| La lettre du GERPISA | no 92 (mars 1995) |
Research Questions - Michel Freyssenet &Nicolas Hatzfeld
Time was spent discussing in depth the trajectories of some of the firms, in the context of the book in preparation: Nissan, GM, VW, Lada, Hyundai, the American "craft" manufacturers between WWI and WWII. The text on Volvo by Christian Berggren was discussed in the author's absence, and summarized in outline by Dan Raff. Several issues concerning research developed out of the ensuing discussion; a few of the most relevant issues are summarized here.
Schematically, each chapter should adopt the following structure: characterization of the industrial model of the firm in question at the end of the 1960's; the various periods of its trajectory up to the present; the problems that may have been encountered and the solutions that were adopted during each of these periods; drawing together in a coherent way the set of solutions adopted and the characterization of any new model that might have arisen.
The characterization of the firm's model at the end of the 1960s raises the question of the definition of Fordism. Is it sufficient for a firm to mass produce, and to do so according to the two industrial principles of fragmented/recomposed work according to an economics of time and production on a moving line to characterize the firm as generally Fordist, even when all other components of the model differ from the model theorized by Ford as well as from its American applications: wage systems, mode of involvement, structure of command, modes of reaching compromise, modes of adapting production to economic change, production management, skills of the workforce, access to financing, links to the market, etc?
By its very caricatural nature, the case of Lada is a good illustration of this problem. All the material transposition of a production system that occurred (in this case the single line at Fiat-Mirafiori) does not seemed to have turned Lada into a Fordist company. The mobile line, designed with the idea of imposing certain production standards, loses its meaning and its content when a company is forced, as was the case with Lada, to employ people from the surrounding area, when lay-offs are impossible, and when the company can use neither its wages funds nor its profits.
The organizational and material structure is economically and socially inert if it is not linked to (amongst other elements) the employment relationship for which it was created or to an employment relationship derived from the same goals. Both a descriptive and theoretical effort are necessary to respond adequately to the initial question for each of the firms being studied.
Amongst the problems that firms have encountered, the structure of command and the structure of internationalization of design and production have so far been insufficiently emphasized. The contrasting cases of GM and VW have shown to what extent this structure played a significant role in generating a grave internal crisis in the
first case, or in the negotiated resolution of a crisis due to changes in the environment in the second case. The issues of internationalizing production and design and of accompanying changes in the structure of the firm appear to have developed into a core issue confronting all manufacturers and a basic fact of their trajectories during the 1990s. Attention was also drawn to the need to include in any analysis of the trajectories of firms the role played by their subsidiaries and transplants along with any lessons they may have learned from their joint-ventures with other manufacturers. This analysis can be carried out in coordination with the work of the hybridization group.
As had been hypothesized, the problems encountered by firms were far from being the same in every case over the past twenty years. Hence there may be substantial differences in content from one chapter to another. However, discussion showed that problems encountered by other firms ought not to be entirely ignored.
In fact, there are two reasons why a problem may not have existed for a given firm: either it has never existed for the firm, or the firm has addressed this problem without any difficulty or apparent changes in the way it functions, by reason of the nature of its industrial model. In the latter case this is a key trait of the firm's system, which ought to be mentioned.
It is also possible for a problem not to be manifest and yet be in the process of developing behind the scenes; generally speaking, crises are developing even when things are proceeding smoothly. This could be true of the working population's sensitivity to the working environment. In some countries, it may have gone unnoticed up to now. It can, however, quickly and forcibly surface when conditions encourage its emergence. Moreover, when a firm achieves good results, its management may be led to believe that they are on the right path, and researchers to dispense with further analysis of possible weaknesses in the firm: managers and researchers may be in for a great surprise when there is a rapid change in the situation. Just as Toyota was performing at its very best and was considered the paradigmatic industrial model, its system met with serious limitations and was forced to undergo modifications to such an extent that one is led to ask whether the company has in fact not fundamentally changed.
The relationships between firms:
The function of partnership is different in each case: if at times it is actually practised, others it is merely a message sent by a manufacturer. Moreover, the nature of relationships is depends upon several elements:
- economic conditions: when the market is growing, it is possible to speak in terms of partnerships; when the market is declining, the relationship and conditions of suppliers are impaired, in such a way that it is then perhaps difficult to continue to speak in terms of partnership;
- national characteristics of the related firms: in this respect some manufacturers guard against situations in which major suppliers are greatly dependent on foreign capital;
- concern about independence in an open economy: hence the risk of too great a dependence which impedes the commitment of suppliers to follow the partnership path; for example, historically, it may well seem that Ford regretted not having had more sub-contractors, and the latter did not wish to bind themselves to Ford for too great a proportion of their turnover; in the same vein, one rarely sees alliances formed between groups of automobile manufacturers with large companies in neighbouring industrial sectors, as if there were a fear that they would lose their strength in spite of industrial complementarity and reciprocal learning opportunities.
A manufacturer's decision to internalize or externalize certain activities may also depend on the context or the economic conditions. Hence, Japanese transplants which did not find sub-contractors meeting the level of their requirements were compelled to internalize certain activities. Moreover, Renault, when it started to produce the 4CV, unable to obtain the product it required from the steel makers, was compelled to take control of a steel maker. However, technical changes may also play a role: when the complexity of an activity increases in an area lying outside the firm's competencies, the firm can externalize the activity in question, as was the case with paint products at Renault.
Variety and flexibility:
The general growth in the variety of production actually covers over differences among the paths being followed by the manufacturers; it arrived late in Japan, as well as in Europe, after the foundations of the production system were developed. Growth in variety did not automatically accompany the increase of production: the development of variety (growth, stabilization, decline) differs according to world region, but also depending on the firm, as well as the articulation between the number of models and platforms. Combinations of scale and product range have been quite different. Another level of variety must be examined: the level which is found within the same model as a function of a combination of options that have been proposed. This second variety, which differs by firm, is sometimes wider than that which separates distinct models.
Several firms claim the objective of "total variety" as a response to an unstable and diverse market; this principle, very costly in terms of manufacture, difficult to manage in the distribution network, is generally limited (to sets of options, for example) and compensated (discounts). Another discourse is appearing in Renault, for example, according to which, excessive diversity leads to a dilution of demand. To counter this, there needs to be a supply of models with a clearer identity; however the firm is not reducing its significant levels of variety in establishing parallel ranges of classical vehicles and monocorps, or by introducing options on the Twingo model.
As far as the practical implementation of variety strategies are concerned, the flexibility that the manufacturers adopt is best studied at several levels (for instance, the level of production, the level of organizational structures). This permits us to draw up a more analytical typology of manufacturers. Here too, the definition of the terms employed is important: a perhaps more technical conceptualization may be used to investigate the ability of a firm to produce variety. Thus a firm like Mazda, which produces a wide variety of products given its small volume, appears to be particularly flexible at this level. However, its poor profitability, in comparison to other firms, leads one to question this initial image.
Regarding this issue of production flexibility, the small-scale manufacturers in Japan, which are responding to very small but growing markets, may provide an interesting subject for research. With their particularly low break-even points, short design lead times (limited, it should be said, to bodywork and the cabin interior), more flexible organization of production, some of these manufacturers are responding to requirements to which the production managers of a large firm like Nissan are unwilling to respond, once the vehicle has been designed. On the other hand, how Toyota proceeds in this case is not well understood. However, in Europe, PSA and Fiat currently appear to be seeking ways to produce these niche vehicles profitably, expecting strong growth in this type of market. One hypothesis for the future would be that the manufacturers will make cars that will be completed in a personalized way by sub-contractors on a much larger scale than today.
For the future development of research, several general orientations were re-emphasized. The use of concepts must be made clear; for instance, the term "model" in the Boyer-Freyssenet paper is based on many and varied themes, which may create a problem in comparison to more limited definitions which fit with simpler problems being addressed in a particular chapter. This problem may be greater for researchers or readers unfamiliar with the debates that have taken place within GERPISA. It is therefore important to specify what is meant by a given concept. More broadly, recognizing the different scientific traditions of the various readerships of the publications, it is important to introduce each chapter in a clear and methodical way: clearly state the goal, the methods adopted and the concepts used so as to avoid any misunderstandings.