I’m David Veech and this is Elevate your Performance.
Post WWII, Japan was under the control of the US Military. Our objectives were to remove war-making capability from Japan, and to restore it’s economy so it can rejoin the world in open trade.
Dozens of measures were put in place that would freeze prices on most commodities, and remove subsidies the government had been paying for critical raw materials and resources like coal and iron.
These economic controls, along with breaking up of Holding Companies in an Anti-monopoly measure, had a devastating impact on Japanese manufacturers, and Toyota was no exception. This move effectively stripped Toyota from its sales organization. To keep people working, including the returning soldiers, Kiichiro launched several other businesses, from a chinaware franchise to fish paste, to clothing and dry cleaning.
To relaunch the automobile business, Kiichiro first had to study what was happening elsewhere. They had time, since Japan was not allowed to produce cars immediately after the war, and the volume of trucks and busses it was allowed to produce was too low to fuel any growth. He sent people to the US and to Europe to study the post war automobile business and learned that they would need to improve productivity significantly to stay in that business. His 4-point plan for recovery included:
1. In order to repair and renew machinery that has undergone heavy use or deteriorated, establish a Temporary Reconstruction Office to comprehensively promote the restoration of the plant’s equipment.
2. Change the company’s parts manufacturing policies to establish and develop a specialized parts plant equipped with independent capacity.
3. Implement improvement and remodeling of the company’s vehicles (which was stagnant during the war), plans for design changes, and establishment of a system for the steady supply of previous model parts for repairs.
4. Change from a company that supplied and maintained automobiles under a controlled economy to establish a sales system that will better and more fully reflect users’ wishes, requests and opinions.
The overwhelming concern Kiichiro expressed was toward the livelihood of his people. His efforts to create work for people and to focus on food, clothing, and shelter, produced some moderate effect and some businesses that still linger – including a business that makes prefabricated components for concrete houses.
All this effort still nearly failed completely when the Dodge Line came into effect in Japan. This strict austerity initiative to control spiraling inflation, sparked a deflationary trend that resulted in some devastating decisions Kiichiro would have to make.
More on that when I see you tomorrow.