermath of World War II, Japan became known as a maker of cheap consumer products, such as toys. At the same time, however, it was welcoming American management experts who sought to help the nation rebuild from the war, such as W. Edwards Deming—today known as the father of Total Quality Management.

“The real output of U.S. manufacturers has nearly doubled in the past 30 years, which can partially be attributed to the introduction of JAPANESE management practices.”

“The Japanese grabbed [Deming’s ideas] and ran with them, while the Americans sort of messed around with them,” says Jim Womack, founder of the Lean Enterprise Institute in Cambridge, Mass. “The Japanese sweated out the details and worked hard to implement them sustainably.”

Some of the ideas adopted in Japan had been developed by the American military to rapidly increase Allied production output during the war. Yet it was Japan—not the U.S.—that most effectively implemented these ideas during peacetime, according to Womack, Liker and other experts.

“The Japanese saw the enterprise as a system with people at the center,” Liker says. “They took a long-term perspective, even in the face of short-term financial costs.”
Leaning Forward
Womack recalls visiting the plant of a major U.S. auto manufacturer in 1979. It employed about 2,500 workers on assembly and an equal number on rework. “The number of people fixing the mistakes was about equal to the number of people making the mistakes,” he jokes.

By that time, Japan was rapidly becoming a leader in automobiles and electronics. As a researcher at the Massachusetts Institute of Technology, where he studied global manufacturing practices, Womack led a team that visited Japan and coined the term “lean production” in reference to the Toyota system.

“The ability of Japanese companies to enter the North American market in the 1970s and 1980s and quickly compete with high-quality, low-cost products was really a wake-up call for many U.S. manufacturers,” says Ken Barina, president of Mitsubishi Caterpillar Forklift America.

“To survive and compete in this environment, U.S. manufacturers closely studied the concepts driving this efficiency and subsequently adopted many of the same techniques that allowed Japanese companies to be successful in the first place. Concepts such as continuous improvement, waste reduction, lean and Kaizen are now standard practice among successful U.S. firms.”

As U.S. manufacturers studied the Japanese model, Americans began learning about Japanese manufacturing processes firsthand from Japanese manufacturers who formed joint partnerships or set up operations in the United States.

Today, Japan is one of the largest and most technologically sophisticated sources of foreign direct investment. It is America’s third largest source of FDI (behind only the U.K. and Canada), with $424 billion invested as of 2016. Companies originating from Japan operate in sectors such as machinery, finance, metals, computers, electronics, plastics and insurance.

Mitsubishi Heavy Industries Group (MHI) employs about 6,600 people in the United States in more than 100 locations across 30 states. Headquartered in Houston, it combines a Japanese-style focus on manufacturing process with American-style rapid responsiveness, Barina says. “We’ve inherited a strong quality culture and long-term vision from our Japanese parent company, which has enabled us to react quickly to local market needs.”

Beyond Manufacturing
If you’ve noticed how much better American automobiles are today, compared to 30 years ago, then you understand firsthand the power of Japanese management processes. But the Japan-led drive toward quality and efficiency has gone beyond manufacturing and has taken hold in a variety of other industries including retail, healthcare, technology and even agriculture.

Womack says that, in addition to lean manufacturing, Japan can take some credit for a broader shift in business practices. While the “quality” function at an organization used to focus exclusively on inspecting for defects, today it involves utilizing the entire organization to find and fix the root cause of problems. “Today, nearly every big organization has an operational excellence group or a continuous improvement group,” adds Womack. “And the first concrete example of that idea was in Japan.”