CIAO DATE: 07/2010
March 2010
Berkeley Roundtable on the International Economy
Despite receiving a strikingly pessimistic evaluation in the acclaimed volume The Machine that Changed the World (Womack et al., 1990), the Hyundai-Kia group has overcome numerous crises to become the fourth largest auto producer in the world. Hyundai’s rise is especially striking because the company has repeatedly failed to implement Toyota’s famed “lean production” system. Hyundai’s labor unions, though well paid by Korean standards, have opposed management’s attempts at rationalization, and gone on strike almost every year. Aside from a few key component companies firmly controlled by the Hyundai group, relations with suppliers remain distant and overwhelmingly focused on price. Hyundai’s impressive achievements in improving quality have stemmed from relentless attention by top management and extensive use of quality inspectors rather than from intensive cooperation with workers and suppliers. Corporate governance remains closed and murky. Even after democratization, Korea’s political system has not provided an environment conducive to cooperation and coordination among assemblers, suppliers and labor. Recent studies of manufacturing have focused on the success of “Toyotism” and “coordinated capitalism,” but the rise of Hyundai suggests that firms in upper-tier developing countries with rapidly growing demand and reasonably high-quality human capital can use a modified version of Fordism—mass production of standardized commodities by vertically-integrated firms employing a reasonably paid but not highly incorporated labor force—to achieve great success in international competition even with complex and highly integrated products such as automobiles. Hyundai has blazed a path on which firms from China, India and other developing countries may follow.
Resource link: Fordism Light: Hyundai's Challenge to Coordinated Capitalism [PDF] - 441K