Reckoning

by David Halberstam

It was that belief in the value of work and in the excellence of products as ends in themselves that made him so compatible with the Japanese. The Japanese had been aware of the low level of their quality, both before the war, when Japanese goods were mocked for their shabbiness, an international joke, and even more by the middle of the war, when Japanese engineers saw American military machinery consistently outperform their own. Japan’s engineers had understood long before its military the vast American superiority in engineering and manufacturing, and above all in mass production. When an American plane was captured, it would be brought back to Japanese engineers to study, and by 1942 those engineers knew the vastness of the technological gap. As they examined captured material they were sickeningly aware that the Americans were turning out better-made machines—yet machines that were obviously mass-produced—and that Japanese pilots were being sent into the skies hopelessly mismatched. Even in the immediate postwar years the Japanese were embarrassed by the shoddiness of their goods. If it rained in Tokyo, ten thousand phone might be out of order.

  At the same time that the Japanese were becoming exasperated with the quality of their manufacturing, Edwards Deming was becoming frustrated with American industry. His quest, to improve the quality of industrial products by applying statistical controls, evoked no interest in the booming postwar American economy, a time of frantic and uncritical demand. Deming had been influenced by Walter Shewhart, an American physicist who at Bell Laboratories in the twenties and thirties had pioneered in the use of statistics to assure industrial quality. The Americans had used Shewhart’s techniques during World War II. Indeed, the War Department had created a small think tank at Stanford to teach and propagate those ideas, and Deming had been a part of it. So pleased was the War Department with the work of the Stanford group that it demanded that many of its defense contractors apply Shewhart’s standards. Deming became expert in that application and came to love the work, for it concerned itself not just with mathematical excellence but with social value as well, helping people to make their products better and thus to make lives better. But in the mushrooming affluence of the postwar years, there was suddenly no more interest in statistical quality control, at least on the part of the new generation of managers. They felt there was no need for it, no time for it, because no company seemed able to produce fast enough for the hungry new American consumers. Instead of the use of controls to improve quality, the use of systems to expand production became the hot new managerial ticket in America. The result, Deming was absolutely confident, was going to be production without quality.

  Deming sensed considerable sympathy for his ideas among the working engineers but none among their superiors. He liked to tell about one engineer who had worked for Western Electric during the war, when it had been a center for quality control and when the Western Electric Control Book was a kind of quality-control bible; the man left Western Electric in the late forties and returned eight years later to find that all the control charts had simply disappeared. For a time Deming had fought that trend, continuing to lecture and to try to inspire young engineers, but he had soon tired of the indifference of the companies themselves. “I was lighting a lot of fires,” he said later of that period, “but they were all going out.” When he met these new managers and tried to convince them of the importance of what he was talking about, he was acutely aware of their disdain. They did not care, he realized, and for Deming that was a serious matter, because it meant the country did not care. Blocked in his main effort, he took refuge as a statistician at the U.S. Bureau of the Census.

  In 1946 and again in 1948, the bureau sent him to Japan to help the Japanese improve their census capability so that they could subsequently improve their ability to feed and house their population. But his real interest was not census-taking but quality control. While in Tokyo he met some Japanese engineers who knew of Shewhart’s work and that Deming was a Shewhart man. He was impressed to find that these Japanese engineers had actually translated Shewhart’s book themselves and copied it by hand. They were very unsure of themselves, he knew, but they had a surprisingly good grasp of what Shewhart was trying to say, and they sensed that it might be applicable to Japan. They were the early founders of the Japanese Union of Engineers. (They were technically not a union, but since MacArthur had said that the country could have unions, they had decided that calling themselves one was the easiest way to gain official recognition.) They would eat and drink together, which was very hard in those days, since there was so little food, but one of them worked for a company producing electric light bulbs, which were even scarcer than food, and so they traded light bulbs for their meals.

  In 1950 Deming was asked by his new Japanese friends to give some lectures on quality control in Japan. He agreed to, though with some misgivings; once again, he suspected, he was going to be wasting his time. He had a terrible vision of the same cycle repeating itself in Japan. So he told one of his sponsors, Ichiro Ichikawa, that it would be worthless if he talked only to working engineers and that there was no sense in lecturing unless the highest executives of the industrial complex attended as well. Deming had no idea how Japan worked at that time, or how important Ichikawa was (he turned out to have been a former professor of most of the foremost industrialists and was exceptionally influential, being among other things the head of the Keidanren, the most prestigious of Japan’s business organizations). There was no signal from Ichikawa, and Deming, who was already worn out by the language problem, believed that the lectures would be pointless. But Ichikawa had understood, and he cabled the top forty-five Japanese industrialists telling them to come to a meeting to hear a lecture on quality control by a famous American. Given his standing as a beloved teacher, his cable was close to an order. All forty-five came, and Deming knew that he was in business.

  These people had their backs to the wall, and they had no place to turn except to him. To keep their hopes up he told them that if they listened to him they would be competitive with the West in five years. That would be 1955 and seemed an impossible goal. One Japanese executive wrote in his diary: “Here was this tall, strange American telling us that we would be an important force in five years if we did what he said. We really didn’t believe him, but in order not to lose face, we did what we were told and it worked.” A few months after Deming’s first lecture, a wire company whose president had attended it reported a 30 percent increase in productivity, and within months other companies were reporting comparable improvements. Deming’s reputation as an oracle was secured. From then on the quality-control movement had its own dynamic. The top people came to Deming with a desire to learn that bordered on obsession. Watching them, listening to their intense, often awkward questions, Deming knew that he was taking on an odd kind of permanence, that every single thing he said was being not so much memorized as codified.

  Deming, who was accustomed to being ignored, realized he had touched something formidable. It was like watching some raw, powerful human force trying to assert itself. They were going to succeed, he realized. He could tell that. No one was going to stop these people, because they so earnestly wanted to succeed. They had no other priority. They would make any sacrifice. They might make a great many errors in the beginning, but they would learn to do it right, and then there would be no stopping them. Their unity of purpose—the fact that everyone in the country, from top to bottom, had the same goal—was staggering to him. The Japanese workers were clearly a manager’s dream—worthy, durable, industrious, unspoiled—and they were perfect for a system like Deming’s, which required mathematical skill. Even ordinary workers were amazingly adept at basic mathematics. (Indeed, the Japanese, Deming believed, possibly because of the rigors involved in mastering their own language, had what he later called the best natural statistical ability in the world.) Their managers were almost pathetically eager to do the right thing. When he told them that if they were careful and operated correctly, they could have the Americans demanding protection within five years, the Japanese
could not believe him. But Deming was in fact very serious. So far as he was concerned, all the requisite elements were there. Most particularly, the Japanese were willing to work at basics while his own countrymen were moving away from them.

  Edwards Deming became not just a consultant but a guru for the Japanese. It was as if this one rather professorial man could explain the inner mystery of how America had won the war. In Deming’s view he was merely describing industrial systems and techniques; in their view he was giving out precious secrets. He returned almost every year to give seminars, and admittance to those seminars took on incredible status. To the Japanese privileged to hear him, he was the best kind of teacher, low-key, comfortable with himself. His lessons were simple: The company’s engineers should not be separated from the manufacturing line in some nice sanitary office but should be out on the factory floor as much as possible, as much a part of the line as the workers themselves. Arriving at a difficult time for the Japanese, Deming never condescended to them. He looked at them, and, unlike so many of his fellow citizens, he saw not their poverty but their purpose. At a moment when Americans were powerful and rich and the Japanese weak and vulnerable, he, unlike many Americans, never made them feel inferior. On the contrary, he genuinely reassured them. If this brilliant American expert believed in them, they could begin to believe in themselves.

  Soon they came to realize that he preferred dealing with them to dealing with his own countrymen. It was puzzling. Here was this genius who was becoming so famous in Japan, whose every word was so important, and whose words actually turned into deeds—there was tangible evidence that what he said was true, that statistical controls could bring higher quality. Yet he was not famous at all in his own country and seemed excluded from the main business circles. They did not bring this up with him for fear it might embarrass him. Occasionally he made reference to it himself. It was not that it seemed to bother him. It was as if he was apologizing for his fellow countrymen—he was sorry they did not pay very much attention to quality control. On occasion he would scoff at American companies that thought that managers were interchangeable. On that subject he was an angry man. He acknowledged that many important American business educators thought men like him were old-fashioned, but he was sure he was right and equally sure there would eventually be a severe punishment for companies that failed to stress quality.

  Even as he was spurned by American manufacturers, his standards and teachings were being picked up by Japanese companies, including Nissan. The process reflected the old-boy network still operative in Japan. Deming’s first sponsor had been Ichiro Ichikawa, then the head of the Keidanren business group. As quality control became a subject of compelling importance in Japan, Ichikawa’s son Kaoru became one of the top authorities on it. Kaoru Ichikawa was a professor of engineering at Todai, and he was wired into Nissan. Soon his former students were pushing Nissan to use Deming’s techniques, and in 1953 the first quality-control efforts were organized. In 1960, at a time when American auto companies were paying no attention to quality at all, Nissan won the Deming prize.

  PART SIX

  18. HENRY KAISER TRIES DETROIT

  IT WAS AN AGE of excess. The country was richer than ever before, and its wealth was spread more widely. Instead of a small market of the rich and a large but impotent market of the poor, there was now a huge new middle class, for there had been a quantum leap in the disposable income of ordinary citizens. In a perceptive series in Fortune in 1953, Gilbert Burck and Sanford Parker described the explosion of the middle class. In 1929, they pointed out, there had been one million family units that were truly rich; this 3 percent of the population received 22 percent of the total income. The lower class was huge—twenty-nine million families, or 80 percent of the population—but it received only 46 percent of the nation’s income. By 1953, the percentages had altered dramatically. The great change had been in families with disposable incomes of between $4000 and $7500 (with the 1929 figures adjusted for 1952 dollars). Once negligible as a potential market—it had been a mere 15 percent of the 1929 population—this group, the very core of the middle class, suddenly represented 35 percent of the national total and had 42 percent of the total consumer cash income. This group had grown 44 percent in just five and a half years.

  These figures both chronicled the past and foretold the future. A decade of almost uninterrupted prosperity was ahead, most of it to be enjoyed by this new middle class and much of it to be manifested in an irresistible urge to buy larger cars. In the decade beginning in 1950, as the gross national product rose 37 percent, the number of registered vehicles jumped from 49.3 million to 73.8 million, and though the rate of inflation was relatively low, the cost of the average car went from $1270 to $1822. The cars were getting bigger every year. In the mid-fifties, Chevrolet, struck by the trend to ever-larger Fords, decided to junk its six-cylinder cars and go to eight cylinders. It was a golden age for auto makers. (Indeed, in a particularly ostentatious celebration of GM’s fifty-millionth car, in 1955, Harlow Curtice, GM’s president, ordered the car sprayed with a special golden glint paint, its parts goldplated, and its seat covers made of gold vinyl.) The auto industry alone represented almost 20 percent of the American GNP in those years. Not only was the industry rich but it was on the threshold of becoming richer, for one of the most powerful lobbies ever assembled, consisting of steel men, auto manufacturers, construction companies, real estate men, and labor unions, among others, had been pushing for a national highway bill, and in the following year, 1956, Congress passed it, committing the nation to $25 billion for a giant highway network, 90 percent funded by the federal government. As dinky little two-lane roads became six-lane superhighways, cars could become even bigger and more powerful.

  The enabler of all this was curiously uncomfortable with what he wrought. Charles Kettering of General Motors, who liked to say, “I am a wrench-and-pliers man,” invented what became known as the high-compression engine—one that generated a great deal more power than its predecessors. With more powerful engines, cars could become vastly bigger and carry more of the weighty and often power-consuming optional equipment Americans had come to crave. That was the result of Kettering’s invention, but it had not been his intention. He prized efficiency above all else. He had seen the high-compression engine as a means of bringing far greater efficiency to fuel consumption, but this, the last of his many great inventions, was co-opted almost from the start. Instead of bringing an era of greater efficiency, the engine opened the door to an era of unparalleled excess. The age of the gas guzzler had arrived.

  Kettering was the exceptional man, a true American genius. He was born on a farm in Ohio in 1876, and his early years were not easy. Getting an education was hard enough because of his family’s scant income—to earn money he had to teach school at the same time he went to it—but it was made much harder by his poor eyesight; it was so bad that he needed someone to read all his textbooks to him, and so it took him six years to graduate from Ohio State. As a brand-new chemical engineer he got a job with the National Cash Register Company in Dayton, where he invented a small motor that allowed cash registers to be operated electrically. The Cadillac people approached him with the suggestion that he adapt the motor to automobiles, to serve as a self-starter, replacing the handcrank. The idea appealed to Kettering; both uses required an engine that could deliver a brief but strong burst of power. Working in the hayloft of a barn with moonlighting fellow engineers from National Cash Register—“the bam gang,” they called themselves—he invented a starter motor that took the need for muscle out of starting cars, enabling women and older people to drive. The innovation, introduced in the 1912 Cadillacs, boosted Cadillac’s sales from ten thousand to fourteen thousand. The name of the company Kettering set up was Dayton Engineering Laboratories Company, which became known as Delco; in 1916 Delco became part of General Motors, and Kettering soon became GM’s head of research.

  “Most people,” he once said, “think of research as either high
brow or impractical.” That was wrong, he insisted. “Research is an organized method of finding out what you are going to do when you can’t keep on doing what you are doing now.” Immensely practical, he was someone the Japanese would have understood, for he was not so much a creator as a man of application. His other inventions included heaters for cars, chrome plating, all-purpose Duco paint (which sped the time required for car paint to dry from seventeen days to three hours), antiknock fuel, freon for refrigerators, and improved diesel engines. His greatest frustration had been his failure to create an efficient air-cooled engine. Angered because GM would no longer support his research, he resigned from the company and had to be cajoled back by Alfred Sloan, the head of GM, himself. (“Accounting always kills research,” Kettering said at the time.) All of those inventions put him, at the height of his career, in fourteenth place on Fortune’s list of America’s one hundred richest men. But none of his inventions was as important as that which led to the high-compression engine.

  The larger engine Kettering was thinking about required a different kind of gasoline, one whose vapor could be more tightly confined in the cylinders before exploding and driving back the pistons. The greater that compression, the greater the power the engine would generate. For years he pushed the oil companies to develop gas of the higher octane levels needed for high compression. “When Mother Nature formed petroleum in the earth,” he said, “she did not have the automobile in mind any more than the hog intended his bristles for toothbrushes, and it is foolish to expect the best molecules in gasoline to be found in crude oil.” But the oil companies resisted. If he raised the compression, they told him, his cars would run poorly and the ignition systems would be damaged. In 1946, three years after retiring from GM, he began his own experiments in his lab in Detroit; he produced a high-octane gasoline and tried it out in a Chevy with a high-compression engine. The performance was far better than that of a normal Chevy, and despite the warnings of people in the petroleum industry, the gas did no damage to the engine. In 1947, at the age of seventy-one, some thirty years after his first important invention, Kettering presented a technical paper explaining his approach. He proposed a V-8 engine with overhead valves and a compression ratio virtually double the existing level of 6.5:1. It would use Kettering’s new gasoline, which was easy to produce. The way was now open for much bigger cars.