Failure Reasons


Why did GM's massive automation effort failed to achieve the original objectives for the company? A comparison with the New United Motor Manufacturing Inc. (NUMMI) at Fremont, California may help to answer this question. NUMMI is a joint venture between GM and Toyota. An old GM plant was placed under Toyota management, and the cars made were divided among the two companies and sold under different brand names, Toyota Corolla and Geo Prizm. Toyota did not convert NUMMI into a high tech factory like Hamtramck. Instead, Toyota managers simplified the job classification of workers and grouped them into teams for more flexible production. Workers were also granted greater power to stop the assembly line when they detected problems. As a result, NUMMI was able to achieve productivity levels as high as GM's other high tech factories (Hof, 1989; "When GM's robots, 1991).

The main lesson of NUMMI is clear: Massive automation without corresponding changes in management and work force organization is not enough. Because GM's executives were too concerned with labor cost, they failed to recognize that other costs are also significant. These costs include inventory, defective parts, and overhead (Hampton & Norman, 1987). Although automation can also reduce these costs, NUMMI clearly shown that changes in management practice are more cost-effective than buying new machines. Moreover, GM's corporate culture in the 1980s was resistant to change in management-worker relationship. Many managers of other factories dismissed NUMMI's practices as irrelevant ("On a clear day," 1989; "When GM's robots," 1991). As a result, GM failed to fully develop its human resources. In contrast, the organizational innovations of Japanese car producers, such as teamwork, short product cycles, JIT (just in time inventory management), much longer training time for workers, and a more equitable relationship between management and workers allow them to fully exploit the advantages of flexible production.

 Besides the issue of management, GM's speed of automation also turned out to be damaging to the company. GM simply wanted to do too much with too little time. As a result, managers and workers did not have enough time to master the latest technologies available. The chaos in Hamtramck during its first year clearly illustrate the danger of GM's "rushing ahead" strategy. In contrast, Ford and Chrysler moved more cautiously towards automation because they were at the edge of bankruptcy in the early 1980s. They simply did not have the ability to compete with GM in automation. As a result, these two companies' automation processes were more systematic and did not have GM's troubles.