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I think you'll find one person behind the Japanese focus on quality--and thus their expertise in "high precision engineering". That person was W Edwards Deming.

Deming was involved in the US Army's post-WWII rebuilding of Japan. Specifically, he was a statistician hired to help with Japan's census. His focus on quality control was revolutionary at the time, and his work became adopted throughout corporate Japan. He is seen as the father of Total Quality Management. He laid the foundations for decades of Japanese excellence in quality control in manufacturing and industry.

The problem, of course, is that the rest of the world is now well versed on TQM, and has adopted TQM principles. This is why the average car lasts 100s of thousands of miles today, when such quality was unheard of in the 1960s.

Of course, all of the other aspects mentioned have contributed--rising wages, managers replacing engineers, etc etc. But the root cause of all of this is that their competitive advantage that results from a focus on quality is gone now.

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