Japan safety failures signal deeper malaise
Shift from lifetime employment undermines much-lauded quality
Aseries of safety scandals at Japanese companies have put the country’s factory floor under scrutiny as manufacturers struggle with increased pressure on costs, stricter enforcement of standards and growing competition.
With margins squeezed by a stagnant domestic market and rivalry from China and South Korea, many factories have cut costs, reducing their reliance on workers in lifetime employment in favor of laborers on temporary contracts.
As they have done so, safety scandals have erupted across the country’s much-vaunted manufacturing sector, with Japanese automaker Subaru Corp recently joining Nissan Motor Co in admitting it failed to follow proper vehicle inspection procedures.
Nissan found in September that uncertified technicians had been carrying out final inspections of vehicles for decades. That prompted it to recall 1.2 million vehicles, including all passenger cars it produced for sale in Japan over the past three years.
The plants will resume production once the final inspection procedures have been brought in line with transport ministry requirements and the ministry has approved the measures, a spokesman for the automaker said on Tuesday.
Nissan has completed those measures at one of its assembly plants and it expected to have made similar changes at five other plants by the end of the week, the spokesman said.
Nissan noted that the sales of its new passenger vehicles in Japan probably fell by half in October from a year ago amid the scandal.
In earlier October, Japan’s thirdlargest steel maker, Kobe Steel, said its workers had tampered with product specifications for years, leaving companies around the world scrambling to verify the safety of cars, planes, trains and electrical goods.
Unable to easily lay off “regular” employees – full-time employees with permanent contracts and pay scales based on seniority, companies have increasingly come to rely on “non-regular” workers – temps, part-timers and short-term contract workers.
These non-regular workers allow companies to cut costs and adjust their workforce, said Koji Morioka, emeritus professor at Kansai University and an expert on workplace issues. But it has led to a de-skilling of the factory floor, lowering standards and increasing the likelihood of wrongdoing and accidents, he said.
“The use of these ‘disposable’ workers is greatly increasing,” Morioka said. “The loss of experienced, skilled workers on the factory floor is becoming more and more risky.”
The share of non-regular workers in the labor force has risen from 20 percent in the early 1990s to a record 37.5 percent last year. The pay gap is stark, with regular workers last year on average paid 321,700 yen ($2,825.9) per month compared with 211,800 yen for contract workers.
Companies are failing to produce the skilled workers needed to ensure standards are met in areas like safety at a time when scrutiny is intensifying around the world and lapses are met with greater criticism, said Parissa Haghirian, professor of Japanese management at Sophia University in Tokyo.
“There is a real human resource problem,” Haghirian said, with the traditional model of hiring workers straight out of school or university, teaching them on the job and rotating them among departments no longer functioning well.
With the ratio of companies complaining of labor shortages at a 25-year high and with employers needing specialists but failing to produce them internally, competition for skilled workers is likely to become more fierce, Haghirian said.
“I predict high performers will leave more quickly... leaving companies in trouble because these people traditionally would stay and drag everyone else along,” she said.
Japanese companies are not alone in being caught up in scandals, with European and US companies caught cutting corners and manipulating results in areas like vehicle emissions tests to the sale of meat. But the Japanese companies face questions over whether they can adapt quickly enough.
Some Japanese makers have taken the attitude that “because the factory floor is well run, quality control and inspection can be applied as an afterthought,” said Tadashi Kunihiro, a lawyer who is a director and auditor on company boards. Companies, he said, were not placing their most skilled workers in quality control roles.
While safety lapses have been going on at some companies for years or even decades, the decline of the lifetime employment system has likely sapped the loyalty of workers who are more likely to raise concerns themselves, Kunihiro added.
Improving transparency at companies has been a key plank of Japanese Prime Minister Shinzo Abe’s corporate governance reforms through measures such as boosting the number of outside directors. But experts question whether such reforms can do much to prevent safety scandals.
“Even if there are more outside directors, if there is cheating on the factory floor there is no way they will be able find out,” a senior executive in the aluminum industry said, speaking on the condition of anonymity. “Even executives don’t know what’s happening on the factory floor,” he noted.
Executives are guilty of becoming too detached from the operational side of the business, said Toshiyuki Shimegi, president of Porsche Japan.
“There is a need for more micromanagement,” he said on the sidelines of the Tokyo Motor Show held from October 27 to November 5. “They are missing the hands-on approach.”
Subaru Corp President Yasuyuki Yoshinaga (front) bows in apology at a press conference on the company’s inspection scandal in Tokyo, Japan on October 27, 2017. The Japanese automaker said that unqualified workers engaged in final vehicle inspections at a domestic factory for over 30 years.