Title: The Geography of Lean Manufacturing: Recent Evidence from the U.S. Auto Industry
Abstract: Since lean manufacturing was pioneered by Toyota Motor Company in the 1950s, it has become the standard practice of many Japanese manufacturing companies. During the last decade American manufacturers started to adopt it in order to compete effectively at home and abroad, and it is fast becoming the standard in manufacturing plants across the country. Lean manufacturing is characterized by an emphasis on product quality, an integrated approach to the various aspects of manufacturing, reliance on subcontractors to produce a greater proportion of the value added, and an emphasis on speed in order processing, production, and delivery. One central feature of the system is the tiering of the supplier structure, which greatly reduces the number of companies the assembler deals with directly. Another feature is close relationships and frequent interactions between assemblers and suppliers.(1) It has been argued that efforts to reduce inventory stocks and arrange for just-in-time delivery function most effectively when the supplying and receiving plants are in reasonably close proximity.(2) The concomitant increase in the frequency of interaction and communication between assembler and supplier companies is expected to strengthen that effect further.(3) On the other hand, there is some evidence that spatial clustering is not a necessary condition for the successful operation of lean manufacturing.(4) The question to what extent the arrival of lean manufacturing has altered the geography of supplier networks has not been definitively answered.(5) The answer will have implications for regional development efforts. Proponents of the spatial clustering hypothesis argue for a just-in-time-based local and regional development strategy.(6) Such an approach was apparent during Mercedes' recent search for an assembly plant site in North America. Alabama offered major tax breaks to the company, apparently on the assumption that the assembly plant would attract a fair number of its supplier plants to locate nearby.(7) This article attempts to shed new light on the spatial effects of lean manufacturing by examining the emerging geographical structure of lean manufacturing supplier networks in the auto industry, often highlighted for its bellwether role in the adoption of the new manufacturing system. First, I present an overview of previous studies. This is followed by a detailed analysis of the U.S. supplier networks of eight auto assemblers located in the United States. While some of these networks have been the subject of previous research, this article goes beyond the existing literature by investigating both domestic and transplant suppliers and by identifying both the tier and the age of individual supplier plants.(8) The evidence of emerging supplier location patterns is discussed both at the sample and assembly plant level. Conclusions follow in the final section. Review of previous evidence As one of the most important and most visible manufacturing industries, the automobile industry has been of interest to economic geographers for some time.(9) Since the arrival of lean manufacturing by way of Japanese transplant assembly and parts facilities in North America, questions have been raised about its impact on the existing spatial structure of manufacturing. In Japan, auto assembly and parts production are heavily concentrated in the core industrial regions of Tokyo-Yokohama, the Nagoya region, and to a lesser extent, the Osaka area. Three factors are cited as an explanation for this concentration: urban-industrial agglomeration factors stemming from the dependence of the auto and other assembly-type industries on a wide range of parts, components, engineering processes and labor skills; ready access to the largest domestic markets; and access to port facilities for interregional and export shipment.(10) Evidence from other industries and other countries indicates that the magnitude of the effect of lean manufacturing on location varies by industry and by country. …
Publication Year: 1995
Publication Date: 1995-11-01
Language: en
Type: article
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Cited By Count: 11
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