Nissan: Portrait of a Global Giant

This June, several hundred American workers began producing trucks at Nissan Motor Com pany's newly built facilities in Smyrna, Tennessee. And within the next few months, the Federal Trade Commission is expected to grant permission for General Motors (GM) and Toyota Motor Corporation to form a joint venture in small car production at a former GM plant in Fremont, California.

Both of these ventures carry enormous significance for the U.S. and Japan and for the future of American labor relations.

"We like to consider the trade issue from the broader perspective of the U.S.-Japan relationship, and as key members of the free world," says Eguchi Yukihito, a vice president in Nissan's Tokyo office. Nissan's investment in the U.S. will "solidify our bond," he adds. "We certainly hope for a strong America. That's good for the auto industry and it's good for Japan."

The Smyrna plant is one of many Nissan overseas investments, while the Fremont venture is the centerpiece of GM's "Japan strategy." In addition to the 200,000 cars GM hopes to produce annually with Toyota, GM will be importing up to 300,000 cars a year from Suzuki and Isuzu Moters.

The most significant aspects of the Nissan and Toyota ventures lie in their introduction of Japanesestyle labor management into the U.S. Nissan is determined to keep the UAW out of Smyrna and manage the factory in the "Nissan style."

"We prefer a union-free shop," says Eguchi. "Our basic objective is to achieve the highest quality small trucks, and in order to achieve that objective, we consider it essential to maintain a direct, first hand contact and dialogue with workers. There's no need for a third party."

For Toyota and GM the venture is a chance to try Japanese-style management using union labor. GM executives describe it as an "experiment ... to see if we can do as well as the Japanese with American workers, American holidays, and American benefits."

What can American workers really expect from Toyota and Nissan? Should Japanese-style labor relations be emulated in the U.S?

In this report, we try to answer these questions by presenting a portrait of the Nissan Motor Company (based on interviews with management, rank and file workers, and a sociologist who is an expert on labor relations at Nissan) and through an interview with Kamata Satoshi, the author of a recently published book about life at a Toyota factory.

Thirty-five miles southeast of Tokyo near the huge U.S. Army depot at Sagamihara, sits the Zama automobile plant of the Nissan Motor Company. A favorite spot for visiting heads of state and important guests of the Japanese government, the plant has hosted the likes of Henry Kissinger, England's Prime Minister Margaret Thatcher, Egyptian President Mubarek - and scores of journalists.

A visitor to Zama is greeted warmly by Shiozaki Mitsuru, deputy general manager of the plant. As in most offices in Japan, young, attractive women bow as the visitor enters, then bring tea into the conference room where a briefing is held. At departure time, they are at the door again, bowing, bowing. This atmosphere of tradition contrasts sharply with the modern facilities of the factory, one of the most automated in the world.

The plant churns out 35,000 vehicles a month, more than 60 percent of which are exported. First opened as a truck plant in 1965, the factory is the main producer of the Nissan Sentra, the company's bestselling car, and employs 6,200 people.

For a reporter used to the quiet confines of an office, the frenetic scene inside the body welding shop - where over 90 percent of the labor is performed by robots - is mind boggling. The entire operation seems to run like clockwork. From stacks of parts piled at strategic locations come the doors and the body frame of the cars. Like lemmings marching obediently to the sea, the parts stream continuously along automated tracks into assembly points, where robots made by Kawasaki weld them together. The skeleton cars are then lifted on to another conveyor belt, which whisks them into an adjoining room where more robots apply a thick, smooth coat of paint.

From time to time, a worker checks one of the robots, which starts a raucous buzzing sound when something goes wrong. But for the most part, human labor in this part of the factory is a sideshow. "Some people maintain the robots, and some operate them." explains Shiozaki. "But the robots provide the muscles for this operation."

A visitor notices photographs and names of women taped on some of the robots. "Because there aren't many humans here, the workers get lonely," explains Shiozaki. "These pictures give the robots some human quality."

Next door at the assembly plant, where the engine, transmission, tires, and interior of the cars are put in place, the pace of automation has been much slower, and there are no robots to be seen. The workers - all of them men except for two women who are sorting parts - appear to be completely absorbed by the relentless pace of the assembly line and the constant flow of parts. Few look up to watch visitors, which on this day include one American journalist and a group of thirty Japanese high school students. Here and there signs have been posted, urging workers to "keep order," "maintain discipline," and to "join in the observance of national safety week."

The entire operation, from the color of each car to the specification of engine, is controlled by a central computer. Under this "flexible manufacturing system," the assembly line can be changed within five minutes to accommodate each variation of model. Parts are delivered the day they are needed. To Nissan, this precision is the highest form of industrialization.

Nissan's rise to this point follows a classic pattern in the history of Japanese industrialization since World War II. Nissan's history of labor relations have set the pace for private industry in Japan, and its postwar economic growth parallels Japan's rapid technological advancements.

Nissan: a short history

Nissan Motor Company began as an engineering and chemical company in the 1930s and from the beginning was closely connected to the military. During World War II, Nissan organized vehicle production for the Japanese army. Then in the early 1950s, wartime procurement orders for the U.S. Army in Korea were vital in helping Nissan to recover from the stagnation that set in after 1945, and to become a major business group through mergers and other corporate links.

Today, Nissan is the world's third largest auto company and one of Japan's biggest exporters. In addition to autos, Nissan produces rockets and missiles through its affiliate Fuji Heavy Industries. Besides its investment in the U.S., the company has major overseas projects in Spain and Mexico, a joint venture with Alpha Romeo in Italy, a joint venture in Japan with Volkswagen, and assembly plants in Ireland, Portugal, Greece, Australia, and New Zealand.

But the most important factor in Nissan's rise as an auto company is its unique relationship with the Nissan union.

The Nissan union

Both the company and its critics point to the famous 100-day strike in 1953 as the starting point for today's labor relations at Nissan. During this strike, a powerful, left-wing union was replaced by a conservative company union that immediately began a policy of cooperation with management in raising productivity through wage reductions and other concessions. The company says the second union saved Nissan; critics charge that the defeat of the original union was orchestrated by the company and the U.S. occupation authorities and was a major turning point in the postwar history in Japan.

The strike took place shortly after the end of the Korean War, in a political atmosphere of strong anti-communism. At the time, the Nissan union was strong and militant. "From the point of view of labor, Nissan was the most influential union in Japan, at the top of the movement," says Tokyo University sociologist Saga Ichiro, author of a recently published book on the strike and an expert on labor relations at Nissan. "They were big and active, and could mobilize 20,000 workers for demonstrations." Its power extended to the shop floor, where the union controlled the line speed, overtime hours, and all working conditions. To Nissan management, however, this was a union "bent on class struggle," recalls Eguchi. Breaking its power became the goal of the company.

The chance came during wage negotiations, when the company took an extremely hard line, rejected all negotiations, and closed the factory. All workers were locked out, and several hundred were fired. With the help of the Japanese government and the U.S. occupation forces, a number of leaders were arrested. Finally, insolvent and demoralized, the union was defeated. A second union was formed by the company, and a contract signed.

One of the members of this second union was one Shioji Ichiro, now president of the Confederation of Japan Automobile Workers Unions and the most influential figure in the right wing of the Japanese labor movement. Educated for a year at Harvard Business School, Shioji distinguished himself early in 1954 by calling for his fellow workers to take deep cuts in pay to help the company out. Under his leadership, the Nissan union became almost a business partner with Nissan. "Shioji's idea is the same as top management," say Saga. "The main slogan of the union is `raise productivity as high as possible.' So after the dispute, the union did not intervene in the line speed or working conditions." Says Eguchi of Nissan: "The union and the company now have the same goal."

In fact, personnel in the two institutions are often one and the same. It is a common practice at Nissan (and other private industries in Japan) for company executives to spend some years as union officers. "The true wage negotiations," says Saga, "are made at a high-priced restaurant, not at the official bargaining talks."

Thus the relationship between top management and the union leadership can be termed "smooth" and "harmonious." For rank and file workers, this has meant high wages compared to other Japanese workers - but at the price of union democracy and job quality.

Between 1955 and 1973, Nissan expanded rapidly on the basis of technical advances supported - and often suggested - by the union. Nissan was a leader in the introduction of new machines and robots, and productivity gains helped to keep the company in the number one position among Japanese automakers through the early 1960s. In 1960, according to Saga, the average worker produced $36,700 in receipts for Nissan. By 1971, the figure had doubled, and by 1980 each worker earned the company $220,400, a dramatic sixfold increase in 20 years.

In this process which Nissan calls "rationalization," many jobs - welding jobs in particular - have been eliminated. Large numbers of skilled and elderly workers have been transferred to other factories, or to less skilled positions within their own workplaces. A few have been laid off. According to Saga, these changes led to a "crisis in human relations on the shop floor" - out of which emerged the famous quality circles, the small group discussions in which workers are encouraged to express their grievances or make suggestions about work.

But Saga emphasizes that the changes in the workplace precede these discussions. "Rationalization comes first, then quality circles - that's a most important point," he says. The Nissan management describes these groups as "purely voluntary on the part of the workers." But according to Saga and several rank and file workers interviewed by Multinational Monitor, workers participation in the group discussions have a direct relation to wages, and serve as a form of coercion and obedience to the union.

Since 1953 Nissan wages have been largely determined by one's attitude towards work and the union. The basic wage is quite low - usually less than 11 percent of a worker's gross pay. The "special allowance," determined by the evaluation of the supervisors and union stewards, and based on "job, ability, and age," is more than 65 percent of the total. Thus lack of loyalty or signs of nonparticipation can mean arbitrary cuts in pay. Union leaders can also control promotion. (Similar systems exist in other Japanese industries, steel in particular.)

In line with its policy of absolute loyalty to the company, the union demands absolute obedience to its own policies. In addition to threatening to withhold wages, the Nissan union is notorious for using intimidation and even violence to prevent rank and file groups from forming. "It's a totalitarian union," says Saga, pointing to the "special action squads that keep an eye on dissident elements" and the elaborate network of spies that try to control every aspect of the workers' lives. "Almost all the workers I have interviewed say they are afraid of the union."

In the union elections, for example, candidates - carefully chosen by the union leaders for their loyalty - almost always receive 100 percent of the votes. Voting is conducted under the watchful eyes of the supervisors, who know when candidates receive negative votes. Speaking up at shop floor meetings against union or company policy usually results in verbal abuse from union officers; a pattern of criticism can lead to demotion, job transfer, or even firing. In one instance, a small group of workers at a parts plant were expelled from the union for advocating higher wages for women workers, and were then immediately fired from the company. When they took their grievances to a court and proved that women were making far less than the men, the union pressured the women workers to recant. As a result, the court case was dropped, and the firings were upheld. "There's not a bit of freedom in the union," says Watanabe Okada (not his real name), one of the fired workers.

For the company, the union control of the shop floor has paid off handsomely. Much of the increase in production has come about through a decrease in the absentee rate, which is less than 5 percent; the union also discourages workers from taking the vacations allowed by law. To Shiozaki, manager of the Zama plant, this "shows the high motivation of the Nissan workers." To fired Nissan worker Watanabe, it means that "at Nissan, we cannot even take a rest."

Falling profits, shaky harmony

In the last several years, falling profit margins and a drop to second place behind Toyota have led to a falling out between Shioji and the top management of Nissan.

Domestic sales, especially trucks and small vans, are down. This year, Nissan hired less than half the usual number of high school and college students, partially because of reduced employee turnover. "People don't quit easily because the general picture of the Japanese economy is not good," says Shiozaki of the Zama plant.

Arch rival Toyota company President Ishihara has taken a much harder line against the union than his predecessors. Essentially blaming Shioji for the company's lackluster performance, Ishihara has, in the last several years, taken measures to minimize the union's power. Many of Shioji's people have been transferred while the company has placed its own supervisors directly on the shop floor.

But the biggest threat to Shioji's power has come from the introduction of robots into the assembly lines and the increasing use of automation in offices. According to Saga, the core of Shioji's strength "consists of older unionists, known as ,non-career' workers, who are assigned low-level administrative tasks and other duties indirectly related to production. Should office automation or robotization eliminate their jobs, Shioji might very well find his leadership in jeopardy." It was this threat, he says, that led the union to sign a precedent-setting agreement with the company guaranteeing that the introduction of robots will not come at the expense of jobs. In this agreement, says Shiozaki, "the union admitted the possibility of changing jobs. This they accepted reasonably. But they will be paid the same salary."

To pressure the company to sign the agreement - and to show that he still maintained his power on the shop floor - Shioji ordered assembly lines shut down on several occasions last year (rank and file workers were not informed of the reasons for the shutdown, however).

As Nissan continues its drive toward automation, the historically close relations between the company and the union leadership are likely to break down even further. But despite these differences, Shioji continues to advertise his procompany, pro-military, right wing views. He is a prime mover behind the formation of zenmin rokyo, a new labor federation of unions in private industry. Inaugurated last December, zenmin rokyo advocates increasing military spending (which will help Nissan's move into defense production), more nuclear power plants, and a stronger relationship with the U.S. Saga and other auto analysts speculate that Shioji's desire for a stronger U.S.-Japan alliance is a major reason for his strong backing of Nissan's plant in Tennessee. "He is an ambitious man," says Saga. "Perhaps he wants to win the approval of the UAW."

At the UAW national convention this summer, Shioji promised to help the union organize Nissan and the other nonunion Japanese auto plants in the U.S. But sources in the UAW say that, though they may accept some of his advice, they are not sure if they want to adopt the "Shioji style" of trade unionism.

This may be a moot point, however; Nissan's Smyrna plant is the most automated plant in the U.S. and represents the final stage of rationalization in Nissan's global production plans. The company has taken great pains to hire only workers without much industrial or union experience. As in Japan, they will be human guides to a giant machine that spits out trucks and cars.

For those who have worked at Nissan plants in Japan getting to this point has been painful. At the Murayama plant, for example, "as many as 70 percent of all, workers have been temporarily reassigned at least once, either to another factory or to a different shop inside the same factory," according to Saga. The introduction of robots has changed the definition of skilled labor: many of the new employees have a technical education, with basic knowledge of computers and robot technology. "Like operators in the oil industry," says Saga, "the new skilled' workers are emerging as the shop-floor elite of the auto industry."

But for older and skilled workers whose lives are being disrupted by job transfers and demotions, the result is often depression and withdrawal.

"Recently, many workers have not been willing to participate in any union activities," notes Saga. "They are very sad, in solitude, without much prospects for the future. The labor movement is dead in private industry. Is this what you want in the United States?"