Tesla v NUMMI

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Being in production, I decided to get better aquatinted with heuristically derived manufacturing principles. Naturally, I ended up with The Toyota Way as the first book on my list - coincidentally, my fiancé recommended it to me and has two copies of it on her shelf. Reading it, you start to get the idea that Toyota has it all figured out. 

Like every other book though, it is written mostly from a single perspective; and from that perspective everything logically follows and makes complete sense. It’s nearly irrational that any competitive method would function at all. 

Recognizing this, I wanted to look into the legitimacy of the Toyota Way by evaluating where it really counts; in practice. The real world, where perspectives are numerous and the variables are endless, theory only gets so far - the rest needs to be filled in by human ingenuity. Fortunately, I have a unique opportunity to compare the idealized methodology, and its real world implementation, to another world class sensation; Tesla, Inc.

Since Toyota and Tesla have both produced cars in the 5,500,000 sq-ft NUMMI-turned-Tesla Factory, we are  provided a unique opportunity to  compare apples to apples to see who’s done it better. 

I’ve done my best to fairly compare Tesla and Toyota based on production output, employee experience, and product quality; metrics they claim are maximized by The Toyota Way.

Metric 1: Production Numbers & Workforce

In the spirit of fair comparisons, I picked Toyota's NUMMI factory in 1997 where 357,809 cars were produced, which is the same site as Tesla's Fremont facory in 2019, when they produced 367,500 cars. Their production numbers are comprable - Tesla being in the lead by about 10,000 cars.

Digging into some of the other easily searchable stats, the match up between Toyota in 1997 and Tesla in 2019 becomes a little more interesting.

Comparison Through Data

In 1997, Toyota NUMMI employed 4,844 people and produced 357,809 cars.

In 2019, Tesla employed 10,000 employees and produced 367,500 cars.

The numbers quickly reveal an imbalance in the companies cars to person ratio, but the story isn't as simple as that. There are several details about both companies that need to be considered in order to arrive at a more conclusive answer of who does manufacturing better.

Toyota's Story

Back in 1997, there were 4,844 employees working at NUMMI. They were building cars that were a joint design between Toyota's design engineers in Japan and GM's design engineers in the US. NUMMI was almost strictly manufacturing, which makes it easier to determine their cars/person ratio. Majority of their designing was done for them - it was a production experiment.

Tesla's Story

In 2019, Tesla had 10,000 employees working at the Fremont factory - double what Toyota had. Though, Tesla also has design-supporting employees working at the factory; meaning, not all 10,000 employees are focused on production. However, to match Toyota's cars/person ratio, 50% of Tesla's 10,000 employee workforce would have to be design supporting employees. 5,000 design-supporting employees seems a tad high; especially for a flagship Silicon Valley company that practices using a small team of overworked employees to do a large team's job.

A more realistic guestament of the number of design employees is 20 (conservative) to 30 (optomistic) percent, leaving 70 to 80 perecent of their workforce for manufacturing. This makes their ratio between 46 and 53 cars/person - more than 28% less efficient than Toyota.

Qualifying Statements

Granted, NUMMI, in 1997, has nearly a century's worth of supplier relations to leverage which might result in their supply-chain workforce being smaller. On the flip side, Tesla has more than 20 years of ERP tool development and data technology to leverage which should somewhat level the playing field.

In conclusion, Toyota produced 40% more cars/person in 1997 than Tesla did in 2019.

Metric 2: Employee Experience

Comparison Through Data

One by one, I sampled, and catalogued, the top 11 reviews on Indeed.com from Mechanical Engineers at both companies; I would have picked Manufacturing Engineer considering that is the discipline of this article, but Toyota had only two entries and Tesla had 0.

Each review is submitted by a current or past employee who writes a bit about their experience, titles it, and submits with a star rating. I distilled the 11 reviews into one good comment, one bad comment, and a star rating. I paraphrased as fairly as I could and standardized a few of the phrases to make it easier to read.

Qualifying Statements

Solely based on star rating, people seem to like Toyota better though they seem to work just as long as Tesla employees in a less exciting environment.

Metric 3: Product Quality

Being that Tesla is a young company compared to Toyota, I chose 2021 as the year to compare recalls of both companies.

For one, this allows Tesla two additional years of quality development to improve their position in this comparison.

Secondly, it is difficult to find tabulated data on Tesla's recalls from 2019 even though it is the recent past. This problem is even more pronounced when searching for Toyota's NUMMI recalls from 1997. 

Thirdly, it is best to compare quality from the same year as the cars have the option to be produced with, or in the presence of, similar levels of technological development which will further level the playing field.

Initially, I wondered if selecting 2021 as the comparison year will give Toyota more weight because of the age advantage, but their attitude toward quality hasn't become any more or less serious over the decades. So I believe this can be considered as fair a comparison as is possible with these two different companies, all things considered.

Comparison Through Data

Tesla has outstanding recalls for 476,000 US cars in 2021. It produced 530,422 US cars in 2021. It's recalling equivalent to 89.7% of the cars it produced in the US in 2021.

Toyota's has outstanding recalls for 697,600 US cars and produced 1.6M US cars in 2021. That is equivilant to 43.6% of the cars it produced in the US in 2021.

Toyota Recalls

Tesla Recalls

Data Details

• Information could not be found on Tesla website
• Outside source estimates 400k vehicles were produced in China
  • 930,422-400,000 = 530,422 

Qualifying Statements

The bulk of Tesla's quality concerns are relatively benign - a defect in the backup camera wire harness that has a negligible safety impact on the driver. However, the possibility of the frunk opening while driving is an aggressive contender for the most catastrophic failure listed in either table above.

Toyota had a wider range of quality concerns, though they also make many more models that Tesla does. However, Toyota's top three biggest recalls are relatively high priority safety concerns - you know, just the regular stuff; fire and the elimination of critical safety functions like braking and airbags.

It is unknown how each company arrived at the numbers they posted for their quality concerns and how their decision philosophy affected the size of their outstanding recalls. 

• Were cars recalled based on the parts installed or were they based on the manufactuing process/method used for installation? 
• Are the companies conservative in their recall of cars to make a problem seem small or are they optomistic in thier recall of cars to minimize the probability of quality conerns cropping up in customer vehicles? 
• What percentage of the population showed signs of failure and how does that compare to the percentage of the population that was recalled for rework? 

Answers to these questions are known only to the manufacturer which is why this data is semi-unreliable in coming to conclusions on who does quality better.

With that being said, and taking into consideration the numbers shown in the tables above, Tesla and Toyota are relatively equal in their pursuit of high quality off-the-line vehicles.

Conclusion

Production

I did the best analysis I could with information found on the internet. The numbers lead me to believe that Toyota produces more cars per person than Tesla given operation in the same plant. However, it is hard to know each company's employee allocation; whether they are directly supporting production or design. Because of that, I'm hesitant to fully trust that Toyota can produce 40% more cars per person than Tesla in the same plant.

We do see that Toyota in 1997 is at least as good at Tesla is in 2019 if not marginally better. For that reason, The Toyota Way is due some respect.

Employee Experience

Star rating crowns Toyota as the winner but that system is very generic and is inherently unreliable. Both companies seem to have their own perks and issues - either can be good or bad to work for depending on personal preferences.

Product Quality

Toyota has been doing production for a long time, and given their established feedback loop from production to design, they have the upper hand. That being said, Tesla has done a good job keeping quality up to a relatively satisfactory level considering the speed they are growing and the technology they are pioneering.

The Toyota Way

What I really got from doing this analysis is that The Toyota Way is up there with the best of them. The production and quality numbers don't lie. It may not be leagues above other manufacturing methodologies but it is all written down and freely shared with the world, ready to be used in any application; in contrast, no one knows how Tesla does manufacturing. Even Tesla employees tell me "We do what works". Being that they are all mostly brilliant engineers, I believe them, but sadly, I can't learn from them unless I worked there too.

The Toyota Way stands as an excellent resource to learn proven manufacturing methodologies and can be trusted as a high-performing method.