1 Case study Exporting Japanese management Week 10

2 Japanese companies in UK Why did Japanese companies come to UK? 1980s to establish presence before increasing protectionism of EU policy Mostly Auto manufacturers Nissan Honda Toyota Reasons partly because of the labour costs also because of the absence of a large volume indigenous manufacturers Key reason: Conservative government of the time enforced a low wage policy

3 Obstacles to success of Japanese practices More likely Inappropriate institutions Unhelpful work traditions Tradition of adversary industrial relations Not so much differences in the technical and commercial competence of British managers or ability of British workers

4 Worker selection & relations Nissan – Sunderland Entered into a single union, no strike agreement with the Amalgamated Engineering Union (AEU) This reduces union power Used rugged recruitment program Jobs paid significantly lower rates than the industry as a whole Nissan argued it was in an area of high unemployment Implemented zero defect regime Increased injury and stress problems for employees On Nissan application form it was stressed that the jobs on offer at Nissan, are of a very physically demanding nature Workers working at maximum capacity does suggest that this will result in higher incidents of health problems

5 Worker selection & relations Toyota – employee indoctrination Refused to recruit employees who had previously worked in auto industry because traditional attitudes, allegiance to traditional job descriptions, and adversarial 'demarcation mentalities' were perceived as being too expensive to eradicate and to remove with new habits of working

6 Worker selection & relations Honda – rejection of training departments There is no need for a training department, because it is the line managers responsibility to train their people... No unions are recognised, and there is no company council

7 Conflict areas in practice Greenfield Sites Survey Employees Should recruit local long term unemployed, practice showed 'poaching' skilled employees from local employers Training Claims of high levels of training but practice was training was of a too short nature, lacking any on-going formal process

8 Conflict areas in practice Greenfield Sites Survey Pay & benefits Pay levels for greenfield sites have been either equal or below national levels and Management felt that under single status, the gulf in differentials between them and shopfloor employees had been reduced by standardised benefits Promotion Major attraction of greenfield site is improved chances of promotion Employees actually felt there was less chance of promotion

9 Conflict areas in practice Greenfield Sites Survey Unions Sites have single union agreements and corresponding high levels of membership but no-strike agreements led employees to question the validity of their trade unions Involvement Key element of Japanese management is high level of worker involvement Although employees valued being asked questions, they actually felt that the vast majority of their suggestions were ignored Management A lot of employees felt that the new companies were badly managed

10 UK adoption In auto industries Japanese techniques were implemented in 1980s to match Japanese productivity at Lucas Electrical Ford Rover

11 The experience Lucas Sought to use rugged management techniques to prevent union action Letter to unions a strong ultimatum to the workforce 'accept our survival plan or we will close the business'

12 The experience Lucas Introduced Just in Time stock management but had adverse effect when union action ocurred In 1986 a strike at Lucas Electrical rapidly led to 12,000 layoffs at Austin Rover... Part of the reason for the speed and severity of the stoppage was the adoption of JIT deliveries

13 The experience Ford Core philosophy of Ford is limited worker roles and strong leadership In late 1970s tried to introduce quality circles Failed due to unrealistic timescale for implementation 1985 introduced Employee involvement and Participative management

14 The experience Ford Reduced number of job classifications from 550 to 52 and introduced team working 1988 introduced flexible working practices Result National strike (Were Brits not Nips) Knock on effect Practices rejected in plants across Europe causing plant closures

15 The experience Rover In 1980s suffered from inflexible working systems and worker mistrust of management Subject to takeover Implementation of 'The transformation of union- management relations from one of perennial conflict to one of mutual accommodation' All the parties involved wanted the business to succeed Were adaptable to embracing change Initial feelings towards Japanese methods were mixed but all realised they had to be adopted to ensure survival

16 The experience Rover Success story but Was the acceptance of transformation because company would fold if system as was continued so nothing to lose from change? Change management under conditions of crisis.

17 Conclusions Is transferability of management techniques possible Can we only expect limited success? The debate is whether they should be used because the industrial relations, cultural, political and economic conditions are different in the UK Implementation frequently causes conflict with organised labour Is this because change is badly managed or Because it conflicts with traditional work practice or Organised labour is too strong/antipathy? Many firms in the past who have tried to emulate Japanese companies, have become concerned with one element, missing the totality of the Japanese system

18 Conclusions Quality and JIT production systems are two vital elements of the Japanese system but when imported into the West have had one initial burst of enthusiasm then gradual decline results in very short term benefits and adoption Successful adoption of any strategy which effects the workforce can only be achieved if employees are treated as strategic resources