Section 7. Modernization of Facilities
Item 1. Training at the Ford Motor Company and Observation of American Machinery Manufacturers
Toyota Motor Co., Ltd. ended a two-month labor dispute on June 10, 1950. The company announced a new employment system, and measures designed to effect a reorganization-such as labor-management negotiations on a new labor agreement and revision of the salary system-were started. It was under these circumstances that Toyota Motor Sales Co., Ltd. President Shotaro Kamiya and Kanto Auto Works, Ltd. President Hidejiro Okuda1 departed for the United States on June 23.
The purposes of their trip were to observe the American automobile industry and to negotiate a technical tie-up agreement with Ford Motor Company (Ford). Managing Director Eiji Toyoda, who also travelled to the U.S. about a half month later on July 11, recalled, "Kamiya of Toyota Motor Sales Co., Ltd. traveled to America as an advance team to negotiate basic technical guidance so that when I traveled to America, I could sign the agreement."2 The negotiations proceeded smoothly right up to just before the signing, but the entire process returned to the beginning as a result of effects from the Korean War, which had broken out on June 25. President Kamiya and President Okuda concluded the negotiations and returned to Japan, leaving Managing Director Eiji behind, on September 30.
The contract signed with Ford included the dispatch of three engineers3, and a technical tie-up suitable for Toyota Motor Co., Ltd.'s production scale was anticipated. With the outbreak of the Korean War, however, the American government prohibited overseas investment and issued an order requiring confinement of key engineers, making implementation of the agreement impossible. In response to these developments, Ford agreed to accept trainees from Toyota Motor Co., Ltd. in place of sending engineers.
Managing Director Eiji became the first trainee at Ford. He spent approximately one and a half months from July 20 to September 8 observing the River Rouge Plant, Highland Park Plant, Mound Road Plant, Ypsilanti Plant, Dearborn Plant, Canton Plant and other sites, and was instructed by various Ford personnel.4 He also visited Chrysler Corporation, the Budd Company, Timken Detroit Axle Company, Muskegon Piston Ring Company, Bauer Roller Bearing Company, and others.
In addition, Managing Director Eiji visited 21 machine tool companies from August 7 to September 29 and observed the latest machine tools. Of these companies, Toyota Motor Co., Ltd. had installed machine tools from 15 of them at the time of its foundation, and Managing Director Eiji was able to confirm directly the advances in performance of machine tools by observing the equipment and to acquire useful information regarding future equipment updates.
Following Managing Director Eiji, Managing Director Shoichi Saito traveled to the United States on October 3 and underwent training at the Ford River Rouge Plant for about one and a half months. Following his return to Japan, Managing Director Saito introduced a suggestion system based on Ford's suggestion system in order to gather ideas from a wide range of employees. The system, which went into operation in May 1951, was the Creative Idea Suggestion System. Over time, the system has been improved and expanded.
One thing that both Managing Director Eiji and Managing Director Saito mentioned after their time in the U.S. was the surprising quality of the materials used in America. Managing Director Eiji stated in response to a request for information from the Society of Automotive Engineers of Japan, "Japan's automobile industry facilities and engineers are good, but our machine tools and materials are inferior. If we can solve this problem, we can manufacture good and economic vehicles that are equal to America's. This is the conclusion that I drew during my recent travels."5 When Kiichiro Toyoda entered the automobile business, he decided to produce steel and machine tools internally because the materials and machine tools available in Japan at that time were inadequate. Even in 1950, fully 17 years later, the company was still facing the same problem.
Later, when recalling his training at Ford, Eiji made the following statement.
I felt that I was being honest in saying: “Ford’s not doing anything we don’t already know”. But at the same time I was certainly not presumptuously downplaying Ford’s tremendous lead. After all, their daily output was 8,000 units; ours was a piddling 40. You might as well compare a pebble with a boulder. In terms of corporate size, we were in very different leagues. Yet, I didn’t think that there was such a large gap in technology. The difference lay mainly in the scale of production. I felt that if the size of Toyota’s operations grew large enough, we’d be fully able to handle an American-type production system.6