One Foot in the Mudd

Toyota’s fast pacing growth towards the number 1 automobile manufacturer with just two car brands (toyota and Lexus) under its belt, as opposed to the several touted by other manufacturers.
maybe this is the reason why:

Fujio Cho has only been in the top job at Toyota for a year, and he is only the second chairman not to be a member of the founding family.

But he’s been with the Japanese automotive giant since 1960. He is now 70, not particularly old by the standards of Japanese bosses.

Mr Cho got a law degree from the elite Tokyo University, and then joined Toyota as an apprentice.

He learnt the secrets of Toyota’s revolutionary Lean Manufacturing System from the man who invented it, Taiichi Ohno, an unarguable genius.

In the six years from 1988, Mr Cho was the head of Toyota’s United States operation in Kentucky at a time of relentless and brave expansion, a long way from home.

He must have picked up a lot of English, but he prefers to speak Japanese when answering reporters’ questions.

I suppose it gives him time to think, and thinking is what he does, leaving quite long gaps between a question and its tentative answer.

Mr Cho does not wish to appear to have all the answers. His is extraordinary modesty, and so is his company, considering what they have just done.

Strong sales

Some time around the first quarter of this year, Toyota outpaced General Motors as the largest car-seller in the USA. It is likely that will continue for the rest of 2007.

This is probably one of the most significant business happenings of the past century.

Toyota is trying to behave like an American company in the US

Answering my question about being number one during a visit to the St Gallen Symposium in Switzerland recently, the self effacing Mr Cho does not sound like a chairman of Toyota.

He ducks it.

“I think it is too early to talk about who is number one or not,” he says.

“And we do not really consider ourselves number one, anyway. But yes, we’ve been doing very well in sales in the past six or seven years in particular.”

American company

Fujio Cho thinks it is the fact that Toyota now manufactures for local tastes that has made the difference. It is what he pioneered in the USA.

Our way of thinking is very difficult to copy or even to understand Fujio Cho Chairman, Toyota

Talk to the people who have run the big three US car companies into almost bankruptcy and they seem to have little understanding of the sheer wholeness of the Toyota system; and part of that completeness is Toyota’s refusal to take a victory role after decades of having GM as its global target.

Toyota recognises the dangers of being number one and luxuriating in the glory. Besides, Toyota has political problems to face if it comes out too strongly as the giant killer in the US.

The export of US jobs from rustbelt industries is already a big issue, and Toyota’s (defensive) US stance is to become as American as it possibly can, hence Mr Cho’s pride in local manufacture and local employment.

Living the success

But there’s another wonder about Toyota I wanted to know about.

Toyota makes cars like nobody else

There’s nothing secret about the Toyota Lean Manufacturing System. Anyone from a US rival can walk along the elevated runway in Toyota City, above the production lines, and see how Just In Time, a Different Model Every Time, Lean Manufacturing works.

And yet, few others seem really to understand what’s happening down below them on the factory floor, let alone take the lessons back to beleaguered car industries elsewhere in the world.

Why?

Mr Cho thinks long about this, and then answers at length.

“There are many factors, so I have to think a bit,” he says.

“First, the philosophy needs to be fully grasped by top management. Groups of companies involved in car making have to become one, to move together.

“Avoiding overproduction has to be built into the system, a difficult task. And each problem will have to be made visible, and then tackled by every one of the workers.

“These are all things that companies do not normally do. It’s difficult to live the Toyota way of production.”

Global benefits?

Just introducing methods and ideas on their own are not going to bring about success, he insists.

“Visiting our factory, you will see that on one line we have eight different types of cars, not just variations. This is done to help our suppliers use up production every day.

“Our way of thinking is very difficult to copy or even to understand. It is even difficult for top managers to understand that this is worthwhile. And doing it this way causes inconvenience all over the place.

“At the start, the line keeps stopping, for example. Even when you see it, it is difficult to understand.”

A last, cheeky question: would the company now echo the old GM motto and proclaim :”What’s good for Toyota is good for the world?”

Mr Cho grins. “We wouldn’t dare to think that,” he replies.

With the advent of new news channel, the dearth of quality reporting has made a mark. The other day i was reading a “report” by someone from a “leading daily” in a very large metro – this is how the “reporting goes”

“The accident occurred a mere 16 days after another teenaged driver put two food vendors in hospital just metres away from Monday’s accident site at Khar Danda. Nearby Carter Road has been the site of several accidents in the recent past. Recently, the traffic department said the owner of the car would be arrested if an under-age person was found driving it.

Salim Khan (name changed), a resident of Uttar Pradesh, had been staying for the last few days at his maternal uncle Miraj Khan’s (45) home at Khar Danda.

Salim, anxious to try out Miraj’s grey Maruti Zen, stole the keys and set off on a drive. Only, a nervous Salim (14) hit the accelerator hard as soon as he turned on the ignition, slamming the car into a stall and two houses. Fisherwoman Parvati Saroj (50) suffered severe head injuries.

A terrified Salim jumped out of the car and tried to flee, but he was nabbed by the locals and taken to his uncle’s residence nearby. As Miraj ran to the spot to take Saroj to hospital, locals told Salim’s aunt what had happened.

Taking advantage of a diversion, Salim fled and is yet to be traced.

The teenager’s relatives said the the car was bought only eight days earlier and that Salim

had never driven an automobile before. “It seemed as if he did not know about the brakes,” said Mohammed Ayub, a witness to the crash. Ayub, who was repairing his scooter at the spot, suffered minor injuries after the car brushed his right leg.

The car itself was mangled. “It was so terrible that parts of the car flew into the houses nearby,” Ayub said. “

Given the quality of the article, one wonders on what grounds do editors ask journos to write. This is more like a high school essay submission “a nervous salim,… “ gwad.

Competing closely with bullshit reporting is the television media. You really must give it to them because they need to churn out the same shit, so many times a day, that they should ensure that they don’t get bored of reporting / repeting it. So what do they do? Sensationalize!

The above article was there in a leading news website – Terror in Jammu and KAshmir school curriculum.
Wow! so now with the world already talking that madarsas are teaching all kids terrorist tacticts, an article like this echos just that, but is that the article? no! the article is that they have started introducing methods for kids to cope with terrorism, but talking about it. The initiative itself is brilliant, but the way the headline is given makes you believe that they are teaching something else. Is there NO one to check this kind of “hype” reporting?

Todays article was titled ” World Prays:Atlantis stuck in space” You thinking ‘OMG” hope we dont have another problem, but then it goes on to talk that there is cloudy weather, hence they cannot land. So as much as it is a temporary phenomenon, you really need to churn out shit to keep readers on one’s site!

God save this industry!

It is an article of faith on the left that the gap between rich and poor has now widened to a dangerous chasm, as global capitalism has enriched rich countries and impoverished poor ones.

But its not quite like that.

It is true that Burundi and other countries in sub-Saharian Africa remain desperately poor, while living standards in the West have risen dramatically, so the gap between the two extremes has widened.

But there is a big group of previously poor countries whose average citizens are now much better off as a result of globalization.

China, India, Indonesia, Chile, South Korea, Chile, Brazil have all moved up, and they are highly populous countries.

Inequality is only unambiguously worse if you ignore the countries where the bulk of the world’s population live.

A new Gilded Age?

It’s within countries rather than between them that inequality has grown starker.

Shopping mall Garuda, Bangalore, India
Affluence has come to urban areas in developing countries
In China and India, those left on the land remain dirt-poor, but those who’ve been sucked into the global market have seen their incomes rise substantially.

In the United States, too, the gap between the super-rich and even the middle class has widened.

There is now talk of a new Gilded Age in America, reminiscent of the previous ones in the 1920s and at the end of the 19th century when millionaires bought mansions by the ocean from the mountains of money the had made on railroads or steel or oil, while the poor looked on from outside.

Rising inequality

According to Princeton economist Paul Krugman, the incomes of the middle class and poor in America have barely risen in a quarter of a century,but those at the top have gone up by about 150%.

“It really is a new Gilded Age. If you look at the distribution of income, at least pre-tax, it is the same as it was in the 1920s, and the 1920s looked the same as pre- World War One – so we are in a new gilded age of inequality,” he says.

In Britain, the country’s thousand richest people now have wealth of about $300bn (£150bn), three times the figure of ten years ago.

That’s partly because London has attracted some of the world’s super-rich. from the Russian oligarchs to steel magnate Lakshmi Mittal, but also because bonuses in the City of London have gone through the roof.

Trade union for the rich?

Finance people all over the world have found a way of securing more money that any trade unionist of old would recognize: play one employer off against another in a very competitive market.

Finance professionals around the world are getting rich. Professor Stephany Griffith-Jones of the Institute of Development Studies at Sussex University says the habit isn’t confined to Wall Street and London’s Square Mile:

“We can see it in the City of London but also in very poor developing countries. They have this curious habit of saying that ‘we have to be paid very well because our peers in other countries are being paid well and we will leave if you don’t pay us ridiculous salaries and bonuses’ that pushes up their levels of income,” she says.

$400m yachts

The signs of inequality are now large – literally so on the jetties of Antibes or Florida.

Where it used to be the “haves and the have-nots”, now it’s the “haves and the have- yachts”.

Twenty-five years ago, a top of the range vessel would have cost about $8m (£4m).

Today, it would be $400m, according to Jonathan Beckett, the chief executive of the Nigel Burgess company which sells the grandest vessels to the super rich.

So what do you get for your $400m?

“Nothing is impossible”, he said.

“You would have a yacht with two or three helicopter landing facilities. You would have discotheques and cinemas. You would probably have a submarine with opening doors in the bottom of the boat., so you get into the submarine and you get into the hatch and then flood the compartment and you slip away quietly”.

Politics of envy

Of course, it’s easy to sneer and play the politics of envy, perhaps easier in Britain than in America where affluence is more often seen as a reward for success.

Can you begrudge Sir Martin Sorrell his salary of about $5m a year when he built an advertising company operating in 106 countries out of a shoe-string operation in a damp garage?

Or should George Soros really hand back his billions from his hedge funds when he made them from nothing after surviving the Nazis and the Soviets?

He says there is a duty on the rich but you can’t expect them to sort out inequality:

“I do think there is something slightly obscene in the degree of inequality that prevails in the world and to that extent I feel an obligation, but to expect inequality to be taken care of by philanthropists is barking up the wrong tree because some philanthropists feel it and others are not philanthropic. So it really needs social regulation.” he says.

In other words, it’s for governments elected by the people to determine rates of taxation on the rich and social provision for the poor.

And any sensible policy would recognise that success does merit reward. The question is: how much?

Is equality good for you?

So are there any real, objective consequences to inequality apart from firing up cheap resentment?

Poverty has risen in the US along with affluence
It does seem true that more equal countries tend to have healthier populations than unequal countries of the same over-all economic standards.

Perhaps the crucial question is whether unequal countries grow faster.

If they do, might a bigger cake, with unevenly divided slices, be better for the poor than a tiny cake cut into equal but tiny pieces?

After all, the most conspicuously successful economy of our times is that of the relatively unequal United States.

The academic evidence isn’t clear-cut, and it may vary between countries.

Inequality in desperately poor countries might stifle growth, but promote it in richer ones.

Generally, though it seems true that some inequality in a country accompanies high growth, but too much may destroy social cohesion.

The two previous Gilded Ages ended with a bump – the Panic of 1893 and the Crash of 1929.

How will the third one end?

While reading an article the other day, a couple of “hot links” came onot the page. This is a feature of the browser, and now it is integrated into the website, as in, the some keywords would launch as individual search windows.
So, while reading up on some intense technological funda, I get the following “hot links”

I do find the image quite amusing. The article is talking about NBFC’s (Non-Banking Financial Companies) and Stock brokers, and the advert says “Sri Sri Ravi shankar Wants to know” 🙂 yup, how to make more money in stocks than in religion, however, sometimes, religion does PAy!!! 😀

India has begun an ambitious development programme for its automotive industry, which it hopes will make it a global production hub by 2016.

To many in India, cars remain illusive luxuries

The initiative, which is backed by both the government and by the existing automotive industry, relies on heavy investment both by domestic operators and non-Indian car companies.

Many foreign firms are eager to participate in the likely profits to be derived both from the growth of the Indian market and from the development of India as a major producer and exporter of cars, motorcycles, commercial vehicles and automotive components.

Here is an overview of the relatively slow, albeit increasingly rapid, emergence of India’s automotive industry.

An embryonic automotive industry emerges in India

Efforts to create a manufacturing industry to supply the automotive industry with components get underway, spearheaded by the Indian government and leading entrepreneurs.

India’s automotive industry begins to grow relatively fast, fuelled by six automotive companies:

• Telco (now Tata Motors)
• Ashok Leyland
• Mahindra & Mahindra
• Hindustan Motors
• Premier Automobiles
• Bajaj Auto

However, having a car is still seen as a luxury.

This is at least partly because the sector’s growth is held back by requirements for production licences and restrictions on both production within India and on imports.

Rickshaws are still commonplace in India

Japanese manufacturers begin to build motorcycle, car and commercial vehicle factories in India, often in partnership with Indian firms.

Component manufacturers also enter into joint-venture agreements, with European and US firms.

Exports start to grow.

The auto component sector, which had been protected by high import tariffs, squares up to competitors as the rules are changed.

Maruti Udyog enters the passenger car segment.

During the following years, Japanese manufacturers started selling motorcycles and light commercial vehicles.

Taxis outnumber private cars in many parts of India

Economic liberalisation gets underway, allowing passenger car production without licences, though import restrictions remained in place.

Hero Honda emerges as a major operator in the motorcycle market, while Maruti Udyog becomes the leading passenger car maker.

International car makers enter the Indian market, a trend that accelerates.

India’s streets are gradually getting fuller

Advanced technology is introduced to meet competitive pressures, and environmental and safety imperatives.

Automobile companies start investing in service network to support maintenance of on-road vehicles.

Auto financing starts emerging as an important driver for demand.

As India’s car market grows, the country is also emerging as a global automotive production hub In pictures

Liberalisation of the automotive industry gets underway, with the removal of many trade and investment restrictions.

Cars developed and produced entirely in India for both the domestic and exports markets emerge.

Financial services firms begin to offer car loans, in cooperation with the car industry.

Efficiency, capacity and environmental issues are identified, along with initiatives aimed at encouraging research and development to address such issues.

http://news.bbc.co.uk/2/hi/business/6478685.stm

A post wrten by a friend…… http://vanessagebbiesnews.blogspot.com/2007/04/winner-of-my-build-man-competition.html

MURALI

I sit beside the door and listen as a forest of broken bones blossoms inside me..

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The first Chinese-built MG sports cars have rolled off the production line in the eastern city of Nanjing.

The manufacturer, state-owned Nanjing Automobile, bought the assets of collapsed UK car firm Rover in 2005.

It plans to produce 200,000 new cars every year and hopes to sell the vehicles around the world.

But many are likely to be sold to the booming domestic market, with demand for luxury vehicles soaring amongst the country’s wealthy elite.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/6497959.stm

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In the era of globalization, the above story is a fitting example of the rise of the east. MG a once mighty European auto maker, took the sad path of closing down, only to be bought by Nanjing Auto. however, Nanjing auto has been very clear, it is imbibing only the technical knowhow and the IP of the company, it saves it the trouble of going through the learning curve. Craftily, it has also included all the British insignias in order to say that “look, its made in china, but its still british”. A rather cruel blow. First to go was Lenovo, now another behemoth MG. so whats next?

The chinese took 6 months to set up a factory to churn out 200K cars per annum. 6Months. Now that is determination. I wonder if at any point any other country will be able to achieve such levels of productivity.

C. K. Prahalad, the University of Michigan strategy guru and author of the best seller “The Fortune at the Bottom of the Pyramid,” has lately taken some flack for his have-it-both-ways proposition that multinational corporations could alleviate global poverty while boosting their bottom lines. Critics like Aneel Karnani, also of the University of Michigan, argue that the bottom of the pyramid is smaller than Prahalad has claimed and far less lucrative.

In an interview for Fast Company’s March “Fast 50” issue, Prahalad insisted he hadn’t overestimated the size of the BOP. Now he’s got some hard data to back up his claim.

According to a report released this morning by the IFC (the private sector arm of the World Bank Group) and the World Resources Institute, 4 billion people who live in “relative poverty” have purchasing power that amounts to a $5 trillion market. The report, The Next 4 Billion, uses income and expenditure data from household surveys to measure the size of the market at the very base of the economic pyramid. That’s a first.

The report defines those who live at the base of the pyramid as having incomes below $3,000 in “local purchasing power” ranging from less than $3.35 a day in Brazil to $1.56 in India. In a classic bit of understatement, the report politely characterizes the $5 trillion BOP market as “underserved.”

No doubt, some experts will continue to squabble over the numbers. But perhaps The Next 4 Billion, which is loaded with business case studies, will inspire at least a few big companies to at last understand that the BOP market could well be their next growth opportunity.

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That was an article on Fast Company. Something that really bothers one, would be the fact that- statistically, the market is huge, like the same way one says, there are 2 million IT employees, so that means that there is a market for ergonomic keyboards thats in the 2 million range, that is a $20Million market, which in theory is correct, but in practice, not correct. So, there might be 4Billion BoP persons, but these persons are subject to such abject poverty, its pitiful to try and sell them coke, or a TV or anything else. one needs to first educate them in better farming techniques, and increase the yield from the soil, and once they are above the “below $1” line, then sell them stuff.

The agrarian society has been one of frugality and caution, the urban society is one of splurging and debt, it would not be advisable to move this lifestyle of steady incomes to one that is dependent on monsoons.