Article 2 - Article 2 Toyota Must Maintain Edge on Quality As It Tries to Step Up U.S Production By NORIHIKO SHIROUZU Staff Reporter of THE WALL STREET

Article 2 March 15, 2001 Toyota Must Maintain Edge on Quality As It Tries to Step Up U.S. Production By NORIHIKO SHIROUZU Staff Reporter of THE WALL STREET JOURNAL KALAMAZOO, Mich. -- Why do Toyota Motor Corp. cars and trucks rank at the top of auto-industry quality scorecards year after year, despite massive catch-up efforts by Detroit's Big Three? Hajime Oba and his hair dryer offer a clue. Armed with a $12 dryer from a discount store, Mr. Oba proved to engineers from Michigan's Summit Polymers Inc. that their $280,000 investment in sleek robots and a paint oven to bake the dashboard vents they produce actually was undermining quality and pushing up costs. The fancy equipment took up to 90 minutes to dry the paint and in the bargain caused quality flaws because parts gathered dust as they crept along a convey or.Mr. Oba's hair dryer did the job in less than three minutes. Chastened, Summit's engineers replaced their paint system with some $150 spray guns and a few light bulbs for drying and integrated the painting into the final assembly process. Along with some other changes inspired by Mr. Oba's visits, family-owned Summit cut its defect rate to less than 60 per million parts from 3,000 per million in the mid-1990s. Victories like this are critical to Mr. Oba's mission to transform Toyota's American auto-parts suppliers into lean, high-quality manufacturers. And Mr. Oba's work, in turn, is key to Toyota's plans to accelerate a longstanding shift in its global production away from Japan. By the end of this decade, the Japanese giant wants to boost its North American capacity by 60% to 2 million vehicles a year from 1.3 million. Pulling off that feat, which would put Toyota in position to displace DaimlerChrysler AG's Chrysler unit as America's No. 3 auto maker, has acquired new urgency as Japan's economy has continued to spiral. Toyota's not-so-secret weapon in reaching this goal is its reputation for bullet-proof quality. For six straight years, Toyota has dominated a survey of the most-durable cars sold in America compiled by J.D. Power and Associates from surveys of owners of four- to five-year-old vehicles. Toyota vehicles routinely score well in other influential product-quality scorecards. Just Thursday, for instance, Consumer Reports is naming four Toyota models to its top-ten list of vehicles for 2001, ranked by reliability and performance -- the most of any manufacturer. Looking for an Edge As the U.S. auto industry cools and consumers look for vehicles that give

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them more value for their buck, the companies with the best quality image will be in position to grab more market share from the laggards. But maintaining this edge won't be easy. As Toyota expands its U.S. output, it will be forced to rely more on American suppliers who haven't grown up steeped in the auto maker's obsessive production philosophy, known as "lean manufacturing." What's more, Detroit's auto makers, which have been trying to copy Toyota since the mid-1980s, have been closing the quality gap somewhat lately. For instance, General Motors Corp. has seen an indicator called "direct run rate,"