UK: Car Industry Review 1 - Why we need TQM-PDQ.

UK: Car Industry Review 1 - Why we need TQM-PDQ. - Once a fashionable buzz-word, total quality management is now seen as essential to survival. For the car industry that means a complete change in working practices. By Jack Semple.

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Last Updated: 31 Aug 2010

Once a fashionable buzz-word, total quality management is now seen as essential to survival. For the car industry that means a complete change in working practices. By Jack Semple.

Japan. One word guaranteed to send a tremor of fear through any self-respecting European car industry manager. With its relentless improvements in productivity, quality and sheer value for money, the Japanese car industry is reckoned to be set to massacre the European industry.

Only one revolutionary concept can, it is believed, prevent this massacre: Total Quality Management (TQM), as practised, naturally, by the Japanese themselves. Once a fashionable buzz-word, it is now seen as essential to survival. It means a total commitment to continuous improvement throughout the organisation, and for most British car manufacturers, that means a transformation in motivation, working practices and not least, management structures.

The importance attached to TQM was highlighted, last September, when Raymond Levy, chairman of Renault, became president of the European Foundation for Quality Management, a body formed by 15 leading Continental groups in 1987. It now has 150 members.

Renault runs a major TQM training programme, spearheaded by Japanese guru Masaaki Imai. During 1991 it completed initial training for all its managers and carried the revolution through to other grades. Already, the company is claiming dramatic, measured improvements with its newer models. "The Clio quality index was markedly superior to the R19, which itself was conceived in total quality," Levy maintains.

Quality is in the eye of the beholder and of the measurer. Each manufacturer has its own method of assessing quality. However, some car industry leaders are dubious about TQM, Japanese-style: "There is no reason to believe that the future of the European industry will depend on copying Japanese systems," Bob Eaton, president of GM Europe, said recently. If he's referring to the caricatures of Japanese methods, such as singing the company song and exercises every morning, he's probably correct. But in reality, most established car makers are adopting the elements of TQM and passing it off simply as good practice. It was, after all, the Americans who invented the concept and took it to Japan, 40 years ago.

With TQM there is a commitment to improved training and motivation, individual responsibility and involvement. It stresses teamwork, and needs fewer middle managers. This is the thinking at Unipart's Coventry subsidiary, Premier Exhaust Systems. The £23 million-a-year turnover company has 190 psychometrically-tested employees who work in 10 teams, with team leaders reporting directly to the MD. Two months ago, the teams making catalytic converters for Honda decided that they could cut down from the three shifts proposed by the company, to two, saving £300,000 a year net.

TQM also means getting the planning right, to minimise waste. Design integrates with production and the manufacturer links with suppliers, at an early stage. No part of the operation exists in isolation, instead it links with the company as a whole. Most famously, TQM demands a commitment to continuous improvement, and getting it "right first time". All this is designed to reduce costs and increase the quality of products, in the sense of that word which customers understand, and they are all being adapted by European manufacturers in one form or another. Until recently, large sections of Britain's car industry would have failed hopelessly on virtually every count. Workers were de-motivated and kept their ideas to themselves; managers might as well have charged tolls at the departmental boundaries and "right first time" was dismissed as unattainable, undesirable, or both.

Yet there are signs of a quality-led renaissance, even at plants once seen as UK's lamest ducks. The Peugeot Talbot factory at Ryton, Coventry, was written off by most pundits in the early 1980s, when it took a week to assemble 600 pretty awful Alpines. Now it builds up to 2,600 Peugeot 405s a week to the same quality, and at the same bottom line costs as PSA's main 405 line in France. By the end of 1994, manufacturing director Colin Walters aims to be matching not only the French, but the Japanese, too. It is a hard task and a serious one.

Walters currently has a production workforce of 4,000, turning out up to 2,600 cars a week on a double shift. That's low by industry standards; he has less automation, especially in the body shop, and a higher labour content. In terms of bottom line cost, that relative lack of capital investment is not necessarily a handicap, he believes, because the plant has flexibility and does not have the burden of heavy overheads. But the pressure to reduce the head count is unrelenting. Another 10% of the jobs will probably go over the next two years, he says.

Walters has so far concentrated on motivation, teamwork, and "right first time" on the line. "Motivational training is in many ways more important even than technical training. Let's not forget, working on the line is still a boring, soul-destroying job." Each employee gets at least one week's "training" a year. He learns about the company and about why it is important to do his job well. He drives the products and rates them against the opposition's: "It's amazing how many employees have never driven a new car."

"Compared to the Japanese, one week is awful," says Walters. He confesses to being baffled by the apparent level of training in Japan, and for that matter, Germany, where shopfloor workers get a full apprenticeship. That risks raising expectations which cannot be fulfilled, he believes. "Still if you had asked me two years ago how I could train our people for two weeks a year, I couldn't have told you," he says.

It's working, though. The workforce has been getting involved in preparations for a new, small to medium car which goes into build this autumn, alongside the 405. "Five or six years ago, people would question whether line workers could use a pen. Now, we have them sitting round the table looking at the new car with a level of commitment and intelligence which we didn't think was feasible in our blind ignorance." Ryton is moving from a critical style of management to being positive and helpful. It is a difficult adjustment and will take years, says Walters. The factory has abolished almost all quality inspectors. Instead, shopfloor workers "mark" their own work, so that faults they have identified can be corrected later. The focus of checking has switched from checking the cars themselves to checking the assessments, and tackling problems as they arise. Ideally, the checking system would be stopped altogether, as employees assume full responsibility for what they do, says Walters. At this point, he delivers an attack on the way the BS 5750 quality standard has been "distorted" by many British manufacturers.

They have taken the fastest route to accreditation because of marketing pressures, but have tied their employees up in detailed systems and procedures in the process. This "flies in the face of delegation and total quality".

TQM culture, no doubt helped along by fears of unemployment, has helped Ryton to raise productivity by 30% over the past three years, despite having no new equipment. Walters turned up the line speed by 5.5% early this year, despite opposition from the unions. He adds: "The men are working harder than they have for a long time and the atmosphere has never been better." Walking round the plant, it is hard to argue.

The application of TQM at Ryton so far is patchy, Walters admits. He has not, for example, seriously tackled supplier relationships. Nor has he made any attempt to measure the cost of quality, as yet. But he believes that other companies at times exaggerate their progress in quality management.

At the other side of Coventry, crisis-ridden Jaguar, now owned by Ford, has axed a search for the finer points of quality management, which it started four years after calling in quality guru W Edwards Deming. Jaguar has gone back to basics says Mike Beasley, assistant MD. Ironically, he started with Ford before joining Jaguar in 1974. "There's a lot of junk talked about TQM. Take the notion of 'driving out fear', what does that mean? When you look at a Japanese company, there's bucket-loads of fear. Does it mean employees should be wholly comfortable? I can't believe that's what Deming meant, but he's been interpreted in that way. Apprehension, concern, and consequently a desire to solve problems, is good. You can become pre-occupied in trying to create a culture where that (creative tension) does not exist." Deming-inspired teams ended up diverting attention from the real problems. In applying TQM models Jaguar's previous management was trying to run before it could walk.

When Ford took over two years ago, the atmosphere changed abruptly. New boss Bill Hayden publicly declared that Jaguar's Brown's Lane plant was on a par with the worst plants in all of Europe. Ford introduced new systems and imposed a new discipline in the way they were applied.

Beasley stresses the dramatic effect on build quality: "If high is bad," he says, stretching his hand above his head, "we're 25% of where we were two years ago. In four years time, we'll be 25% of that, putting us about where we think others will be, then - not where they are now. We have the road maps to get us there, from design to manufacturing, and the workforce wants to help us do it." But he won't be rushing to management gurus to motivate people.

The other UK car builders all claim to have improved product quality, and show soaring exports to Europe, including Germany, as evidence. Exports to EC countries rose from 248,557 in 1989 to 536,576 in 1991. Ford of Britain has just undergone management changes, which some industry watchers suggest is part of a move to maintain the process of continuous improvement.

Vauxhall is reckoned to have made as much progress as any of the established assemblers. The company itself says it has made great strides since 1989, when it gave a commitment that there would be no mandatory redundancies as a result of increased efficiency. The company says its build quality of cars going to dealers now matches the Japanese, but it still has a long way to go.

Rover - 20% owned by Honda - is committed to TQM, and the new 400 model line, R8, is said to be almost as efficient an assembly line as any in Japan. However, industry insiders see one problem remaining in much of Rover's production operations: "George Simpson and those who report directly to him are promising change and the people on the shopfloor are looking forward to it. The middle bit - middle management - has still to be tackled properly," one says. "It's very difficult to say, 'Please innovate and hasten your forced retirement'." But a consequence of TQM is that, to be a lean producer, you don't need seven or eight levels of management between top and bottom.

In Britain, however, there is a lot of unhelpful tradition to break through, before the established makers can match competition from Japan, and other parts of the Far East. The most important lesson from TQM is probably the only one which survived intact at Jaguar - a commitment to continuous improvement. David Nicholas, managing director of Unipart's rejuvenated manufacturing division, also echoes this need for continuous improvement: "The pace of change in the Far East is frightening. We must never let go."

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