4't,n4

!
I /.-ze:i

The Case

ttss^x usa
HISTORY 't-

Nissan Motor co., Ltd. was incorporated in Japan in 1g33 and in

19g0
acquired a 37% stake in Motor rberica s.A. of. Barcerona.
Nissan
manufactures and sells Datsun automobiles, roc*ets, textile machinery,
boats,
other machines ancj appliances, and their respective parts as
oiher operations
incidental to these activities. Their distributors are tocate{ in
180 foreign
countries. Their properties incrude 13 p6nts in Jdpan' and 24 knockdown
plants abroad with production capaclty of 210,0Q0 units per
month. Nissan
alsc owns a fleet of 16 auto carrier shios (see Exhibit i).

Nissan co. has a totar of ss,2g5 stockhorders as of 1gg0 and ,emproys

56,7a2. Their head office is located in Tokyo with Nissan
Motor corp. in the ,

United States the head office.is in Califomia

As Nissan Motor corporation in the united states reachdd

its twenty second
year; it was a vigorous, successful organlzaiion.
lt was securely established
as the second-largest seller of import cars in the united
states ctose enough
to the leader, Toyota, so that reaching first prace courd be
seen as a
reasonably attainable goal. sales cpntinued to be
skong; in fact the impetus
given io'purchases of small cars in 1g79 carrieo
on as fuel prices kept
escalating, so that each successive month saw nevc records
in Datsun sales.
The hatf-million targei set for 1gg0 five years before had atready been
reached and passed;the 1g80 sares figures wourd top
600,000. Behinc NMC-
usA stood Nilsan Motor co., Ltd., now the world's fourth rargest
manufacturer of motor vehicres, folrowing Generar Motors, Ford,
and roycta in
that order.

As the year begun, NMC-usA was an organization

with a capitalization of $6
nrillion and 1582 employees. The largest nurnber680
were at the National
Headquarters complex in carson, caiifornia. The
others were in the regionat
offices: l3osion, 77: Chicago, g3; Columbus, 43; New york, gS;
Jacksoiville,
88; Dallas, 78; Mernphis, 42; Norfolk, g4; Denver, 6g; Los
Angeles, 10g;
Fortland., 47; san Fi"ancisco, 41; sacramento
{pa{s warehouse opened in
1978 r'eplacing san Fraicisco and poriland depots), g6.
There were 10g3.
dealers, with a totarof 30,201s emproyees (see Exhibit
il).

Prepared by w-E. Greene, llliddie Tennessee state university,

!gu1e: and G.D. wails,
western N*w Mexico Universig. useo b'7 pein:iesion of waiter E. ereene, pt,.o.,
D. Waiis "noJrv

7l'i:it,a
 NISSAN MOTOR CO., ITD
Tokyo, lapan

MARUBENI I
AMERICA II SHIP CARGO
' I ORAIR CARGO
CORPORATION T

NISSAN MOTOR CORPORATION

United States of Americo

MASTER PARTS "/ REGI ONAL

DEPOT WATEI IHOUSE

he

DEATERS

CUSTOMERS

EXHIBIT I

Parb Selllng Organlzation

AMERICAN PRODUCTION

The truck plant that Nissan Motor Corporation, U.S.A. is cunently building in
Smyrna, Tennessee will be an example of the latest Japanese management
techniques and technology for producing vehicles. The Nissan truck
manufacturing plant will be a $500 million complex. Production is scheduled to
begin in Augusl, 1983, and 219 robots will be operating in the body assembly,
stamping, and painting areas. This will make Nissan one of the most robotized
factories in the world. Automation will also be installed in the plant for
operations where a robot's flexibility is not needed. Unfortunately, robots do
eliminate workers, but many skitled people are needed to keep them working.
ln Japan those workers whose iobs are taken by robots are retrained to do
new jobs within the comPanY.

EX!!IFITI!

SATES AND OISTR!BUrlON DEPARTMENT

Dlstributlon of Vohlcles from Plannlng Stage'through Retail Selllng

Tennessee's Department of Employment security is screening applicants and
sending suitable applicants to Nissan. Applicants are expected to complete on
their own time a pre-employment training program which is conducted by the
state's Department of Economic and community Devolopment's industrial
training division. The training programs vary in length according to the
previous training and experiences of the individual and the type of job applied
for. Nissan selects their employees out of the applicants that successfully
complete the state's training program.

Many of Nissan's top management have come glJt-efu and are

between 50 and 65 years old. For example the,zfreqidql Marvin
Runyon, was a vice president at Ford Motor Compa-f tor 37 years. Nissan
hired John Bryan as Human Relations manag(ir because he is a native
Tennessean and familiar with the state'S work force. Key positions and first
line production supervisors are being filled by workers from Tennessee
through an agreement with the state. The state agreed that if Nissan would
hire Tennesseans for these jobs, then the state would pay for the h'aining
programs. Several hundred enrployees of Nissan will receive specialized
training in Japan, The length of this training will vary from 2 to 4 rnonths.

Marvin Runyon asserts, "Nissan will have participative management,

employee meetings every morning, multi-skilled tradesmen, almost
continuous education programs and probably no unions.' Runyon believes
that many of the ilapanese management techniques are American methods
the United States abandoned. Nissan ptans to establish a work motivating
environment to help improve efficiency. The aim is for bottom-up
management as opposed to the US method where managers hand out work
directives. Nissan will encourage allworkers to offer their input, For example,
at the start of each shift, foremen will hold meetings with their staff to discuss
the day's objectives and safety measures.

Suppliers wilt have to bow to the Japanese ways because Nlssan plans on
keeping stocks as low as possible. The production process of each supplier
wi1 be certified in dbtail by Nissan's quality control staff. Another feature of
Nissan's system is maintenanCe. Nissan will have a team maintenance
engineers; the operators will be responsible for minor jobs.

EMPLOYEES AND THE UNION

Runyon aims to import the Japanese techniques of u3ing temporary or sub-

contract workers for a percentage of the jobs in the Smyma plant. That means
for example, that janitors will not eam the same pay as assembly line workers,
and many temporary factory workers will not be eligible for fringe benefits, As
a result the UAW is tighting hard to organize the Nissan plant'

SlPrge
Failing to organize the newcomer could mean trouble for the UAW. lf the
Japanese can operate at lower costs and without a union, then the UAWs
bargaining strength with GM and Ford could be weakened.

Jim Turner, who is in-charge of UAW unionizing in Tennessee, says,'This is

nothing now; we expected it because every Japanese plant built in this
country has attempted to defeat the unions. We have made no secret of
waniing to unionize the Japanese plants here in the U.S. and we have to
doubt that the employees, freely given their chance, without discrimination,
willjoin the union,"

Nissan rvill be employing 2,200 people at the Smyrna plant. Nissan has had
experience in the past when employees and management did not see eye to
eye, This is the problem in the u,s. operation is facing today, and it is
somewhat similar to these the Japanese faced almost three decades ago.

Mr. Shioji, president of the Confederation of Japanese Automobile Workers'

Union, in 1954 as a young auto worker for Nissan proposed the first wage
reduction in order to safeguard iobs. Nissan had decided to lay-off employees
because of sagging profits, However, the union voted to take a wage
reduction in order to save jobs. From then on the Japanese management has
had a differerrt outlook concerning tlreir employees,

Mr. Shioji remarl(ed, "The consultation system is to increase the pie, the fruit
of the company; collective bargaining is for cutting the pie for the good of the
union mernbers."

The Japanese Auto Workers' Union has offered to send a team of its workers
to Nissan U.S.A, to urge unionization ol the plant. The UAW feels this is a
positive move because they feel the Japanese will encourage employees to
join the UAW. Unlike American unions, in Japan there is hannonious
relationship between management and labour. ln Japan each company has
its own union wliich works with managenlent'

Runyon said he does not expect word from Nissan Ltd. On the proposal, "lt'S
between the UAW and the Japanese Auto Workers.'The question of whether
or not the Smyrna plant will have a union is between the American urrion and
*Meet the Press"
Nissan USA. Douglas Fraser appeared on NBC television's
and said, The UAW will organize the Smyma plant because the American
work force will demand it." Local union sources will make an all-out effort to
unionize Nissan workers prior to August 1983. Fraser said, We have the
support of the AFL-CIO.' AFL-CIO leader Lane Kirkland says, 'The nation
needs a program of re-industrialization that will mobilize the available capital
and channel it into reviving the capacity and modernizing out industrialfacility'
The Japanese economy is the worst advertisement for so-called free trade
that could possibly exist."

6lP;rfle
MANAGEMENT STYLES

Japanese

When Nissan Motor Corporation, U.S.A. begins production on August 1, 1983,

American employees will be working under Japanese management styles.
The Japanese management style is strongly supported by Runyon, who plans
on using tlre Japanese style at the Nissan plant in Smyrna. Runyon, says,
"Management attitudes and policies that encourage quality are part of the
reason Japanese workers' output now equals that of France, Britain,
Switzerland conrbined or as little than 40% of the national output of the United
States.' The Hudson lnstitute predicts that by the year 2000, Japanese will be
the richest people otr earth.

Runyon outline for the authors, five differences between U.S. and Japanese
styles of management. These differences are:

1. Most Japanese work for the same company for their entire life, unlike
American wlro are prone to job hopping. ln Japan, seniority is more
important than merit. Because of the turnover rate, Japanese businesses
are willing to invest more money in training programs for employees, which
improve both the confidence of workers and the quality of their products.

2. The relationships between management and labour are harmonious and

stable. Wlrile labour negotiations are intense and strikes do take place,
basically the overall attitude is friendly.

3. Top priority is given to employeesatisfaction and welfare. Japanese treat

their employees as resources that, when properly utilized, will provide
great benefits for the company. The result of this policy is that employees
are very loyal to the company and most Japanese regard the future of the
company as their own. Japanese businesses' long-term view is also a
major reason for its steadily increasing productivity.

4. Japanese have a strong sense of teamwork. This feeling of teamwork is

due to the concepts of quality control circles. Quality control circles
encourage employees to make suggestions on how to improve efficiency
and at the same time encourage communication between higher
management and workers.

5. Decisions are macle through consensus. Employees have a say in the

decision-making process throughout from the planning and engineering to
the production and sales suggestions are encouraged from every level and
taken into consideration and often put into effect. Open communication
between the workers and management creates a form of collective

7lF'ase
/.

participatlon, The result is more and better ideas, many of which can mean
saving to the company.

Another Nissan Executive, Shuichi Yoshida, Mce President of Quality

Assurance, plans in using Japanese management practices. Yoshida plans to
maximize the human resources of Nissan-USA. Nissan will make use of
continued training programs within the company. Job enlargement and job.
enrichment programs will be used to help workers develop all their skills.
Management will use an interdisciplinary approach and will also encourage
workers to go beyond the boundaries of their particular job. ln a personal
interview, Yoshida declared, "The biggest problem between the Japanese
company in Smyrna and Nissan itself is the language barrier."

The success of Japanese companies is based on their utilization of human

resources. This involves three interrelated strategies (See Exhibit lll).

1. An internal labour market is created to secure a labour force of the desired

quality and to induce the employees to remain in the firm.

2. A company philosophy is stated that expresses concern for employee

needs and emphasizes cooperation and teamwork.

3. Close attention is given both to hiring people who fit wellwithin the values
of the parlicular company and to integrating employees into the company
at all stages of their working life.
 --*
:. ---

'U-t-'

A Model of Japanese Management

I
I

Job Rotatlon and Slow

Promotldn

Evaluatlon of Attrlbutes
of Behavious
!

II D"r"l,rp - t"t-*l
labour Market
I
r--T--J I

I
I
I
I
I

Enrphasire Human I articulate a Unlque I

ReEource I company
_......r.'_-
Phllosophy I

Open Communicatlon

Articulete a Unlque
Company

Cgniultative Declslon

EXHIBIT III

A Model of JapaneBe Management

Amedcan

Host American auto workers feel the need for a union. This attitude will have
to be considered in August 1983 when Nissan begins production. Nissan
begins production. The executives at the smyrna plant are against the union,
tlut the UAW strongly wants to unionize Nissan ernployees. Runyon believes
a union shop will cheapen the qualig of the Nissan trucks.lt is believed that
the adversary relationship between the United Auto Workers (UAW) and the
American automobile managers is not good for the employees or the
company. lt seems tttat the UAW and n'ranagement have different objectives..
ln Japan employees and management are both interested in creating a good
quality product that will be competitive in the market place. Runyon said,,
"Nissan is pro-employee. We want a participating management and we think'
the only rvay to do that is to be union free. The union methods are fine as long
as there is no competition. However, unions in America are not ready to face
up to the fact that when they work against management, they are threatening
their own future."

LEGAI. PROBLEMS

Foreign Trade Zone

As for enticement for Nissan to locate to Smyrna; American government

established a foreign trade zone for it. Foreign trade zones, which are
monitored by fecleral custonrs officials, allow industries such as Nissan, which
imports parts and raw materials, to delay paying import taxes on the goods
until they are assembled in the finished product and ready to ship to other
areas. This can result in tax savings for the industry becauge taxes on the
finished product are often less than the cumulative tax on the individual parts.
The Smyrna City Council, with all members present, voted unanimously in
favour of establishing sub-free zone at the Nissan plant. .

lrnport Quota

us rrade Ambassador Bill Brock has said, "The restriction on Japanese auto
imports which I negotiated will not affect the Nissan plant." Brock came back
from Japan where he had negotiated an agreement by which Japan would
limit its exports to the United States to no more than 1.4 million cars next year.

The agreement kept Congress from acting on legislation that would have
restricted Japanese imports. Elrock said, lNe've avoided protectionist

l0lPage
I

legislation. The Japanese have been very reasonable and we have made a
good approach to the thing." The aim is for a two-way street between America
and Japan. Legislation is being discussed to ensurd that American workers
can sell their products in Japan just as readily as Japanese workerq can sell
their products in America.

Domestic Content Bill

Recently, the Fair Practices in Automobile products Act, or the Domestic

content Bill, has received much attention. The DCB would force Nissan to
purchase 90% of the parts for its trucks on the domestic market, which would
take away much of the benefit of the foreign trade zone. under terms of
legislation being considered by the House Energy and Commr.rnication
committee, the trucks would be required to contain at least g0% domestic
parts by the year 1985. Runyon states, 'Nissan wilt not be able to meet the
content requirement demanded by the legislation." Under present production
schedules, Nissan plans to begin production in mid-1g93 for model year 1gg4
and they expect to use only 38% of donrestic products."

Nissan plans to increase that percentage gradually after, production begins.

They beliove that at present their production volume of 156,000 vehicles is too
snrall to justify the manufacture of engines and drive trains at the smyrna
facility, Runyon says, 'At present Nissan will have to continue to import these
major parts."

ln Nissan's view the DCB will seriously threaten all manufacturers who export
to the tJnited States. The president of Nissan Co., Ltd., TAKASHI ISHIHAM,
states, "The bill is a serious threat not only to manufacturers, but also to those
who work itt industries related to exported automobile. I do not think it is the
American intention that this legislation, should pass. I feel an amended
version of the legislation also would not be appreciated."

ln the originalforrn, the DBC would require that sell automobiles in the US to
use 90% of domestic parts by 1985. A proposed amendment would use the
amount of a company's total US sales the preceding year to determine the
required domestic content. That would lower the required domestic content for
Nissan to 71o/o based on 1980 sales. lshihara stresses that there are no
industrialized countries in the world where such legislation is imposed.
Currently, there are about 30 countries that have domestic content laws, but
most are developing countries such as Kenya,

UlPage
CONCLUSION

Nissan Motor co., Ltd., the largest automotive industry in the world
has finally
made the giant steps of buitding plant in the united states. The difference
in
clrlture and management techniques will either become a hindrance to
in"
new Nissan plant located in smyrna, Tennessee, or may herp produce
a
model plant the other U.S. firms will wish to follow. whether Nissan, u.s.A.
is
a success or not, only the future can telt.