Google Devours Planet. General Motors Fails to Notice.

Posted April 25, 2007

The press has been aflutter about Toyota overtaking GM as the world’s largest car company. Hardly a shock — especially in California, where Toyota crushed GM years ago. Toyota doesn’t just outsell GM in California, it outproduces it as well. The two companies jointly own New United Motors in Fremont — now part of Silicon Valley. Tens of thousands of people drive by the plant every day; most don’t know what it is.

During the 1970s, the Fremont GM plant resembled something out of Charles Dickens. Parts were piled everywhere and seemingly randomly. The car chassis stayed at ground level — so if your work was underneath the car, you spent the shift on your back in a pit while cars passed overhead. The lighting was lousy — the place could be dark at noon. UAW militancy flourished to the point of comic opera — the Socialists Workers Party (Trotskyites) hated the Communist Party USA (Stalinists) who hated the Revolutionary Communist Party (Maoists). It goes without saying that the cars sucked — as communist cars always seem to.

In 1982, GM closed the whole mess down. We held rallies, carried signs, denounced the greedy corporate bastards, and sang old Wobbly songs. For some reason these efforts did not persuade GM to reopen the plant.

Remarkably, in 1984 Toyota did what labor rallies could not. Toyota persuaded GM to reopen the plant and hire back virtually the entire workforce (I believe that Toyota took a pass on rehiring known felons). NUMMI was born — an innovative joint venture under Toyota management. Toyota promptly shipped the the local union president and several of the most militant shop stewards off to Japan to work in a Toyota plant and learn kaizen — the process of continuous quality improvement. These guys were transformed: they came back talking about kanban, heijunka, and poka-yoke instead of the dictatorship of the proletariat or the joys of leaving a bolt loose in a cylinder before sealing the engine head.

As the Mondale-Ferraro ticket went down to defeat that fall, the first cars rolled off the assembly line. Within a year, the plant hit full production. Within two years, they added a second shift and certified the plant to produce Toyota Corollas. They added trucks, produced more than five million vehicles and have been recognized many times for vehicle and assembly plant excellence by JD Powers. The UAW is still there, although most of the original leaders are now retired. In short, the plant was turned around by Toyota, which managed people and production dramatically better than GM ever did.

What did GM learn from the experience? Not much. The first car they rolled off the line was the Chevy Nova, which was a tough sell to Spanish-speakers, for whom “No va”, meant “won’t go”. GM might as well have renamed itself Nova, which even in English suggests something large that is about to explode.

In fairness, the car business is a very tough way to make a living. Cars are really hard to design, build, and sell because we insist on cars that are efficient, fashionable, reliable, safe, and affordable — and you can’t compete with just four out of five.

A car assembly plant is an extraordinarily complex operation. Parts arrive minutes before they are slapped onto cars. You have to manage thousands of people, tens of thousands of vendors, and fussy distributors in a global, regulated, highly competitive, capital-intensive and labor-intensive market. Toyota is very good at it — whether the plant they operate is in the US or elsewhere. GM is almost always lousy at it — in part because they refuse to learn from two decades of being in business with Toyota.

Toyota has played down the achievement of becoming the world’s largest car maker. They are worried about protectionist reaction from the public and Congress. (Hint to protectionists, including most Democrats and union leaders: Toyota is not a Japanese car company any more than GM is an American car company. Wake up — it isn’t 1964 anymore).

Oddly, a second business milestone has gone far less noticed: Google has quietly taken over the planet.

Google just passed Microsoft twice. According to ComScore, Google is now earth’s most visited Web site (indeed, twenty Google sites, including Google Egypt and Google Saudi Arabia, rank in the world’s top 100 websites by traffic, according to Alexa).

More importantly, Google is now the world’s most valuable brand according to Millward Brown, a British market research company. They measure the potential earnings of a brand and brand loyalty. They value Google’s brand at $66.4 billion, ahead of GE, Microsoft and Coca-Cola.

As Americans know, nobody trusts a superpower. When a corporate juggernaut like Google makes a small mistake, it will now be visited with the venom and paranoia heretofore reserved for Microsoft. But for now, Google is the closest thing to King Midas since — well, since Microsoft. Or perhaps since the once infallible General Motors.