Two things happened to the U.S. auto industry over the past 16 years.
One, it was invaded at its weakest moment by competitor manufacturers who built cars playing by new rules.
Two, it used some of those same new rules to claw its way out of trouble and re-emerge as the world's pre-eminent auto-building superpower.
This year may not set retail sales records. The profits of U.S. automotive companies may not top last year's. But insiders will rest assured that the U.S. industry's competitive condition in 1998 is more fit than it has been in a generation. Its factories are more efficient. Its workers are better trained. Its products are of better quality. And its whole approach to getting the job done is as good as anything else in the world.
But consider its unlikely turnaround.
It was the spring of 1982, and the U.S. industry was in the ditch.
Some 200,000 U.S. auto workers were on layoff. More than a dozen assembly plants were targeted for closing. Industry sales had been dragging along at fewer than 1 million units a month for two years. Chrysler Corp. had narrowly averted bankruptcy. Ford Motor Co. had feared for its life. General Motors - the largest corporation on the planet - sat by helplessly as its market share and profitability eroded.
But this was more than a recession. It was a turning point.
The mighty Big 3 were showing themselves to be out of touch with a changing U.S. market.
Sales of imported vehicles were 2.6 million units and rising - roughly the equivalent of an American auto plant's annual volume rolling into the market every month. Little Japan was outproducing the U.S. industry by nearly 4 million vehicles a year, and it was just getting warmed up.
Fast-forward to 1998: The United States again will outproduce Japan by nearly 1 million vehicles. The best factory technologies of Germany's luxury builders and the most sublime production systems of Japan's market leaders are embodied in a network of young plants scattered across the country. By 1998, the same automakers that swamped the U.S. markets with imports in the mid-1980s had invested more than $12 billion in U.S. factories. The operations now build some 2.4 million vehicles a year, representing one-fifth of U.S. auto sales. Both Japanese and European automakers now rely on U.S. factories for key vehicles, here and overseas. And in many cases, they are vehicles now designed and engineered here.
But it is also what is going on inside those factories that helped transform America. The competitive fear and loathing that came out of the great transplant invasion of the 1980s and 1990s have made the U.S. industry a stronger force today. The ideas about employee involvement and nickel-and-dime efficiency gains that veteran American mass-production wags once dismissed as hooey have caught on from Norfolk, Va., to Fremont, Calif.
THE K WORD
In a word, America has discovered kaizen. Continuous improvement - the unassuming secret weapon that catapulted the Japanese industry to glory in the 1970s - is now deeply rooted in the U.S. industry. Find an auto plant anywhere in America that hasn't been galvanized by the quest for improved quality and better efficiency. Find a supplier factory willing to lag behind while the rest of the industry ferrets out waste and empowers workers.
These lean factory practices and others ushered in by the new American manufacturers may use different names and trace their origins to different executive orders. But they are giving new vitality to the U.S. industry.