Chapter 1
Basic concepts
What is important is not the system but the creativity of human beings who select
and interpret the information.
Taiichi Ohno, Former Executive Vice President, Toyota Motor Company
Introduction
The automotive industry is the biggest industry in the world and constantly changing.
Over 8 million people working for 50 manufacturers produced over 60 million vehicles
in 2003 with production rising by 6% by mid-2004. As revealed by Table 1.1,
1
80%
of the vehicles were produced by just 12 manufacturers and over the next two decades
there is speculation that this may reduce to just six. There has been modest growth since
1999 and apart from some changes in position, the top 15 vehicle manufacturers have
remained the same over the same period.
Our lives revolve around the automobile. We use it to transport goods and people, for
work, for sport, for war and for pleasure, and in many ways our world would not be
the same without it. With oil prices rising since the start of the second Gulf War, today’s
consumers are interested in more fuel efficient, smarter and safer automobiles, and
consumer groups are pressing for sustainability thus impacting not only the selection
of materials to build automobiles but also the efficiency and effectiveness of the produc-
tion processes.
Until the oil crisis of 1973 and subsequent recession, it was an industry that pushed
products onto the market in quantities derived from sales forecasts. This mass produc-
tion strategy depended on sustaining consumer demand but when oil prices soared, the
post-World War II gas guzzling cars were no longer wanted. Faced with having to cut
costs while producing a small number of many types of cars, in 1945 Toyota began to
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