The Reckoning

Halberstam wrote a comparative history of Ford and Nissan, using the two companies to explain why American automobile manufacturing lost its position to Japanese competitors.

The American side traces Ford from Henry Ford's manufacturing achievements through the postwar period, and locates the decline in the ascendancy of financial management. The Whiz Kids, brought in to install control systems a company without accounts desperately needed, became the company's leadership, and Halberstam argues that their successors managed by numbers without product knowledge. Decisions were made on cost reduction and on short-term return, product engineering lost authority to finance, and the company built cars designed to hit price points rather than to be good. He also covers the adversarial relationship with the United Auto Workers, which produced work rules and job classifications that prevented flexibility, and the shared assumption among American producers that consumers would not buy small cars.

The Japanese side traces Nissan from the postwar reconstruction, the labour conflict of the 1950s and the emergence of enterprise unions, the role of the Ministry of International Trade and Industry, the quality improvement programmes that drew on Deming's statistical methods, and the export push into the American market during the oil shocks.

Halberstam's argument is cultural as much as economic: American managers optimised for the quarterly result and lost the ability to make things, while Japanese managers retained engineering authority and long horizons.

The book is very long and Halberstam's method is extended narrative rather than analysis. His treatment of Japanese management was written at the peak of Japanese success and reads as more admiring than the subsequent decades justify, since Nissan itself required a rescue by Renault in 1999. The account of how financial management displaced product knowledge at Ford has held up well.