The Tragedy of Kobe Steel: How the smoke is fading and mirrors are breaking on lean manufacturing–revealing a diabolical academic scheme that was always there

The truth is there isn’t any magic wand that takes manufacturing techniques and turns companies into winners at the bottom line. Just like going to college couldn’t turn a kid into a success story without extremely hard work to go with it.  The harsh reality that many people have come to face is that you can’t buy quality, and you can’t wish yourself into profitability.  If you want to be successful in life you have to be willing to work harder than a competitor and you’ll have to figure out the latest trends before everyone else does in an ever-changing world.  It’s not enough to memorize the work of Eliyahu M. Goldratt or to study really hard the techniques of James Womach so that you can call yourself a “black belt” of lean manufacturing.  It’s still the case and it always will be that innovation and creativity are ever-changing opportunities for market dominance.  And let’s face it, that’s the name of the game.  That’s also why this global tragedy involving Kobe Steel is such a case study into the temperature of the world regarding manufacturing that it merits our tenacious considerations.

Kobe Steel is a large producer of various industry metals, particularly aluminum and due to the nature of the world marketplace distributes their product all over the world to the largest companies currently in existence.   The assumption is that since the company is Japanese that they make high quality products at Kobe Steel—just because they are made in Japan.  That country has done a great job building up their brand with an eye toward quality—which is precisely why Womack, Roos and Daniel T. Jones featured them so prominently in the 1990s book The Machine that Changed the World.  In that classic book Womack had pretty much closed the case on western mass production techniques and very subtly implied the takeover of manufacturing practices being instituted right in front of our faces.  College academics were essentially attempting to use lean manufacturing practices revolutionized by Japan—specifically Toyota into a global revolution that would help pave the way to a one world global government by unifying all various markets under the flag of lean manufacturing.  And this failure at Kobe Steel, which is quite serious presently, has the fingerprints of failure rooted in this rapid expansion of manufacturing approach that has been taking over the world since the 1960s.

The attempted academic takeover of all industries has been going on for a long time and their goal is almost always the same.  Generally the academic believes in global collectivism and that the power of the individual is subservient to the needs of group think—and the view of American mass production was that a single foreman, and a single process engineer were things of the past and that hive behavior in the form of lean manufacturing developed from Japan would become the dominate way of doing business.  But the real villain was not American manufacturing; it was the kind of rugged individualism that often emerged in American car companies and steel manufacturers.  If you peel back the onion even more behind these academic reformers they were ahead of themselves on global wealth redistribution and they purposely worked their way into the various industries with mountains of paperwork for employers to fill out so that the tasks would become so cumbersome that companies would just flee overseas to run away from bureaucracy.  The subtext to all this academic insurrection for the last 50 years has always been lean manufacturing and that American companies better get with the pace of the rest of the world or they’d be out of a job.

I’m never one to throw out the baby with the bath water; there are some really good things that Womach and his buddies came up with in that aforementioned book.  And I’m a fan of the work by Eliyahu M. Goldratt.  I like those guys, but in relation to the problems of today, I have my own thoughts—and I dare say I often go much deeper than anything that came previously.  I’d say that you have to if you want to invent something new, otherwise how would you ever stand out in a world that is so competitive?   I can also say that I’ve been through many lean manufacturing seminars over the years and all those companies that sponsored those activities are now out of business, because what they did was attempt to copy what worked in Japan to an American market, and it clearly didn’t work.  I watched with disapproval as many companies tried to take the concepts in Womack’s book and applied them directly to manufacturing facilities where American workers resisted, and resented the efforts to the point where the company just folded—because nobody seemed to understand what was really going on.

The Japanese had a unique problem after World War II.  They had lost a war and needed to rebuild their economy from the ground up.  They also had an occupying force that changed all the rules of manufacture on them, and imposed on Japanese companies union friendly policies that made innovation so much more complicated.  Just like American manufacturing at the time was peaking because the mass production techniques had created in American workers this new idea of lifelong employment instead of just doing a job in the city then returning to their fields in the country to resume their independent life—socialist oriented labor unions took root and started managing things at manufacturing facilities across America.  At that time it was a trend so America forced Japan into the same box of thought for which they needed a way to get out.  So Japan offered a policy of lifelong employment to their employee but in going a step further than unions did in America, they adopted a decentralization of authority policy where wages and promotions were attached to tenure, not performance and that essentially stabilized their work culture into a nice predictable pattern that they were able to inject into a market share that essentially ruled for the next fifty years.  This was fine with the academics because it sapped the wealth from American manufacturing and relocated it to the orient and even into Europe.  As time passed and American companies still struggled with the concepts of lean manufacturing because at the core of it is a group think that purposely diffuses the merits of individualized behavior then more American companies became Chinese and Korean companies because people in those regions already were somewhat predisposed toward lean manufacturing thought—it’s an Asian thing.  For people who will eat the eyeball of a chicken as a snack it’s no big deal to stand at an assembly line and decentralize authority to the masses of group think.  But to the six-foot six ,300 pound redneck from Appalachia that has a Confederate Flag on the front of their pick-up truck, it’s quite difficult.

However, life was never all that great in Japan.  They were willing to work hard and long, but they were still an occupied country infused with western ideas on the collapse of their great empire which was destroyed at the end of World War II.  Before that they had the samurai culture which had been destroyed by the emerging new emperor—so the people were always ready and willing to fight for something but they had been shell-shocked over the centuries with a lot of disappointment.  If they could get back at the West by imposing lean manufacturing techniques on those “cowboys” then they’d be very happy, and thus they have been riding on that reputation now for many decades even though it took a lot of smoke and mirrors to maintain the illusion.  But those mirrors essentially broke with the release of this news from Kobe Steel.  To keep up their shipments and deal with the focus of the world on their products Kobe Steel had to fudge the paperwork they helped to create and due to the constant pressure from other Asian markets which have emerged over the last twenty years, Kobe Steel had to take short cuts on quality to stay relevant.  In essence, they became dominated by new, leaner and more ambitious manufacturing techniques just as mass production had been destroyed by lean manufacturing in the 80s and 90s.

I had a front row seat to all this activity, I worked at Cincinnati Milacron in the mid 1990s and it was going out of business by the day at that point in time.  They had us studying lean manufacturing techniques just to stay alive.  I could say the same about the Fisher Body planet in Fairfield, Ohio where my grandfather worked.  I could also say the same about the Camero plant in Norwood where I knew several people who worked there.  Now there is nothing left of those places, Milacron and the Camero plant were completely bulldozed away erasing their memory.  People visiting those locations today would never know that they ever existed.  In the final days of their manufacturing lives they had the same desperate anxiety about them that we can now see out of Kobe Steel—and it saddens me to see it, but it doesn’t surprise me.  These trajectories of failure are predictable and can be traced largely back to our academic institutions that impose themselves on the creativity of any industry that must move with much more nibble feet to compete in an ever-changing world.  By the time the academics get their published opinions out about global trends, they are too late and those who listen to them find themselves on the hot seat toward losing immediately.

I may tell my secrets later, but certainly not now.  Innovation didn’t stop with Womach.  Lean manufacturing has some good things to offer, but it certainly won’t deliver anybody to the Promised Land without a lot of hard work and a new take.  Just because you study the words of something it doesn’t mean that success is guaranteed, and so many people even today think that success can be bought.  For those who think such things just look at the Kobe Steel case—a Japanese company that is still struggling to find their place in a competitive world as their niche concept of lean manufacturing is proving to be more of a gimmick now than a justifiable strategy sold by academics for the purpose of destroying manufacturing in the West so that the East could spread communism to every corner of the planet.  That was always on the mind of the academic after all—that much should be clear to everyone now.  But lucky for us all, the wheels fell off at Kobe Steel before we went too far down that road—and the good news is that innovation and the next great things are still out there waiting for the world to copy them.  Until then, I’ll keep the smile on my face watching others try to figure out the latest riddle in the world of competitive manufacturing.

Rich Hoffman

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