Get used to it: Japanese steel themselves for downsizing

Shizue Terasaki, standing astride her bicycle as she prepares to leave the Nissan Motor Co. plant here, has an easy answer when she's asked why the company is cutting thousands of jobs. "Because it can't sell cars," says Ms. Terasaki, a wizened, garrulous woman who works as a factory cleaner.

But until recently, the logic of downsizing in Japan has not been a straightforward matter of losses begetting layoffs. Instead big companies kept workers on the payroll in hard times, partly out of loyalty and partly because the government has always rewarded enterprises that helped maintain a stable society.

Things are different in Japan these days. The bonds that linked worker and employer are withering as companies demand the flexibility to hire and fire at will. And the government finds itself less able to influence businesses that are more ruled by global economic logic than ever before.

"From now on company workers will have to change their mentalities and put some distance between themselves and their companies.... Unless they do so they will not be able to survive," says Kiyotsugu Shitara, a Tokyo labor activist who has worked with many newly unemployed white-collar workers.

Tokyo International University economist Yoko Sano says Nissan's program of layoffs is nonetheless "Japanese-style" because the company will shrink its job rolls over several years. "If Japanese companies hope to win in international competition," she adds, "they should also slash the number of jobs quickly."

Trapped in the middle is the government, which is caught between its desire to revive Japan's moribund economy and the instinct of many politicians and bureaucrats to maintain the status quo and muddle through.

The result is what Mr. Shitara calls a "dual policy." Prime Minister Keizo Obuchi and his ministers have voiced concern about Nissan's restructuring plans even as they announce subsidies and programs to help the affected workers - steps that make it easier for other companies to contemplate layoffs.

In short, the reaction to Nissan's Oct. 19 announcement that it would cut 14 percent of its global workforce, including 16,500 jobs in Japan, and close five domestic production sites has been, well, very Japanese. There has been frustration and dismay; the company is now one-third owned by the French carmaker Renault SA, so there was a bit of nationalistic grumbling about foreign influences.

But many people have said something along the lines of a classic Japanese expression: "It can't be helped." As one young Nissan worker puts it, "Companies are collapsing, so they have to try a new approach and not be so protective."

A labor union protest in front of the plant early this month drew exactly 38 people, and only four of them were Nissan employees. "I think the company is not considering the workers' feelings," says Masatoshi Sakanoshita, who organized the demonstration. Nissan's managers "just want to get away from bad economic conditions by cutting an unprecedented number of workers," a strategy Mr. Sakanoshita calls "Western-style restructuring."

But the vast majority of Nissan's employees belong to a company union that isn't opposing the job cuts and plant closures, which is why so few employees were standing alongside Sakanoshita. He heads a tiny rival union.

Sakanoshita sees that things may get pretty bad pretty quickly for workers at major corporations, who have grown accustomed to cozy relations with managers and being spared layoffs.

Since the unveiling of the Nissan plan, Nippon Telephone and Telegraph Corp. has announced a retrenching plan that would result in the loss of more than 20,000 jobs over a three-year period and Mitsubishi Motors Corp. has said it will cut nearly 10,000 positions by early 2004. In recent months, a number of banks have announced restructuring plans that include significant job reductions as part of the consolidation of Japan's financial industry.

Japan's Ministry of Labor said late last month that the country's 41 biggest companies plan to cut 142,000 jobs - 12 percent of their workforces - during the decade that began in 1996. Even for an economy that can sense the beginnings of a long-awaited turnaround and where an aging society portends labor shortages just ahead, the ministry's report is further evidence of significant change. Thousands of smaller enterprises depend on the fortunes of large corporations, so cuts at the top will mean the same all the way through the economic pyramid.

The process is slow - many critics disparage reports of change here as the smokescreen masking an entrenched and unyielding system - but increasingly evident. The closest thing to an economic hero in Japan today is a software entrepreneur called Masayoshi Son, who represents a sense of innovation and independence that is new to Japanese business.

He and a few like him have replaced the old hero - the faceless salaryman of Japan Inc., the loyal corporate warrior who served his company without fail. While the salarymen are being forced into early retirement, the government is consulting Mr. Son for his economic advice.

And after decades of scholarship that examined the singularities of Japanese corporation and economic management, even the academic tide is turning.

Haruo Shimada, a reform-minded professor of economics at Tokyo's Keio University, goes so far as to say that it is pointless to distinguish between "Western-style" and "Japanese-style" restructuring. Balance sheets are balance sheets, he says.

"Nissan postponed cutting workers because the company thought the economy would get better. Nissan thought land prices and stock prices would increase," he explains. But those things didn't happen. Now many workers will have to look out for themselves.

"Most of my co-workers do not seem to think they will work for the company their entire lives," says one worker, a painter who joined the company straight out of high school seven years ago. So goes "lifetime employment" - once a pillar of Japan Inc.

"I think the whole system is changing," he explains, declining to give his name, and adding with more hope than confidence: "Maybe with the new system there will be good sides as well as bad sides." One bad side is that the Murayama plant, where he is about to join the evening shift, will shut down in two years. At the moment, he says, he can't specify what the good sides might be.

(c) Copyright 1999. The Christian Science Publishing Society