In the 80s it was the talk of the biz courses at my “bleeding edge” university- “Just In Time (JIT)”, “lean management”, or simply “Kanban”- Components moving from factory to factory with no delays and no need for inventory and warehouse space. Then after class I went to work and spent the night fighting breakdowns, weather, and every other imaginable industrial gremlin just to move bread a couple hundred miles to store shelves by the morning. But we had a couple industrial aces up our sleeve- A crew of crack maintenance techs with their own machine shop and materials stash in the basement of the bakery, another “backup” bakery less than a hundred miles away, and extra trucks and drivers ready to go. In the name of “lean management” all the above backups were deemed unneccessary expenses and eliminated, resulting in that bakery company being eliminated by bankruptcy.

They didn’t realize it, but it was the American auto industry and especially Ford that invented JIT with a mega factory complex called “The Rouge” that took in iron, coal, rubber, sand, etc. and turned them into new Fords- When the assembly line is right next to the foundry which is right next to the steel mill, etc. blizzards and international disputes don’t slow production down. And just as the Japanese adopted the wisdom of American Professer Deming who we’d ignored, Toyota, VW, and others rebuilt their industry with giant factory complexes like Ford’s Rouge. Throw in Japan’s topography where almost every industrial area is a seaport and JIT worked like a charm for Toyota et al.

So by the 80s the Japanese were having Detroit’s lunch so the big 3 figured they’d better copy the Japanese, without bothering to consult a map to see how much more vast their supply chains were compared to their Japanese competitors. About the same time Wall Street’s “masters of the universe” decided that the vertical integration that gave the big 3 automakers a predictable and controlled supply chain was a waste of capital. Ever eager to please dim bulb investors and puff up their stock options, Detroit and America’s executives dismantled their great corporations with essential suppliers sold off to the highest bidders.

It gets worse… Remember NASA’s amazing mission control? Ford built it, built TVs too. GM developed the high power semiconductor technology for their Electromotive Division locomotives that made hybrid and electric cars possible, then sold off the whole division. So when cars needed computer chips to pass emissions the automakers didn’t invest in making said chips, and as cars evolved into smart phones on wheels they still haven’t invested. Then two of the big three lost even more of their captive supply chain in bankruptcy and Ford got smugger. Meanwhile, Toyota’s supply chain was all across America and the world, and after a couple natural disasters broke that supply chain Toyota deciding that keeping stashes of components around wasn’t such a bad idea.

So the world’s automakers are happily cranking out vehicles by the millions despite stressed supply chains… Then a pandemic comes along and shuts down the factories for a couple months, followed by double digit changes in consumer preferences and outright panic buying. Consumer electronics demand becomes so inflated by a suddenly stay at home populace that intermodal rail becomes more expensive than trucking last peak season and canned goods disappear from Costco shelves to prepper’s pantries. Meanwhile manufacturers of every thing in the potential “internet of things” from a toaster on up gets chips so it can be called home… It takes years to build a chip factory, and automakers were competing for chip making capacity with consumer electronics and even lowly appliance makers. With the pandemic hopefully over (get vaxxed if you haven’t), Ford has over 100,000 orders each for the Bronco, electric F150, and upcoming Maverick pickup. A year after it’s announcement Broncos are finally crawling off the assembly line and Ford has lost half their production capacity for conventional vehicles, never mind chip rich electric vehicles. GM having lost most of it’s semiconductor capacity isn’t doing much better, and both GM and Ford have promised around $25-30 billion each investment in electric cars, assuming they survive long enough to build them.

And Toyota, the trend setter that abandoned JIT and went back to old skool “keep stock on hand”? Headed for another year as the world’s biggest volume car maker!