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Toyota's Management Strategy and Its Impact on Workers and People
By Shozo SasakiJapanese Auto Industry in the International Reorganization
In search of a way to "survive" in the 21st century, the international reorganization is accelerating in the auto industry. Last year the announcement of German Auto manufacturer Daimler and U.S. counterpart Chrysler merging to form a new firm shocked the world. In March this year, Japan's second largest auto company Nissan Motor Co., Ltd. determined to have a capital tie-up with a French car company Renault to pursue the "financial reconstruction" under the control of foreign capital. This decision had a greater impact than the Mazda Motor Corporation's placing itself under the control of U.S. Ford, leading Japanese car industry to a critical turning point.
Amid the international reorganization of the Auto industry, Japanese automakers with their "advanced environmental skills" and "lower stock price" seem ideal business partners, so that they cannot stay outside the global industrial reorganization any more.
Due to the sluggish sales at home, Asia's economic crisis, and full-scaled transfer of production abroad, Japan's domestic car production has remained below 10 million (the highest record was 13.5 million in 1990.) Since the total production capacity of Japan's eleven car manufacturers is 13 million cars, more than 3 million are overproduced. Now that Japan and other Asian countries are not profitable markets any more, the sales in the North America have a greater influence on the profit making. Japanese automakers are in the process of bi polarization, namely the well-doings (Honda Motor Co., Ltd., Fuji Heavy Industries Ltd., Toyota Motor Co.) and the badly-doings (Nissan Motor Co., Mitsubishi Motors Corporation.)
Under such circumstances, Japanese car manufactures are pushing ahead with an all-out reorganization and restructuring strategy at home. Their restructuring policies are full-fledged. They include reduction of the domestic production capacity; reorganization and abandonment of the subsidiary parts manufacturers; promotion of tie-ups to reduce costs and reinforce technical skills (capital and technology); review on the globalization and international reorganization; the realignment and reinforcement of the domestic sales system; leveling of the personnel and wage systems, namely to introduce an individualized, ability-based system; reorganization of the employment system (by making better use of women and elderly workers and introducing dispatched or contract workers.) Below I would like to discuss the Toyota strategy and its impact on workers and people in relation to the international reorganization.
Toyota Motor Corp.'s World Strategy
Japan's largest and one of the world's five major car manufactures Toyota Motor Corp. made a pretax profit of 500 billion yens (US$4.5 billions) for the period ended in March, with an enormous internal reserves that reached 4,800 billion yens (US$43.6 billions). Facing the international reorganization, Toyota is determined to "strengthen the unity" of the group companies, so that it can "catch up with GM and Ford and win through as a world's major player in the 21st century." In its "vision for the year 2005," it defines the present time as the "second operation period." And it aims to establish a system that will enable it to increase profits, while the domestic production being reduced to 3 to 3.5 million cars. Toyota's productive capacity is 4 million cars, and if that of Daihatsu Motor Co., Ltd. is added, the figure goes up to 5.5 million. Toyota's domestic car production last year was 3.16 million, and about 40 percent of it was designated for export. In its efforts to achieve an effective management and stronger unity of the Toyota Group, Toyota is forcing parts' manufactures and sales companies under its umbrella to set up a system capable of "making profits with 3 million vehicles." As a part of this strategy, Toyota decided to close Fukaura Factory of Kanto Car Industry Co., one of its subsidiary car body makers.
In the midst of the rough waves of global reorganization, Toyota plans to set up a "holding company" as a "system to win the competition." At present, the Toyota car manufacturing group consists, with Toyota Motor Corp. at the top, of 14 parts and car body manufactures including Denso Corp. and Aishin Seiki Co., Ltd. plus 326 subsidiaries (126 of which operating abroad) that Toyota holds more than 50 percent in its capital contribution. The total number of employees, if added the number of the sales companies, exceeds one million. Emphasizing the necessity of "strengthening the unity of the Group" to "win through the world competition," Toyota sends full-time executives to Denso Corp, has won over Daihatsu Motor Co., Ltd. and Hino Motors, Ltd. as its subsidiaries, increase the percentage of its capital contribution in the related enterprises. In this way, Toyota is tightening its control over the Group members with a view to establish a holding company. The idea is to place "Toyota Holding Company" over Toyota Motor Corp. and parts manufacturers belonging to the Group. The Holding Company governs the Group as the "supreme decision-making body" and "specialized in the Group Management Strategy Council." In this way, Toyota plans to establish a strong line of command that rules over the member companies. It also aims to downsize and bring together the research and development sections of each Group members into one covered by the whole Group to make the work more efficient.
Seated at the center of that governing body will be Toyota's chair emeritus of the board Shoichiro Toyoda (a former board chair of Toyota Motor Corp.and the Federation of Economic Organizations) and its incumbent board chair Hiroshi Okuda (a former president and incumbent board chair of the Japan Federation of Employers' Associations. Toyota's incumbent president is Fujio Cho, who was a leading figure in introducing Toyota's production method known as JIT (Just-in-time) system and in setting up U.S. TMMK (Toyota Motor Manufacturing Kentucky.) They are now to carry forward an all-out cost reduction and efficient management.
Toyota's Management Strategy and its Impact on Workers and People
While saying that it would "defend the job of 70,000 employees," Toyota has been pushing ahead with a massive personnel reduction at the sacrifice of Group members and related enterprises. In these six years it has reduced about 5,500 employees. In 1992 it had 75,266 employees, but in 1998 the number went below 70,000. In Aichi Prefecture, Toyota is ranked at the top for its success in personnel reduction. It would not fill the vacancy of the retired while holding down the number of new recruitments. It will recruit only 800 workers for technical (production) work next year.
For clerical and engineering work, it has cut down the employees by 20 percent according to the organizational realignment and leveling. To those areas where the work needs more personnel, it employs workers on a loan. This has resulted in long, excessive and intense labor for clerical and engineering staff. It plans to cut 2,200 more personnel. Toyota plays a central role in aggravating the employment situation.
In its organizational reform, Toyota has greatly reduced middle-level managers. General managers were cut from 300 to 140; assistant general managers, from 540 to 370; and 1,700 section chiefs and 3,700 subsection chiefs that totaled 5,400 were reduced to 1,550 by the introduction of a staff leader system. Those in administrative posts more than fifty years of age are either sent on a lease or transferred to the related or subcontract companies.
In the technical and line production area, they have cut factories' 2,000 superintendents to 1,400, and 5,900 team-heads to 3,800 along with the change of the name to post heads. Group heads counted to 1,000 were abolished. The company authorities create conditions for those in the middle management and administrative posts to have no choice but to resign. The authorities would either transfer them to the line production that requires hard work or force them to compete with younger workers, so that they would feel it too hard to stay in the workplaces. Such a situation has even increased workers' death from overwork ("karoshi" in Japanese), death in service, ill health and destruction of life.
Those in the middle administrative posts were leaders in the technical and engineering work and union officials in the workplaces. The way Toyota treats them has caused unstableness, unrest, anxiety and discontent among workers, leading them to unite with militant workers. It now also influences the attitude of the trade unions.
Declaring that it would "drastically cut the personnel expenses" to "defend employment," in this year's Spring Struggle Toyota held down the wage raise as low as 700 yens (US$6.36), which represented a thorough wage restraint. Further, it is going to substitute the seniority-based wage system this October with new one that completely based on individual ability and achievement. It introduced an arbitrary work system to clerical and engineering sections, through which the company was able to reduce the overtime allowances. After having worked in fact 30 to 50 hours, workers would only receive the payment for 15 hours in the name of arbitrary work allowance. This provoked discontent among workers to such an extent that the company was forced to increase the payment to the amount equivalent for 25 hours' overtime work. In the clerical and engineering work sections the company abolished the age allowance and the wage would be paid based only on workers' ability.
Toyota employs more dispatched and contract workers than regular workers. In the production line as well, it increases women and elderly workers whose wage is low, apart from dispatched and contract workers. In the clerical work, it increases the percentage of workers on a lease in the whole employees, and all new recruitment goes to dispatched workers.
Aiming to introduce younger women workers for night shifts in the production line, Toyota made itself a driving force in deleting the protective provisions for women workers from the Labor Standards Law. The adversely revised law with no protection for women workers came into effect in April. With this, Toyota intends to increase women workers in the production line from 500 to 1,000 by the end of this year. Before the revision of the law, women workers could not work after 10:30 p.m., but now the company can put them on duty until 0:25 a.m. at the latest. At factory level too, the company now plans to make a drastic reform that includes production of more various models and fewer number of vehicles, change in the assembly line, to employ more women and elderly workers.
Toyota adopts a system of "procuring parts at the most favorable place in the world." It would go to any place in the world to procure parts of high quality and low cost from any place in the world. Toyota has promoted selection, fostering and reorganization of parts manufacturers, expanding the parts procurement from the non-subsidiary manufactures and abroad. In March it integrated three organizations composing the parts' cooperators' group into one. Under such Toyota strategy, the actual conditions of subcontract manufactures are so serious: making more parts for Toyota means greater deficits for them. Under the pretext of "price cooperation," Toyota forces subcontractors "cost reduction." So their component-processing fees at every unit have resulted in dropping to about half of the level during the bubble economy.
Toyota has such a great impact on the local economy of Aichi Prefecture. In the manufacturing industry there, about 25 percent goes to the car-related industries. Taking into account that many industries such as steel, machine, electrical machinery, textiles, plastic are involved in parts production, the "car" industry has a large weight in the prefecture's economy. The Toyota Group holds 7 percent of the whole electric charges and 40 percent of the gas charge for industrial use. It makes up nearly 20 percent in the municipal revenues. The survey conducted by Aichi Prefecture shows that the decreases in Toyota's domestic production and the increases in production abroad have resulted in reduction of one million cars produced in the prefecture, which meant 130 billion yens (US$1.18 billion) loss the added value of the industrial manufacturing. Such a situation has deteriorated the employment and livelihood of workers, business of subcontract and related companies, and financial conditions of municipalities that suffer decrease in revenue. All these have given a serious blow to the local economy.
Toyota is carrying forward its management strategy as a major "streamlining" policy in the name of restructuring that imposes an enormous sacrifice on workers and people, affecting the subcontract companies, local economy and financial conditions of municipalities. Behind Toyota's strategy is the "capital's logic" that disregards the social rules and arbitrarily gives top priority to the profit making by the company. Against such a strategy, it is an urgent task to launch a united movement to regulate the outrageous conduct of major companies based on demands and policies that force the companies to take their social responsibility and aim for a stable national economy. The struggle and cooperation of workers and people are now becoming widespread.
The author is a member of Rodo-Soken and Aichi Labor Institute Board of Directors.
Development of Activities of National and Local Centers
for Health and Safety of Working People to Foster a New
Current in the Labor Movement in Japan
By Shin'ya Yamada1. Significance of the Establishment of the Japan Center for Health and Safety of Working People
The Japan Center for Health and Safety of Working People (JCHS) was formed on December 15, 1998, with expectations from many working people toward it. General Council of Trade Unions of Japan (Sohyo) had set up a Japan Center for Workers' Safety in 1989. Yet due to the dissolution of Sohyo, the center was closed. In the following ten years, no organization similar to that center existed in Japan. The inauguration of the JCHS filled this vacancy, and this newborn center stands on a new idea and democratic management.
In 1990's, the Japanese government adopted policies to help companies increase their competitiveness. These policies include easing of regulations imposed on companies by the labor laws, more freedom and discretion to companies, hands-off to excessively long working hours, introduction of an arbitrary working system, expansion of labor leasing, increase of night work, and transfer of workers with dismissal in view, and on-the-spot discharge. Supported by these policies, companies are pushing ahead with the harsh restructuring plans. For workers, this means deprivation of their freedom to live at their own will, and a great threat to their life and health. This emergent situation was an important factor that encouraged the establishment of the JCHS. The inauguration of the JCHS marks a starting point of a new movement to realize workers' demands. It is a counter move to the above mentioned anti-worker policies of the government and companies. It also represents workers' demand that their life and health be placed at the basis of politics and the economic administration.
The international economic competition has grown into a storm, which is raging throughout the world.
The workers of the world constructed social systems and customs based on the respect for workers' human rights. The storm of competition is ready to blow away such achievements. It is going to deteriorate labor conditions, destroy the social security, and drive workers into a critical situation about their health and safety. It will undermine in fact the international labor standards set out by the ILO one after another.
Such a situation tells workers that they cannot find a way out of it without solidarity with workers all over the world. In establishing the JCHS, Japanese workers pledged to promote solidarity with workers of the world. The ILO Bureau of Workers' Activities, World Federation of Trade Unions, International Federation of Trade Unions, France CGT and Center of Indian Trade Unions and others sent solidarity messages to the inauguration of the JCHS. These messages were a great encouragement to Japanese workers.
2. Cooperation between the JCHS, Regional and District Centers
The JCHS are composed of organizations and individuals. Its member organizations include the National Confederation of Trade Unions (Zenroren), active neutral unions, local centers for health and safety of working people, organizations dealing with labor accidents and job-related diseases, and Japan Federation of Democratic Medical Institutions. Individual members are experts of medicine, laws, economics, engineering and safety and health, medical practitioners and lawyers, etc.
The JCHS board of directoars consists of thirty-eight members who have engaged in protection of safety and health at workplaces, relief activities for labor accident victims or workers suffering from job-related diseases and the prevention of such accidents and diseases. They belong to trade unions covering such areas as the press, publishing, printing, education, public services (state and municipalities), transportation, communication, broadcasting, chemical, metal, medical, construction, welfare, commerce, self-employment and agriculture. They are also members of labor accident victims' organizations, Japan Federation of Democratic Medical Institutions, lawyers' organizations and nine local centers for health and safety of working people.
The Board is now discussing a way for experts representing different fields to work together according to their specialties.
The lineup and background of organizations and individuals composing the Board clearly show that the JCHS aims to carry out original activities. This stance makes a clear contrast with the conventional style of the trade union movement.
Local centers for health and safety form a nationwide network. In cooperation with the national center, JCHS, local centers will play a key role in elevating activities at local level. Local centers are at work in Japan's northernmost part Hokkaido, the industrial areas and main cities on the coasts of the Pacific and Inland Sea, and in prefectures in Japan's southern most Kyushu Island. They are planning to foster smaller-scaled centers in cities.
Being in-house unions is considered as a serious weak point of Japanese trade unions. In the activity to protect workers' life and health too, they think it important to take this weakness into account. They are planning not only to reinforce the national and local centers, but also to develop many district-based centers throughout the country.
3. Workers and Trade Union Movement and the Role of JCHS
The movement for protecting life and health of Japanese workers has some important tasks.
First is to strengthen the activity of committees on labor safety and health at workplaces and a nationwide united struggle. The work of committees on labor safety and health at workplaces has a special importance from the historical point of view. It must be noted that the national protest against the terrible disaster at Miike Mine in 1963 led to the enactment of law for establishing such committees at workplaces.
This activity aims to build up a grass root movement concerning safety and health at workplaces. It is to make use of creativity of each worker. This activity has two goals. One is to achieve the conclusion of a labor agreement at each company and each industry to humanize working conditions. The other is to get the achievement in such efforts reflected in the revision of the Industrial Safety and Health Law, so that improved labor conditions will benefit all workers. The most urgent task that requires united efforts is to regulate overtime and night work. To this respect, it is also important to promote arrangement and enactment of domestic laws in Japan for the adoption and ratification of the ILO international labor standards.
Second is to claim administrative judgement to get compensation paid to the victims of labor accident and job-related diseases. In case of this claim being rejected, it is necessary to bring the matter to court to hold the company concerned and the state responsible for the payment. The standards for and the way of recognizing labor accidents and occupational diseases are extremely unfavorable to workers. A nationwide "Karoshi Hot Line" (Karoshi means death from overwork) opened by the cooperation of lawyers, medical doctors and trade unions received many complaints. The activities of JCHS and local centers have stimulated workers and their families to ask for administrative judgement or to bring their cases to court to realize their demands. Their demands, of course, include official recognition of and compensation for "karoshi," overwork-related suicide, on-the-job injury and occupational diseases caused labor accidents and job-related diseases.
It is noteworthy that many activists of industrial safety and health have grown out of the victims' relief activities.
Third is to promote a united struggle by task among a broader range of the Japanese people.
Hospital nurses are suffering from excessive night shifts. They are calling for the regulation on the night work. This demand has won support from citizens who call for the betterment of public medical service. Their united efforts achieved the enactment of the law on securing nurses.
Teachers are also troubled with diseases and psychotic depression due to the tremendous burden of educational work. Teachers' activity to protect labor safety and health has brought about cooperation with parents of the pupils. Because, these parents are also under a heavy pressure from society and their children are in an abnormal state of mind in their school life.
Retired workers' demand for better medical treatment and elderly people's demand for the improvement of the nursing care insurance scheme are growing. Their movement to realize the demands has attracted the attention of middle-age workers in every locality, and cooperation is developing among all.
The damage of dioxin contamination spreading out in various places has brought municipal employees and residents together in their efforts to eliminate the damage.
It is indeed of a great significance that all this cooperation and united struggles have raised awareness of solidarity between such workers and citizens.
Forth is the united efforts in the district. Unorganized workers are concentrated in small- and medium-sized enterprises, making up 75 percent of the total labor force. These workers are in serious conditions, frequently hit by accidents and diseases, which in many cases result in disability or ill health. The companies would even discharge these victims.
The self-employed that have been supporting the life of local residents are now forced into bankruptcy by the undisciplined advancement of large-scale retail stores. This has resulted in the increase of the self-employed becoming ill or committing suicide.
In both cases, it is important for finding solution to the problem to start working to have influence upon the companies, municipalities and central governments. For this, a united struggle of workers and the self-employed in the district is indispensable.
For the development of these activities mentioned above, the role of the JCHS and local centers is extremely important.
The first role of these centers is to provide information on the actual conditions and analysis of labor and workers' health; workers' efforts; and the attitude of the government and companies toward industrial safety and health. In the past six months after its inauguration, the JCHS has issued six monthly newsletters and two quarterlies. Local centers are also carrying out similar informative activities.
The second role is the promotion of education and the training of activists. In June 1999, they held study seminars on industrial safety and health in East Japan and West Japan. Local centers are also active in sponsoring courses.
The third role is to provide opportunities of exchange of various activities concerning industrial safety and health and relief of labor accident victims. Local centers are active in carrying out many programs on different tasks on their own initiatives. On October this year we are going to have a national big event to exchange their experience.
The fourth role is theoretically to dig into the analysis of the situation and the action policies of the movement. It is also important to get the results of such works reflected in setting tasks of the movement, in raising questions to society and in making political proposals.
To this respect, a joint research with experts is important. On the question of industrial safety and health, we set up two task forces, on night duty and shift work, and on the international industrial safety and health. As for the question of labor accidents and job-related diseases, we started two task forces, on "karoshi" and on the administrative judgement and judicial precedents on labor accidents and occupational diseases. These task forces are open to the public. Further research activities are necessary for us, making proposals on tasks to be tackled based on the analysis of actual working and health conditions; improving the industrial safety and health system and related laws to humanize the labor; making a better preventive and relief system for occupational diseases; proposing common tasks for the Japanese people; promoting the establishment of international labor standards based on the ILO conventions and recommendations.
The fifth role is to plan for promoting cooperation with experts of broad areas, to enrich the study, research and practical activities.
Sixth and lastly, the JCHS and local centers have a significant role in expressing opinions and making political proposals to society. They have already proposed the way the labor administration should be. They also started negotiations with the authorities on the centers' participation in the councils on the labor standards and workers' accident compensation administrations.
4. Expectations for International Solidarity
To promote international exchange and solidarity of the movement to protect workers' life and health is an important part of the JCHS's plans. The message of the ILO Workers' Activities Bureau to the inauguration of the JCHS expressed expectations for our center establishing solidarity not only at home but also with workers' movements in the developing countries. France CGT proposed to work jointly in the prevention and relief activities for the victims of labor accidents and occupational diseases, as well as in the industrial safety and health activity.
The whole world faces today such a harsh "streamlining" in the name of restructuring resulting from the international economic competition. For many countries it is difficult to satisfy the international labor standards set out by the ILO conventions and recommendations. The impact of such a situation is particularly serious on life and health of workers in the developing countries. We are at a time that workers of the world must strengthen more than ever exchange cooperation between them and make plans for united activities. The JCHS started working on this task with the neighboring country; it opened exchange with the South Korea's "Foundation for Occupational Diseases of Wonjin." It is planning to start exchange with France CGT, which has already on the list, and broader range of workers' organizations all over the world. We expect to receive information from various countries. Let us promote solidarity to make the 21st century a century of workers!
The author is a member of Rodo-Soken Board of Directors, Professor Emeritus of Nagoya University and Director General of Japan Center for Health and Safety of Working People.