By any reckoning, it has been quite a year for Japanese auto companies, whose results have just landed. Record earnings at Nissan and Toyota, dramatic swings from losses to profits at Mitsubishi Motor and Mazda -- all this comes amid much change in the industry.
The salutary performances turned in by Japan's big-brand car manufacturers also come with some sort of weird celebratory ritual among the gaijin, as we foreigners are known. Somehow, these companies are now supposed to be something other than Japanese.
PHOTO: AFP
They're succeeding to the extent that they've begun to follow the lead of imported saviors -- missionaries, really -- who have turned them into foreign islands in a Japanese sea.
I can't buy into this. The influence of foreign executives among Japanese carmakers is unmistakable. They are performing tasks their Japanese counterparts were addressing too slowly or not at all. But the notion that a handful of gaijin is altering the national ethos is sheer hubris. The control in the experiment is simple: Toyota Motor Corp is the largest and most successful automaker in Japan. It's also explicitly committed to upholding the Japanese corporate model.
The star of the show among the car manufacturers, of course, is Carlos Ghosn, the Brazilian-born president and chief executive at Nissan Motor Co, who was brought in to restructure the money-losing giant in 1999. Having watched him succeed swiftly, if not yet completely, we are now invited by the Financial Times to think of him as another Commodore Perry, the American door-opener of the 19th century.
Behind him stand others set to assume the same role, based on partnerships similar to Nissan's with Renault SA. At Mitsubishi Motor Corp, Rolf Eckrodt, who came from DaimlerChrysler AG, has overseen the restructuring and is set to become chief executive later this month. Mark Fields, who came from Ford Motor Co, has headed Mazda Motor Corp for the past three years and has guided that company's return to the land of the living.
Results for the year to March 31 certainly make the gaijin look good. Nissan just reported record operating profits of Japanese yen 490 billion (US$3.8 billion) on sales of Japanese yen 6.2 trillion. Ghosn has achieved an operating margin just short of 8 percent and debts are down drastically. The man from Renault is now negotiating an important joint venture with Dongfeng Motor Corp, its partner in China.
After a year of restructuring, Mitsubishi Motor reported a return to profit, with an operating gain of Japanese yen 40.2 billion, against a loss of Japanese yen 74 billion the year earlier. This came on a marginal drop in sales, to Japanese yen 3.2 trillion. Debt is down, and the cost-cutting drive is being intensified.
Roughly the same story at Mazda, which is one-third owned by Ford. It turned in net profit of Japanese yen 8.8 billion, compared with a net loss of Japanese yen 155 billion the year earlier. For the year just begun, the company says it expects profit to increase by more than double, to Japanese yen 20 billion, on a forecast rise of 8 percent in sales, more debt payback and reduced capital outlays.
Currency swings played no small role in these results.
So did tougher contracts with suppliers, workforce reductions, plant closings, changes in decision-making and management -- the deeper story at all three of these companies.
Fine. But has Ghosn turned Nissan into something other than a Japanese company? Has he invalidated the stakeholder values at the heart of the Japanese system and proven the efficacy of an antithetical foreign model? I'm hard-pressed. Nissan is very different now than it was before he arrived. But the larger part of Ghosn's skill, it seems to me, lies in the extent to which he has managed fundamental change without upsetting the apple cart any more than circumstances required. His goal all along, as he put it in a presentation last year, has been to make Nissan "a first-rate Japanese company." That's what he's doing.
Ghosn, "le cost killer" in one of those manga comics the Japanese read, has become the stuff of legend among Japanese executives. In this he takes his place in a long line of elevated heroes, notably Jack Welch, late of General Electric Co.
The Japanese love this sort of fantasy. It provides a convenient escape from the confinements of the system to which they are committed, and the place of standout individuals -- exalted, a bit distant -- can be found far back in history and literature. But they're exceptions that prove the rule.
In the case of Ghosn, the system is too tightly integrated at this point for Japan to afford too many like him without creating a recklessly deflationary danger. As to Nissan itself, the atmosphere inside is less than jovial. Japanese executives loyal to him in public appearances, I often hear, are bitterly resentful in private settings.
Nor is Ghosn quite finished yet. Debt is down and margins up; the sales increase he is looking for has yet to be achieved. He wants to add a million unit sales between now and 2004. This will be tested with the addition of 28 new models over the next two years -- almost half of them within the next 12 months.
Now consider Toyota. It reported a 31 percent increase in net profit, to Japanese yen 615.8 billion ($4.8 billion), on a 12.5 percent increase in revenue to Japanese yen 15.1 trillion. The company promptly announced a Japanese yen 600 billion share repurchase.
Toyota may not repeat this year's performance, the analysts caution. It is forecasting a rise in net income this year of -- do we want to say "only?" -- 17 percent. It's sticking with its announced global ambition: With 42 percent of the Japanese market, Toyota hopes to lift its share of the global market by half, to 15 percent, over the next eight years.
Curious, isn't it? Here's a company committed to its traditions and conscious of its place in the larger entity known as Japan, and it's the most successful -- innovative, long-term in its thinking, well-funded -- of them all. Nothing, not even layoffs, is beyond consideration at Toyota, executives there will tell you. But it would be a last resort to sacrifice any part of the workforce, supplier relationships, and the tight corporate integration that only continuity brings.
The lesson here is a good one. I can't put it any better than Shu Nung Lee of Lehman Brothers Japan Inc. "It's not the system that was bad at Nissan or any other carmaker," he told me once. "It was the way the system was managed. That's what makes the difference."
It's an old movie, the one where the gaijin ride in and change everything in their own image. The car industry does have echoes of Perry and his arrival off the Japanese coast in 1853.
Perry is a figure in history; after him came great change. But the Japanese managed all those changes, and they made sure Japan as it modernized and industrialized went on being Japan.
SECURITY: As China is ‘reshaping’ Hong Kong’s population, Taiwan must raise the eligibility threshold for applications from Hong Kongers, Chiu Chui-cheng said When Hong Kong and Macau citizens apply for residency in Taiwan, it would be under a new category that includes a “national security observation period,” Mainland Affairs Council (MAC) Minister Chiu Chui-cheng (邱垂正) said yesterday. President William Lai (賴清德) on March 13 announced 17 strategies to counter China’s aggression toward Taiwan, including incorporating national security considerations into the review process for residency applications from Hong Kong and Macau citizens. The situation in Hong Kong is constantly changing, Chiu said to media yesterday on the sidelines of the Taipei Technology Run hosted by the Taipei Neihu Technology Park Development Association. With
CARROT AND STICK: While unrelenting in its military threats, China attracted nearly 40,000 Taiwanese to over 400 business events last year Nearly 40,000 Taiwanese last year joined industry events in China, such as conferences and trade fairs, supported by the Chinese government, a study showed yesterday, as Beijing ramps up a charm offensive toward Taipei alongside military pressure. China has long taken a carrot-and-stick approach to Taiwan, threatening it with the prospect of military action while reaching out to those it believes are amenable to Beijing’s point of view. Taiwanese security officials are wary of what they see as Beijing’s influence campaigns to sway public opinion after Taipei and Beijing gradually resumed travel links halted by the COVID-19 pandemic, but the scale of
A US Marine Corps regiment equipped with Naval Strike Missiles (NSM) is set to participate in the upcoming Balikatan 25 exercise in the Luzon Strait, marking the system’s first-ever deployment in the Philippines. US and Philippine officials have separately confirmed that the Navy Marine Expeditionary Ship Interdiction System (NMESIS) — the mobile launch platform for the Naval Strike Missile — would take part in the joint exercise. The missiles are being deployed to “a strategic first island chain chokepoint” in the waters between Taiwan proper and the Philippines, US-based Naval News reported. “The Luzon Strait and Bashi Channel represent a critical access
Pope Francis is be laid to rest on Saturday after lying in state for three days in St Peter’s Basilica, where the faithful are expected to flock to pay their respects to history’s first Latin American pontiff. The cardinals met yesterday in the Vatican’s synod hall to chart the next steps before a conclave begins to choose Francis’ successor, as condolences poured in from around the world. According to current norms, the conclave must begin between May 5 and 10. The cardinals set the funeral for Saturday at 10am in St Peter’s Square, to be celebrated by the dean of the College