Interesting Ken Belson article on the stagnating auto market in Japan which is impacting all the vendors who provide parts and services for Toyota. As the Japanese car companies move more and more production overseas, it is more clear than ever that Japan must move beyond making things to providing services, creating intellectual property, or other knowledge work. The crux of the matter is that many Japanese businesses excel at refining production processes so it is very hard for them to consider a world beyond manufacturing.
Last year, the company [Toyota] earned more than America’s Big Three automakers combined [!!!]. Still, the job market in its hometown peaked a decade ago, and workers can no longer take raises and bonuses for granted. Every year, Toyota Motor builds more cars and buys more parts overseas, and its hundreds of domestic suppliers are having to compete ever harder with foreign rivals, sometimes by cutting prices so low that many cannot make ends meet. Many are quietly closing their doors because their outlook is bleak.
Cue Clayton Christensen and his theories on “The Innovator’s Dilemma.”
Rethinking the Town That Toyota Built