Kyle's Corner (FYI) Auto Industry Reminder: They Put Their Pants on One Leg at a Time Too

It is an understatement
to say that during a past
year or so the auto industry
has been wild. VW will go
to Porsche. No, VW will
take Porsche. Toyota is
the biggest. Wait a minute,
maybe I should put that
Toyota purchase on hold!
Saab will go here, there,
and almost anywhere.
Ford and GM are fighting
back hard and doing a good
job of it. What will happen
next?

There's no shortage
of hope in Detroit these
days as Toyota leaves
an unthinkable opening
at no better point in time
.
American car brands have long been hammered by their competitors from across
the Pacific.

The American who may well have been able to predict the current
state of the industry is the person whose statistical techniques helped
to build the Japanese auto industry and its quality reputation.

W. Edward Deming developed a statistical application to quality control
in the 50's and 60's, and his techniques were not recognized until the 80's
by U.S automakers, mainly Ford, as the way to increase quality.

Deming's approach to doing things is familiar to do-it-yourselfers
who use the 'measure twice, cut once' approach to complete home
projects. The approach is now viewed as common sense; however,
it was revolutionary at a time when domestic automakers were building
massive quantities of cars to hit their profit targets - quality was relegated
to an after-the-fact inspection and a possible repair process.

On the other hand, the Japanese identified and corrected problems when
vehicles were being built rather than handing the issues one or more times
after the vehicle had been built.

Regarding the American automakers, to take up Deming and his statistical
approach to quality, it would have been a massive new way of doing things.
They were reluctant to give in to the pressure to produce, produce, produce.
This is not to suggest that the domestic automakers were not aware of the
quality (or lack of it) regarding the vehicles they were building. Why change
if the profits are there? Once the profit stopped however, then it was time to
do something different.

Today, all vehicle manufactures are focusing on quality as part of their
survival. As American sales volume went down, their quality when up,
and as the imports' volume when up their quality when down.

Part of the picture is due to Deming's concept of allowing for an
acceptable defect rate. He supported the establishment of an acceptable
level of quality variation rather than use additional (and likely quite
massive) resources to obtain a zero-defect level. This approach works
well when an automaker buildings relatively small production numbers
- hundreds of thousands of vehicles. However, there can be problems
with the approach when an automaker produces high production numbers
- millions of vehicles. If a manufacturer obtains a non defective rate of
99.9 percent, that translates into one vehicle per thousand. However,
multiply that by millions, and soon the number of defects become larger.

Toyota's wows actually concern a relatively small number of vehicles
when compared to the automaker's total production. Deming was excellent
with statistics, however, he likely did not foresee today's 24/7 news cycle
and Internet where words move quickly about problems and a long built
and established reputation can be destroyed very fast. Perhaps it is not such
a bad idea to put the additional resources into a zero-defect goal.

Another aspect of possible auto manufacturing difficulty concerns
component part suppliers. The competition in the auto industry
has been responsible for improving vehicle quality. However, a
single component manufacturer supplied the 'sticking' Toyota
gas pedals. Multiple suppliers would provide competition to push
quality. The chances of a problem coming from multiple component
manufacturers would be unlikely (thus limiting a large number of
problems) but if a problem were identified, the automaker could quickly
shift to another component maker thus also limit the problem.

The only constant in the auto industry is change. And like the
rest of us, auto manufacturers put their pants on one leg at a time!

Have an auto question or comment? You can email it to me at
Kbusch3@verizon.net. Kyle Busch is the author of "Drive the Best
for the Price..." www.DriveTheBestBook.com.