As Japanese conglomerates swallow up Manhattan skyscrapers and Hollywood film studios, and as Japanese factories spread across the industrial landscape, from Peterborough, New Hampshire to San Diego, California, many Americans have become fearful that their economic sovereignty is at stake. Will the basic decisions about whether a midwestern town thrives or withers now be made in Osaka and Tokyo? Will decades-old patterns of work and life be disrupted to fit the needs of foreign owners?
No doubt these fears are exaggerated. Foreign investment has bolstered our economy; more than a century ago, it helped lay the groundwork for America's Industrial Revolution. But some policy experts, in dismissing public fears about Japanese direct investment, go farther than merely saying that it is benign. They contend that Japanese firms set a positive example, for which we ought to feel thankful.
The Japanese, these experts say, are bringing superior methods of industrial organization to the United States. In The Sun Also Sets, Bill Emmott, the business editor of The Economist, writes that "getting Japanese management, organization and technology is the fastest route to raising productivity to Japanese levels. What seems like an enormous 'rummage sale' of American industry to the Japanese could, paradoxically, lead to America's salvation."
According to these experts, the Japanese companies are a boon to the towns in which they locate. "Most regions have found Japanese companies to be constructive corporate citizens and a welcome addition to their communities," according to The United States and Japan, a report published by Johns Hopkins University's Reischauer Center. Emmott suggests that if a town had to choose between a U.S. and Japanese firm, the town fathers would be wise to choose the foreign firm. "Newcomers are even more concerned about establishing themselves in local communities than old hands. They have something to prove." Brookings Institution fellow Philip H. Trezise reminds critics of Japanese firms that it is "in their interest to be seen as good corporate citizens here."
In addition, the policy experts argue, the Japanese are introducing a model of labor relations that the U.S. would do well to emulate. Two researchers from the Columbia University School of Business, Martin Starr and Nancy Bloom, praise the Japanese for inculcating a sense of "family" among their workers. "By stressing communication and openness, they have given employees a sense of importance and the knowledge of having a meaningful place in the organization," Starr and Bloom write.
These authorities invariably cite the same examples: the Japanese tire company, Bridgestone, which took over a failing Firestone plant in Lavergne, Tennessee and expanded employment four-fold; the Toyota plant at Fremont, California, which has introduced American managers and the United Auto Workers to the advantages of team production; Honda, which now does the design and engineering for the Accord entirely in the U.S., even exporting the car from Marysville, Ohio to Japan.
Indeed, if every firm followed the example of these firms, Emmott, Trezise, Starr, and Bloom would be right: public fears would be entirely groundless. Yet, with the exception of Honda, none of these firms has been in the United States more than a decade or has even had to endure a recession. Evaluating these firms now is like evaluating a marriage after the first six months -- before a couple have had to raise children and to weather job loss and illness.
What will happen to these Japanese firms after the first blush of local enthusiasm wears off? Will they still be good corporate citizens? Will their workers still feel part of a family? These questions are worth pondering as one examines the record of Kawasaki, a Japanese company that has been here for over fifteen years. It is a company that, like Toyota and Bridgestone, was widely acclaimed when it first invested in the U.S. But unlike them it has successively betrayed every aspect of its early promise.
Kawasaki is one of Japan's oldest companies. In 1878 Shozo Kawasaki, the son of a minor Samurai, got government help to establish a shipyard in Tsukiji, Japan. A year later, as 1,000 people looked on, Kawasaki launched its first ship and laid the foundation for what would later become Kawasaki Heavy Industries (KHI), one of Japan's leading conglomerates. Known in Japan for its ships and for the cars in the "bullet train," Kawasaki also builds subways, aircraft, machine tools, motorcycles, lawn mowers, and jet skis.
As befits a company whose prosperity was always rooted in international trade, Kawasaki was one of the first Japanese companies to set up shop in America. In 1974, four years before Honda opened its first factory in Ohio and a decade before the wave of Japanese investment hit, Kawasaki began building its "let the good times roll" motorcycles in Lincoln, Nebraska. In 1986 it began building subway cars in Yonkers, New York -- the first Japanese transit car builder to set up an American plant.
In the U.S., each of these ventures was greeted with applause. Kawasaki's Lincoln factory was seen as a model of Japanese productivity and worker-management relations. Kawasaki Motors even made nationwide television news in October 1981 when it lent eleven of its employees to Lincoln's city government so that it would not have to lay them off. Kawasaki symbolized the Japanese manufacturer's commitment to lifetime employment.
Kawasaki's just-in-time production facility in Lincoln even became the centerpiece of management consultant Richard J. Schonberger's highly influential 1982 book, ]apanese Manufacturing Techniques. According to Schonberger, Kawasaki showed that the best of Japan could be successfully brought to America: "The Kawasaki, Nebraska experience is that Western managers and workers behave more like their Japanese counterparts as just-in-time techniques are adopted."
In New York, public officials and the local media were no less enthusiastic about Kawasaki's decision to build subway cars in Yonkers. Kawasaki's move was heralded as a sign of Japanese willingness to invest in an old industrial city with a large minority population -- one that had suffered high unemployment even during the boom of the 1980s. Kawasaki rented a plant that Otis Elevator had vacated two years before, leaving 2,000 skilled workers idle. A grateful Mayor Angelo Martinelli declared in 1987, "The revitalization of that plant is the best thing that ever happened to this city."
But as the applause has died down, and as Kawasaki has settled into doing business in the United States, it has become increasingly evident that the company has not lived up to its early promise as an employer and corporate citizen. Kawasaki's health and safety record at Lincoln would make a nineteenth-century coal mine operator wince. In Yonkers, the firm's dismissal of local black workers and its recruitment of Korean-born workers from New York City has infuriated black community leaders and led to demonstrations in front of the plant and a national boycott of its products by the AFL-CIO. And, most recently, Kawasaki has even run afoul of congressional investigators, who claim that the company perpetrated a fraud in using its Yonkers address to win a Taiwan subway contract that was supposed to go to a company committed to building subway cars with American-made parts.
As criticisms of the company have mounted, Kawasaki officials claim that they are being victimized because they are Japanese. Trying to explain congressional hostility toward its Taiwan deal, Kawasaki Rail Car's president, Masakazu Fudo, interviewed in the company's new Yonkers office, insinuates that differences in "culture may be a part of such judgment."
But when Kawasaki's conduct is closely examined, its complaints of mistreatment ring hollow. Whatever hostility it has incurred, it has brought on itself. Once held up as a model foreign investor, Kawasaki now offers a case study in how a company should not conduct itself in America.