There were problems to be overcome. But in the end, the systems were the solutions. Two belief systems, both focused on continuous improvement and with roots in Eastern philosophy, made national headlines last week.
And Alabama was the big winner as a result.
For Nick Saban, the University of Alabama’s football coach, there is “The Process” – a core belief that players should focus solely on execution and the immediate task at hand and not be distracted by past events or future outcomes.
And last Monday night, the Process prevailed. The Crimson Tide, a team utterly void of any superstars, rolled and won its fifth national championship in the 11 years that Saban has been its coach.
Two days later, there was evidence of another, not unsimilar process at work when Alabama edged out North Carolina as the winner in a multi-state contest for a prized Toyota Motor Corp. and Mazda Motor Corp. joint car factory worth $1.6 billion.
The Nature of An Assembly Plant
To understand the problem facing the Japanese automakers and why a 2,400-acre site near Huntsville was chosen, you must understand what an automotive assembly plant is. Add to that backdrop one of the main pillars of the Toyota Production System, which is Just-in-Time production.
It means transporting only what is needed, when it is needed, and in the amount needed.
In some respects, today’s automotive production line is not that much different from when Henry Ford installed the first moving assembly line for auto production in 1913.
Then as now, vehicles are mechanically moved to the workers at individual work stations where parts are added in sequence. Those interchangeable parts have been acquired and shipped in from other companies, which are the suppliers.
By the time a car or truck reaches the end of the production line, all the parts, almost all of which have been manufactured offsite by the suppliers, are fastened and attached, resulting in a brand new ready-to-drive vehicle rolling off the assembly line.
The Toyota Way
The fact that Toyota already has a substantial number of suppliers near the general vicinity of North Alabama, serving its other assembly plants in Blue Springs, Miss., and Georgetown, Kentucky, was probably the difference maker as to why North Carolina was not chosen.
Much of “The Toyota Way” is about conserving resources and eliminating waste. Had North Carolina been chosen for the assembly plant, it would have required building entirely new supply chains and an array of supplier plants. Such a move would not be conserving resources.
Which is probably why at the end of the day, when North Carolina was offering $1.5 billion in incentives, Toyota instead choose Alabama, which offered a state and local incentive package totaling about $700 million.
Of course, I am assuming that Toyota, the largest automotive company in the world, was, in effect, the managing partner with Mazda in choosing the site. The future Huntsville plant will be Toyota’s 11th assembly plant in the United States. Mazda currently does not manufacture in the U.S.
Back to Fundamentals
So what can we learn from this?
In some ways, it should be very reassuring to economic developers everywhere, including North Carolina, that basic business principles trumped (no pun intended) the financial incentives that were offered. While substantial, the Alabama incentive package was less than half that of North Carolina’s.
Two things stand out in my mind. First, incentives cannot make a bad location decision good. That is something that all companies truly should understand.
Second, logistics, the art and science of moving resources and which began as a military precept, is very much a basic business principle and certainly a major cost factor that should be understood by all manufacturers. But curiously it is often not given proper due consideration in the site selection process.
We know, for example, that a relatively short distance between two competing sites can mean millions of dollars in reoccurring transportation costs on an annual basis.
So Toyota’s choice in Alabama was a nod to the fundamentals, something that Saban stresses with his Alabama teams.
Chop Wood, Carry Water
It is interesting to note that both in Saban’s Process and in The Toyota Way, there is a consistent, ongoing emphasis on team, respect and getting the fundamentals right. It’s all about focusing on becoming the best that you can be, knowing that there is always room for improvement.
“The key to the Toyota Way and what makes Toyota stand out is not any of the individual elements…But what is important is having all the elements together as a system. It must be practiced every day in a very consistent manner, not in spurts.” — Taiichi Ohno, Japanese industrial engineer and considered to be the father of the Toyota Production System.
“Eliminate the clutter and all the things that are going on outside and focus on the things that you can control with how you sort of go about and take care of your business. That’s something that’s outgoing, and it can never change.” – Nick Saban.
“Before enlightenment, chop wood, carry water. After enlightenment, chop wood, carry water.” — Zen proverb.
Both Saban and Toyota subscribe to the idea that no matter how big or small the task may seem, the focus should be on the task at hand, which will help you develop a habit of always doing your best. Do your work, do it well, and when you find success, do it again and always strive to improve.
This is very much rooted in Zen doctrine. A worker on the assembly line in the Toyota Production System can stop the entire line if a problem is detected or to introduce change and improvement.
Go to the Source for Facts
At Toyota, as part of its “Chie to Kaizen” continual improvement mindset, there is this concept of “Genchi Genbutsu,” which means “going to the actual source and getting the actual facts” so as to make the correct decisions. Decisions should not be based on data alone, but one must have a deeper understanding of the problem at hand.
For Toyota and Mazda, the problem was picking the right site for the joint assembly plant. It was enshrined by the news media nationwide and opining consultants like myself who were not involved in the project. We voiced our opinions with little knowledge of the facts.
And whether they knew it or not, the Japanese managers and the assisting JLL team practiced Genchi Genbutsu as they did go to the competing megasites in North Carolina and Alabama to get the facts.
I do not know of any site selection consulting firm that would not take corporate client to the finalist sites under consideration to get the facts and gain a deeper understanding. In that sense, we’re all Zen.
Learn from Loss
“The best things come to those who wait” was a slogan used in an advertising campaign by the H. J. Heinz Company in the 1980s to promote its ketchup. However, that is not a truism in business.
What may be a truism is that good things happen to those who prepare. In 2008, Volkswagen passed over the very same Huntsville site in rural Limestone County that Toyota and Mazda chose in favor of a site in Chattanooga.
“When Volkswagen came, we weren’t ready,” Huntsville Mayor Tommy Battle said Wednesday night. “”… We didn’t have the soil compaction, we didn’t have the environmental, we didn’t have the utilities to the site. We didn’t have plans on roadways. We didn’t have everything necessary to make those sites a success. We took a learning lesson off of the loss of Volkswagen.”
But this time around, the Limestone County site was ready. The prerequisite work had been done for it to be certified in 2016 as a TVA megasite, meaning that all the basic infrastructure to accommodate a large manufacturing plant was in place.
At a press conference in Montgomery last week, Toyota President Akio Toyoda, grandson of the company’s founder, said he had fond childhood memories of spending time in Alabama as a Boy Scout.
And we all know the Boy Scout’s Motto, “Be Prepared.”
I’ll see you down road.