Facing Uncertainty Head-On: Lessons from the 1985 Plaza Accord

Every time you turn on the news, there’s another ominous headline about potential U.S. tariffs on Canadian goods. With so much uncertainty swirling around, it’s tempting to adopt a “wait and see” approach. But if there’s one thing history has taught us, it’s that waiting and hoping for a better political environment doesn’t guarantee success.

Let me take you on a quick time-travel trip back to 1985. The Plaza Accord caused the Japanese yen to soar in value, instantly making Japanese exports more expensive – particularly Japanese cars. Conventional wisdom suggested that the big Japanese automakers would have to raise prices so high they’d be driven out of the market. But here’s the thing: instead of throwing in the towel, they doubled down on Lean – and not only survived, they thrived.

Lean Principles: Your Best Move in Uncertain Times
Whether it’s 1985 or 2025, the lesson is the same: Lean is the silver bullet that helps you:

1. Reduce Operating Costs
   • Lean isn’t just about “small improvements.” It’s about identifying and eliminating every form of waste – overproduction, waiting, rework, you name it. By trimming the fat in your processes, you’ll free up resources you didn’t even know you had.
   • For the Japanese automakers, Kaizen (continuous improvement) paved the way to streamline operations so effectively that they offset the rising cost of exports. For Canadian manufacturers today, that could mean beating tariff-driven cost hikes – and then some.
2. Empower Your Workforce
   • When you involve your team in continuous improvement, you’re not just cutting costs; you’re tapping into their expertise to solve problems before they escalate. In Lean operations, everyone from the shop floor to the boardroom has a voice.
   • A highly engaged workforce is your secret weapon. They see waste every day and have front-line insight into streamlining processes. When tariffs loom, wouldn’t you rather your people be part of the solution than at the effect of another country’s antics?
3. Stay Flexible and Agile
   • The Japanese automakers rapidly adapted by refining production methods and even localizing some manufacturing to North America. Meanwhile, Lean taught them to pivot quickly without sacrificing quality or driving up costs.
   • You can apply the same strategy here in Canada. If U.S. tariffs do come, you’ll be ready to shift gears, optimize your processes, and protect your bottom line.
4. Improve Quality and Customer Loyalty
   • Lean is as much about quality as it is about cost savings. By building quality into the process – spotting defects at the source rather than the end of the line – you’ll gain an edge that’s tough for competitors to match.
   • During the Plaza Accord era, Japanese cars became synonymous with reliability and innovation. In a market threatened by tariffs, an unwavering commitment to quality can tip the scales back in your favor, even if your goods face higher duties.

Why Lean Now?
Even if tariffs never materialize, the time and money you invest in Lean will pay off in spades. Lower costs. Smoother processes. A tighter supply chain. A more engaged, empowered workforce. And an edge that’ll keep you competitive no matter what the headlines scream tomorrow.

• History Repeats Itself: The 1985 Plaza Accord moment forced Japanese automakers to become even more efficient. Fast-forward to today, and their lean methods remain world-class.
• Your Moment Is Now: Tariffs? Trade tensions? Market fluctuations? Use this “crisis” as your trigger to refine and strengthen your entire operation.
• Stay Ahead: Don’t wait for the ink on a new tariff deal to dry. If you already run a lean operation, you’ll be positioned to absorb sudden market shocks – and maybe even win new business from less-prepared competitors.

Let’s Talk Strategy
Ready to strengthen your Canadian manufacturing operations – and maybe even gain a competitive edge in the face of looming tariffs? Lean is the difference between being blindsided by political and economic shifts, or rising above them.

I’m here to help you navigate this uncertain environment, just like the Japanese did back in 1985. Together, we’ll uncover every improvement opportunity, from the production floor to the corner office, and make sure you’re ready for whatever the future holds – tariffs or no tariffs.

Shoot me a message or book a complimentary Discovery Call, and let’s talk about how Lean can protect your margins and empower your team. Because the best defense against uncertainty is to take control of what you can change not what may or may not happen.