Japan Inc.'s safety failures point to deeper malaise

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As manufacturers struggle with increased pressure on costs, stricter enforcement of standards and growing competition, a series of safety scandals at Japanese companies have put the country’s lionized factory floor under scrutiny.

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 Subaru Corp. on Friday joining Nissan Motor Co. Ltd. in admitting it failed to follow proper vehicle inspection procedures.

Japan’s third-largest steelmaker, Kobe Steel Ltd, 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. /Reuters Photo

Earlier this month, Japan’s third-largest steelmaker, Kobe Steel Ltd., 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 that formed the heart of Japan’s post-war workforce, 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.

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.

VCG Photo

“There is a real human resource problem,” she said, with the traditional model of hiring workers straight out of school or university, teaching them on the job and rotating them between departments no longer functioning well.

Japanese companies are not alone in being caught up in scandals, with European and US companies caught cutting corners and manipulating results in areas ranging from vehicle emissions tests to the sale of meat. But the Japanese firms face questions over whether they can adapt quickly enough.

Improving transparency at companies has been a key plank of 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 occurring in the first place.

“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.

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. “They are missing the hands-on approach.”

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Source(s): AP ,Reuters