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A Modern Parable

Discussion in 'The Economy' started by Tropo, 10th Dec, 2008.

  1. Tropo

    Tropo Well-Known Member

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    A Modern Parable

    A Japanese company (Toyota) and an American company (General Motors) decided to have a canoe race on the Missouri River. Both teams practiced long and hard to reach their peak performance before the race.

    On the big day, the Japanese won by a mile.

    The Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat. A management team made up of senior management was formed to investigate and recommend appropriate action.

    Their conclusion was the Japanese had 8 people rowing and 1 person steering, while the American team had 8 people steering and 1 person rowing.

    Feeling a deeper study was in order, the American management hired a consulting company and paid them a large amount of money for a second opinion.

    They advised, of course, that too many people were steering the boat, while not enough people were rowing.

    Not sure of how to utilize that information, but wanting to prevent another loss to the Japanese, the rowing team's management structure was totally reorganized to 4 steering supervisors, 3 area steering superintendents and 1 assistant superintendent steering manager.

    They also implemented a new performance system that would give the 1 person rowing the boat greater incentive to work harder. It was called the 'Rowing Team Quality First Program' with meetings, dinners and free pens for the rower. There was discussion of getting new paddles, canoes and other equipment, extra vacation days for practices and bonuses.

    The next year the Japanese won by two miles.

    Humiliated, the American management laid off the rower for poor performance, halted development of a new canoe, sold the paddles, and canceled all capital investments for new equipment. The money saved was distributed to the Senior Executives as bonuses and the next year's racing team was out-sourced to India.

    Sadly, The End.

    Here's something else to think about:
    Ford has spent the last thirty years moving all its factories out of the US, claiming they can't make money paying American wages.

    TOYOTA has spent the last thirty years building more than a dozen plants inside the US. The last quarter's results:

    TOYOTA makes 4 billion in profits while Ford racked up 9 billion in losses.
    FORD folks are still scratching their heads.

    IF THIS WASN'T SO SAD IT MIGHT BE FUNNY
     
  2. Sacko

    Sacko Well-Known Member

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    Now I'm not suggesting that this is the only reason for the difference in profits, but IMO it cetainly is a contributing factor.

    The american firms have to pay an absolute fortune each year into the allocated pension funds. I believe the figures are something like there are 6 times as many people in the funds as there are current employees.

    The situation is likely to get worse a shares prices across the board tumble the folks at Ford, GM etc will have to make larger contributions to the pension funds to make up for the lower value of the funds' assests.

    As for the solution, I'm from the UK originally and I'm just about old enough to remember the hash that the UK government made of running the UK car industry - and where are all those companies now????

    So IMO a period of adminstration [not government!!!] may do the big 3 a great deal of good in the short / medium term by stripping out the excess layers of "steerers" leaving a greater proportion of "rowers" to will make them more competitive.
     
  3. carlosreynolds

    carlosreynolds Active Member

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    Absolutely hilarious. Here's something else that's doing the rounds.



    [​IMG]
     
  4. Billv

    Billv Getting there

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    Maybe it's time they've reintroduced tarriffs.

    Until now the US and Australia were manufacturing larger cars and
    if the times have changed and they now have to start making smaller cars
    they won't be able to compete with Asian manufacturers.

    Therefore, they will have to be protected from cheaper imports or they will eventually close down.
     
  5. AsxBroker

    AsxBroker Well-Known Member

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    Hi BV,

    I don't like tariffs, they protect inefficient businesses from market forces.

    Just like CarlosReynolds poster says "You wouldn't buy our ****ty cars". This is normal economics supply and demand, if their is no demand, build a better car that someone will buy.

    Japan was the China of the 1950s were anything built in Japan was sub-standard, in the 1990 and 2000s Made in Japan is a sign of high quality.

    China is heading this way at the moment, Made in China in 1990 was a sign of mass manufacturing and lack of quality, now in 2000s it is better quality and in 2010s Made in China will be a sign of manufacturing quality.

    Cheers,

    Dan
     
    Last edited by a moderator: 14th Dec, 2008
  6. Billv

    Billv Getting there

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    ASX

    I have always believed in supporting local manufacturing because it provides employment.

    In the past 10-20 years we've lost most manufacturing in Australia but not because of bad quality or inefficiencies, but rather because we couldn't compete with workers getting paid 1 $ per day.

    In recent times companies are closing down factories and moving them to China in search of higher profits. A recent example is our only solar panel manufacturer BP SOLAR. Being unable to compete is one thing but being greedy is another. Greed is what caused the economic crisis the world is going through at present.

    If one day our Automotive industry shuts down it will be a sad day for me and it will also be bad thing for the country and for our kids.

    cheers
     
  7. AsxBroker

    AsxBroker Well-Known Member

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    Hi BV,

    I agree it is important to support local manufacturers when buying products which have similar imported products with similar quality and similar costs.

    When an item is significantly more expensive, that's when I may not buy the Australian manufactured product. Unfortunately most Australian manufacturers can't compete against overseas workers being paid $1 per day.

    Another example which we all know about is Mitsubishi closing it's Adelaide plant which affected directly a thousand employees and many more businesses which supplied parts to the plant. This is exactly what the US is facing now with their automotive industry looking very shaky.

    Australia's economy has slowly over the decades moved to a service industry from a producer (primary and manufacturing). Many years ago half the companies listed on the stock exchange were primary producers, now only a quarter are primary producers. Over time this number will probably shrink further, whether it's a good thing or not I don't know.

    Cheers,

    Dan
     
  8. samaka

    samaka Well-Known Member

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    IMHO it's a good thing, if it's seen as reason to invest in more high-tech industries. Heaps of less developed countries can grow potatoes and assemble cars - we should focus on developing jobs that can't be taken.

    If Australia was leading the way in electric car development, medical research, bio-tech, space exploration, whatever.... then you can't simply out source them elsewhere.

    Australia will always need a manufacturing and primary producing industry of some size (if only to sustain us) - however we should be stepping up and dumping money into these new industry areas - so that when they become common-place - Australia's already out ahead.
     
  9. Sacko

    Sacko Well-Known Member

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    Don't BHP and RIO count as primary producers then?:confused: