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From the Desk of Jack Healy

Why It’s Harder to Get a Production-line Job at Toyota Than it is to Get Accepted at Harvard

By Jack Healy, Director, Manufacturing Advancement Center, jackh@massmep.org

A recent report issued by the World Bank refutes what has been passing for conventional wisdom – that the US is losing it’s ability to manufacture competitively and has nowhere to go except offshore. Instead, this new report indicates that the US continues to lead the world in manufacturing.

The US accounts for 23.8% of value-added manufacturing output, even after more than two decades of the “the world is flat” global competition. The World Bank reports that during these last two decades, the US share has “remained fairly constant, with an annual average since 1982 of 24.6%.” The term value-added represents the real dollar value of manufactured goods that was created after deducting materials and labor.

This news certainly helps place the proper perspective on continuing noise in the media about the “impossibility of US manufacturing competing with China Inc.” China’s share of value-added manufacturing output currently stands at 9%. Unfortunately, this report does not help us understand where local manufacturing is really going, such as here in New England.

New England Manufacturing Goes Lean

Manufacturing in New England has continued to evolve from the “high-tech wreck” of 2000-2001, the downturn that caused industries in some sectors to shed 30% to 40% of their employees. To respond to such widespread structural changes, manufacturers in New England followed the path that Toyota Motor Corporation blazed for the last several years with its “Toyota Production System” (Lean Manufacturing). Companies who focused on reducing costs (Lean Manufacturing), promoting quality, and maintaining real pricing value led the region’s recovery.

The dimensions of this recovery are best illustrated on a per employee basis. The New England manufacturing community increased its Gross Sales per Employee by 18% between 2001 and 2003. We are now producing more output at current dollars than before and with 133,000 fewer employees. In 2001, New England manufacturing lagged the US in average sales per employee by approximately one percent; by 2003, we exceeded the US average by 4%.

Despite this improvement in productivity, New England manufacturers, with the exception of a few industry sectors such as computers, chemicals, and food, have had little overall sales growth. As a result, our region seriously lags overall US manufacturing growth for this measured period: 1% New England vs 5% US.

This lack of market growth, with continuing increases in costs and an overall lack of pricing power, coupled with continuing global competition indicates that the most significant challenges are still ahead for New England manufacturers.

What We Can Learn from Employee Behavior

Someone once characterized Americans as a ‘people who are eager to learn almost anything at any age.’ Hopefully, this is still true as we may well learn something from where Toyota is going. The people who gave us “Lean Manufacturing” have now developed a system of “Continuous Improvement” that has the resilience of a living organism as supported through their exceptional screening process for employee behavior.

According to Manufacturing and Technology News, “It is much harder to get a production-line job at Toyota than it is to get accepted into Harvard.” There were 63,000 new employee applicants for 2,000 job openings at Toyota’s new assembly plant under construction in San Antonio, Texas. This is three times the amount of applicants that Harvard receives for a similar number of positions. On top of that, Harvard has the lowest acceptance rate (11%) of all universities.

Manufacturing and Technology News continues:

“Toyota is now in the process of assessing 3,000 applicants per week. It is sending them to six community colleges where they spend four hours filling out online forms and going through an interactive Web-based multi-competency assessment. They are tested on basic math and the fourth grade-equivalent English skills. The San Antonio factory will not be bilingual, so applicants must be proficient in English.

“If an applicant makes it through this screening, then they go through a full day of interactive assessments including a simulation of an eight hour work shift on a Toyota production line. Screening is done based on the applicants’ ability to do quality work, follow safe work procedures and directions, keep up the pace, generate ideas to improve the process, and complete exercises that determine how well they work on a team.”

This approach does not happen just in Toyota’s new plants, but in their existing ones as well. Final candidates work a real 40-hour week on a production line just to see if they can handle it. The hands-on test comes only after a series of psychological and mechanical aptitude tests, physicals, and screening interviews. Toyota does all of this knowing that they must continue to improve their long-term competitive capabilities. The company knows they can best accomplish this by screening for good employees with the expectation that they are hiring for jobs that will last a lifetime. Unfortunately, this is a position that few US manufacturers take.

AME: Leading the Revolution Conference

Toyota’s focus on employee behavior is but one of many new programs currently being employed by manufacturers in order to maintain their competitive competency. Anyone interested in learning where US manufacturing is going with continuing productivity improvements should attend the upcoming AME: Leading The Revolution conference that is being held in Boston Oct. 31 to Nov. 4, 2005, http://www.ame.org. The conference program includes 6 keynote speakers, 45 “best practice” presentations, 20 plant tours, 21 workshops, and 7 special interest sessions. All sessions will demonstrate where US manufacturing is going in today’s race to improve productivity across the nation.

This is a race that no one can afford to lose. Join us at the conference.

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