Does “Just-in-time” Mean “Right-next- door”? Evidence from the Auto Industry on the Spatial Concentration of Supplier Net- works

Lean manufacturing was pioneered by Toyota Motor Company in Japan during the 1950s. It has since become the standard for many manufacturing companies in Japan and around the world. This production system tries to improve on the type of mass production systems that have been prominent in the post-war period. Instead of organizing production according to a pre-set schedule it operates on the premise of a so-called “pull system”, whereby the flow of materials and products through the various stages of production is triggered by the customer. In addition, the production process itself is subject to continuous improvement efforts. The GM strike during June and July of 1998 showed the extent to which lean manufacturing production methods, such as efforts to keep inventories low and reduce the number of parts suppliers, have taken hold in the U.S. auto sector. This paper addresses the question if the application of this new production system leads to tight geographical linkages between assembler and supplier plants. Proponents of that argument suggest that close linkages across the supply chain, such as frequent interactions and delivery work most effectively when supplying and receiving plants are in reasonably close proximity (Estall 1985, Kenney and Florida 1992; Mair