In the early 1980s, General Motors quietly negotiated an unprecedented deal: GM, the world's largest automaker, would build cars jointly with fast-rising challenger Toyota.
Both parties had something to gain from the talks, which created New United Motor Manufacturing Inc., known as NUMMI. Toyota wanted to learn to build cars in the United States.
In a sense, GM wanted the same thing. Lulled by years of dominance in the United States, GM had allowed lean Japanese competitors to surpass it in manufacturing efficiency. GM needed to learn how to build cars in the United States, too.
"If you looked at the domestic manufacturers, GM plants were competitive," says Don Hackworth, retired GM senior vice president. "But when you put them up against the best in the world, they fell short."
What GM leaders didn't initially grasp was how pulling on the string of manufacturing inefficiency would unravel much of their corporate structure — and culture. As executives studied GM's competitive shortcomings, including high costs and mediocre quality, they realized that the GM empire had to change radically.
Eventually, GM responded to the NUMMI challenge. Enlightened executives, eager to reform GM manufacturing, marketing and other functions, eliminated many corporate fiefdoms and adopted efficient practices worldwide. But GM executives now agree: It took too long.