| For people who love engines (several of my friends
come to mind), nothing could be better than an entire book devoted
to one of the world's premier engine companies. But even the
mechanically-challenged can find something to love in this history
of Cummins. In particular, Chapter 10 -- "Cummins vs. Japan
1984-1987" -- is a compelling parable of attempts by American
manufacturers over the past 40 years to find the right strategy
for the global economy. To make a long story short, and overly
simple, Cummins taught the Japanese how to make engines and
then woke up one day to find them selling them in their own
backyard, threatening the survival of the company itself. There
were some valuable lessons learned along the way; maybe it would
be better to make the story a little less short, in order to
share them.
"Cummins vs. Japan" unfolds in
four stages:
(1) Local Partner, Junior Partner -- In 1961, in what seemed
like a brilliant strategy for marketing its products in a
globalizing economy, Cummins licensed a local company called
Komatsu to produce its diesel engines for the Japanese market.
At the time, the Japanese licensee struggled to meet the specs.
Cummins was patient with its junior partner, and Komatsu steadily
improved. The 60s were the "go-go decade" for Cummins, as
it rode a wave of economic growth, infrastructure development,
and heavy equipment purchases around the world.
(2) Farming out the Tedious Jobs -- By 1972, Komatsu's manufacturing
performance was satisfactory enough that Cummins decided to
purchase key components from them. Komatsu began to ship blocks,
heads, cams, and crankshafts from its Oyama plant to Cummins
in the U.S. for assembly.
(3) The Student Outdoes the Teacher -- As 1980 rolled around,
Komatsu was still continuing to improve. In fact, it had improved
to the point that it was ahead of Cummins on quality, costs,
automation, and electronic controls. In 1982, it announced
that it would manufacturer its own diesel engine.
(4) Awakening -- In 1984, Komatsu began selling its diesel
engine in the U.S. market. Cummins realized they had a problem.
A BIG problem . . . .
Outsourcing -- There's not
enough room here to explain all the ins and outs of the Cummins
comeback, but I will say that part of it had to do with attitudes
(starting with denial and progressing from there) and part
had to do with business methods, including something called
"strategic sourcing." In a description that should be of intense
interest to buyers and suppliers of cast metal parts, Cruikshank
and Sicilia explain how the Cummins strategy evolved from
the '60s, when they set out to bring all parts manufacturing
under their own roof, to the '80s and beyond, when they outsourced
key components to supply partners. A big part of the story
is the advent of numerical controlled machines in the '80s,
and the Cummins strategy for timing changes in parts procurement
to scheduled pattern replacements.
As for the rest of the Cummins comeback story, you owe it
to yourself to seek out this book and read about it directly.
[Editor's note: Do you have insights to share on the globalization
of casting production? Visit the World Foundry Forum
by clicking here.]
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