Abstract
Beginning in the 1980s, most notably in the automobile industry, debates over the Toyota production system (TPS), or “lean” production, dominated employment relations disciplines. Over the past decade, however, such deliberations have mostly subsided, reflecting both lean’s now largely hegemonic status and increasing attention to the apparently more novel adoption of Industry 4.0 technologies. Nonetheless, as Kenichi Shinohara argues in Work Organizational Reforms and Employment Relations in the Automotive Industry, it may well be that many Western interlocutors have not fully comprehended how TPS actually functions. If so, what does this imply for our understanding of not only TPS’s Japanese deployment but also its adoption by Western automobile assemblers such as General Motors (GM)?
Shinohara’s contention regarding the misapprehension of TPS by Western scholars as well as North American emulators such as GM is thus the central theme in his book. Based on a critical review of primarily US research on TPS, he argues that many scholars have tended to focus too narrowly on the role played by autonomous teams as its novel “magic wand.” Thus, while paying great attention to the “knowledge-driven” and “problem-solving” aspects of teams, such studies did not adequately relate these to Toyota’s strategies for systemic cost reduction and continuous improvement. Rather, in Shinohara’s view, teams are neither autonomous nor singularly important but are only one element of the TPS system. What is important about teams is their relationship to how Japanese firms such as Toyota use them in conjunction with merit pay, shop-floor worker upward mobility within internal labor markets, and how teams link to a wider system of continuous improvement across and between manufacturing units. From his perspective, teams contribute to this system by their performance of non-routine work and by how kaizen (continuous improvement) techniques improve machine uptime and reduce both defect rates and labor hours. As such, teams are subordinate to, rather than autonomous from, the wider production system.
Empirically, Shinohara’s book focuses primarily on GM’s adoption of TPS through the implementation of its Global Manufacturing System (GMS) in 1996. The book is based on interviews conducted with UAW representatives and managers in a US GM case study plant and on archival work on the evolution of the seniority system from the 1930s onward. Shinohara shows that the TPS model has not been fully implemented outside of Japan. This lack of implementation is seen in North American original equipment manufacturers (OEMs), such as GM, and in Toyota transplant operations where, for example, both total suggestions per employee and the suggestions to implementation ratios are significantly less than they are in Toyota’s domestic operations.
Shinohara locates the causes of GM’s unsuccessful TPS emulation as stemming from the firm’s industrial relations system and flawed managerial strategy. Within GM, the UAW union had based its strength around job control linked to multiple tightly defined job classifications within the seniority system. This approach was an obvious impediment to a TPS characterized by worker flexibility centered on few classifications and having online workers perform quality checks. Nonetheless, under pressure the UAW has accepted teams and significantly reduced job categories. The UAW resisted job combinations, however, which lacking the lifetime employment guarantees Toyota in Japan offers to its core workers, means that layoffs are highly likely to occur. What remains are union-regulated job transfers within the seniority systems, which in Shinohara’s perspective continue to impede a freer allocation of workers.
However, Shinohara attributes GM’s inability to fully adopt TPS to management primarily, rather than to the UAW. Thus, in initial iterations of GMS, team leaders received insufficient training, while a more merit-based pay for skills saw a minuscule 1% of workers receiving extra compensation, not surprisingly significantly reducing their motivation to participate. After the 2008–09 financial crisis, GMS emulation of the TPS was more successful as GM used teams to engage in continuous improvement, decentralized its quality control, and created more collaborative labor–management forums at plant and company level. Nonetheless, GM’s efforts still fell short in part because, per Shinohara’s assessment, workers lacked sufficient incentives, such as merit pay and off-the-shop-floor promotion, to participate in aggressive cost reduction; while for the company, production volume and shareholder returns remained the primary yardsticks used to measure manager performance.
Work Organizational Reforms and Employment Relations in the Automotive Industry offers important insights into the challenges that have confronted American automotive firms, such as GM in adopting TPS. The team aspects of lean production were often viewed as novel by Western observers, but as the author contends, the team system was taken out of its context. Nonetheless, it may be that Shinohara overstates this argument because while labor-oriented scholars naturally sought to focus on the implications of teams for production workers, other researchers including Womack et al.’s (1990) The Machine That Changed the World placed teams within wider TPS systems. Nonetheless, Shinohara does raise valid points regarding the need to examine the role of teams more relationally within the TPS.
However, even if we can accept Shinohara’s arguments, questions still remain. The first is his contention regarding the importance of production worker upward mobility within TPS as a critical source of the motivation to participate in constant improvement. Shinohara notes that in Japan some former production employees have risen to senior management positions including as chief executive. Yet most firms almost inevitably have pyramidic employment structures, and so it is questionable whether more than a tiny share of production employees can be promoted above the shop-floor level. Given this, is it realistic to expect that this relatively rare prospect gives the kind of motivation to production employees that Shinohara contends it does? To address this issue, Shinohara would need to give more details about how common upward mobility is, for example, within Toyota’s domestic operations and how significant this possibility is in encouraging worker participation. In other words, while such a relationship is possible, lacking such details, it is open to question.
A related issue is that while Shinohara claims that merit pay plays an important role in motivating worker participation, he does not give details of how significant this is for Japanese Toyota workers’ final wages. Furthermore, Shinohara notes that implementing such a system in unionized North American plants has been difficult, but this also brings up the question of who defines merit? Since the 1980s, the UAW has accepted annual contingent profit-linked bonuses, but the experience of many North American unions with variable pay systems, such as payment by results or other output-based forms, is that it is open to managerial abuse. Merit pay is not strictly the same as such systems, but the risk for workers remains. As such, merit pay could be viewed as much a strategy for wage suppression as it is an incentive for motivation. Indeed, as Japanese inflation has risen recently, Toyota has sought to augment the merit and hence the contingent component of its wage system—a move that could be interpreted as an effort to limit total labor costs when compared to simply increasing overall hourly wages. In fairness, it could be argued that Shinohara’s book is about GM’s North American emulation of TPS and not Toyota’s Japanese operations, but since he often makes such implied comparisons, greater detail about the latter would have strengthened his arguments on these issues.
Finally, Work Organizational Reforms and Employment Relations in the Automotive Industry does not engage with the “management by stress” arguments made by TPS critics who contend that a core feature of TPS lies in it being an unrestricted managerial regime that allows for the intensification of work. Nor does Shinohara address the significantly higher use of temporary or contract workers in Japanese North American plants when compared to their domestic operations. Indeed, in some of Toyota’s North American plants, temporary workers constitute up to 40% of the workforce, and multi-status employment has now become commonplace even in unionized facilities. Certainly, some radical scholars maintain that TPS has innovative if not potentially progressive features around worker involvement. By not accounting for both TPS’s “sticks,” including management by stress, and its worker involvement “carrots,” however, Shinohara only partially succeeds in giving a more thorough account of TPS and its uneven adoption within unionized North American firms.