1

Failure and Success in Manufacturing—

The General Motors–Toyota
NUMMI Joint Venture

I’m part of the team; I don’t have a team. Let people maintain their own
personality.

Rick Madrid
Team leader at NUMMI

The General Motors (GM) Fremont plant, around 1980, was one of the
worst automotive plants ever to operate in the United States (Womack 1990,
p. 81). Even the United Auto Workers (UAW) union representatives—who
rarely see problems with its members—considered Fremont to have the
worst workforce ever (Siegel 2010). A host of problems plagued it, mostly
stemming from very low morale of the employees.
The quality of GM was already mediocre at best, but the quality of the
vehicles produced in Fremont was the worst within GM (Shook 2010).
Workers intentionally sabotaged many vehicles. For example, empty cola
bottle caps were left in the doors with the sole purpose to annoy the cus-
tomer through its clanking sound. Or worse, half-eaten tuna sandwiches
were welded in (Childress 2013, p. 219). Cars were intentionally scratched.
Screws on safety-critical parts were deliberately left loose. The employees
wanted to hurt the company by hurting the customer.
Even if the workers tried to produce quality products, the system worked
against them. The most important rule in the Fremont plant was to never,
ever stop the assembly line. Even in the case of accidents, the line did not
stop. Hence, all problems were simply pushed downstream, resulting in
miserable quality at the end of the line. Sometimes, engines were installed

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 2  •  “Faster, Better, Cheaper” in the History of Manufacturing

backward; other cars had brakes or steering wheels missing. Some cars
would be half of one model and another half of a completely different
model. Many cars arrived at the end of the line incomplete or defective,
unable to drive, and they had to be towed (Glass 2010).
All kinds of illegal activities were also readily available within the plant.
Sex, drugs, and gambling were widespread. A large part of the workforce
was drunk, if they showed up at all. On an average day, one out of five
people simply did not show up, with Mondays being considerably worse.
Yet, the assembly line must not stop. Some days, when there were too few
people to start the line, management simply hired people from the bar
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across the street on the spot so they could start the line. Of course, this
worsened quality even more (Siegel 2010).
People hated working there, yet due to a lack of alternatives, they had to
stay with their secure jobs. The only thing they did with enthusiasm was
quarrel and fight. Both workers and management were constantly occupied
with disputes, mostly through formal grievances, even for minor disagree-
ments. Strikes, including wildcat, strikes were common. Management did
not help either by belittling and micromanaging its workers.
Finally, GM had enough and put this sorry excuse of a plant out of its
misery. The plant closed in March 1982, and 5000 people lost their jobs
with only three weeks’ notice (Turner 1990).
Two years later, the plant reopened as a Toyota–GM joint venture named
New United Motor Manufacturing, Inc., better known as NUMMI.
Production restarted in the same buildings as the old Fremont plant
(adding only a stamping plant). The manufacturing technology was also
not much different (Adler, Goldoftas, and Levine 1998). Incredibly, they
rehired mostly former employees of the old Fremont plant. With virtually
the same machines, materials, and manpower, it looked like NUMMI was
destined to repeat the previous miserable manufacturing system.
To everybody’s surprise, the plant turned out to be the best automotive
plant in the United States. Quality by far exceeded that of any other GM
plant. In fact, quality exceeded that of any other U.S. automotive plant and
was very close to the then-legendary quality of the Toyota plants in Japan.*
Productivity also soared, and the new NUMMI plant produced almost

* Quality is usually measured in defects per 100 vehicles. In 1992, the average U.S. automotive maker
had 136 defects per 100 vehicles. European cars were even worse with 158. Japan was far ahead
with only 105 defects per 100 vehicles (not only Toyota but all Japanese carmakers). NUMMI, with
only 83 defects per 100 vehicles, reached quality levels similar to those of Toyota (Adler 1995).
 Failure and Success in Manufacturing—GM–Toyota NUMMI Venture  •  3

twice as many vehicles with the same labor force as before.* The cost per
vehicle was reduced by $750 (Keller 1989, p. 130). Even employee morale,
previously the biggest handicap to success, reached amazingly high levels.†
Absenteeism, previously at 20%, reached very low levels, below 3%. Annual
employee turnover was also less than 6% (Adler 1995). Many workers, for
the first time in their lives, enjoyed coming to work.
What happened? What turned the pathetic old Fremont plant into the
stellar outperforming NUMMI plant, and that with the same workforce,
to boot?
Toyota changed the culture in the plant. The manufacturing system
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used the same hardware, but the software of running a manufacturing

system was very different. Toyota was able to implement its highly success-
ful Toyota Production System at NUMMI. There were too many changes
to list them all here, but probably the biggest change was that Toyota
worked with the workers, not against them. Toyota treated its workers
with respect, valued their input, and not only allowed but even encour-
aged them to make decisions related to their workplace. While Fremont
was based on conflict, NUMMI was based on teamwork, and everybody
was treated with respect and fairness.
Another major difference was the focus on quality. At Fremont, the
quality control department checked quality after production. At NUMMI,
every worker was responsible for quality. At Fremont, the most important
rule was to never, ever stop the assembly line. At NUMMI, workers not
only were allowed to stop the line, they even had to stop the line if there
was a quality problem. As a result, Fremont needed 12% of its space for
rework, whereas NUMMI used only 7% (Keller 1989, p. 132).
The hiring of new employees also received much more significance.
On average, NUMMI personnel spent 35 hours with every potential new
employee during the hiring process. This was not only to find good employ-
ees but also to instill a sense of importance into the potential employees
(Keller 1989, p. 132). In comparison, Fremont sometimes simply picked up
new temporary employees in the bar across the street.

* The old Fremont plant needed 29.1 salaried hours per produced vehicle, and the comparable GM
Framingham plant needed 30.8. NUMMI required only 19.6 hours per vehicle, comparable to
the best plants of the world, for example, the Toyota Takaoka plant in Japan, with 18.0 hours
per vehicle. Note that the NUMMI workforce on average was 10 years older than the Takaoka
workforce (Adler 1995). Inventory levels were also reduced from two weeks at Fremont to two days
at NUMMI, while Takaoka had only two hours’ worth of inventory (Womack 1990, p. 81ff).
† Worker satisfaction in 1991 was very high at 90%. Similarly, satisfaction with job security reached

89% in 1991 (Adler 1995).

 4  •  “Faster, Better, Cheaper” in the History of Manufacturing

There were many other changes. For example, the workers’ assignments
were more flexible, as the number of job categories was reduced from
183 to 4. There was a strong focus on reducing waste and streamlining
the manufacturing process. Floor space was used much more efficiently
(Keller 1989, p. 129). Many things were done differently, creating a new
superior manufacturing system that made NUMMI the best automotive
plant in America.
One of the goals of GM in this joint venture was to learn the secret of
Toyota. They wanted to understand the magic with which the Japanese
produced superior cars at lower cost. Only, there was no secret. It was
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respect, common sense, and hard work to improve lots of little details.
GM wanted to apply the learnings from NUMMI to its other plants.
Except, they did not get it. They did not get it at all. The former Fremont
plant had a culture of oppression, threats, and distrust. NUMMI was
based on respect, trust, and teamwork. However, GM management used
the only management style they knew and wanted to force and bully their
employees at other plants into trusting them. Incredibly, they set up a com-
petition between two plants, Van Nuys near Los Angeles and Norwood in
Cincinnati. The loser would be shut down.
Unsurprisingly, this trust me or get fired approach did not work. From
the beginning, most employees were highly suspicious about this new
NUMMI thing. Union representatives of these plants called it the most
dangerous scheme ever conjured up by GM to rob workers of their union.
They were suspicious that all of this was just a tool for layoffs. Actually,
they were right, as GM indeed wanted to reduce the headcount by 25%
(Keller 1989, p. 137f). Norwood rejected the NUMMI approach altogether,
and nothing was implemented. Van Nuys reluctantly played along, but
their heart was never in it.
Van Nuys mechanically implemented many of the successful approaches
at NUMMI, but without the trust of the workers, these did not work. For
example, the ability to stop the line soon led to the line being stopped
so often that both productivity and quality declined (Keller 1989, p. 139).
Both management and employees resisted the change, and any ideas con-
nected with NUMMI often met stiff resistance in other plants simply
because it was from NUMMI.
This lack of understanding and disinterest also extended to the upper
management. A Toyota manager said that GM understood the changes
as far as the hardware and the plant layout are concerned. But I’m afraid
that GM upper management doesn’t understand the basic concept (Inkpen
 Failure and Success in Manufacturing—GM–Toyota NUMMI Venture  •  5

2008). Toyota executives visiting NUMMI were very interested in the

details on the shop floor. GM executives, on the other hand, did a five min-
ute fly-by, looking for a magic bullet that they can delegate others to imple-
ment in other plants. A GM boardroom meeting on the secret of NUMMI
drew on 25 studies and lots of data but resulted only in a huge discussion
without any conclusion (Keller 1989, p. 142).
Toyota, on the other hand, learned successfully how to work with U.S.
unions (Clarke 2002), preparing them for further ventures into U.S.-based
Toyota plants. They also kept their NUMMI graduates in larger groups of
30 to 60 people, whereas GM diluted their impact by having them fight the
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GM culture in other plants alone (Finkelstein 2004). Toyota also proved

that the Toyota Production System is not dependent on the Japanese culture
but can also be successfully applied in other countries. Nowadays, Toyota
has plants in more than 20 countries (Reingold 1999, p. 64) and produces
in excess of 50% of all Toyota vehicles outside of Japan (Marsh 2012, p. 56).
At GM, Van Nuys eventually won the deplorable competition, and GM
closed Norwood in 1987. However, Van Nuys did not have much time to
enjoy its victory, as GM also closed it only five years later in 1992.
Overall, GM learned little. Especially, top management resisted the
change. While GM did improve some aspects eventually (Sato 2008,
p. 255), it was not enough to turn things around. In 2009, GM had the big-
gest bankruptcy in U.S. history, costing taxpayers $50 billion (Siegel 2010).
Toyota, on the other hand, became the largest carmaker in the world and
is highly profitable.

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