A Shift of Power; Japan's Industrial Heartland Has Some Salutary Lessons for the West Midlands

Article excerpt

Byline: Anthony Rowley reports

Visiting Greater Nagoya in Japan's industrial heartland between Tokyo and Osaka is like stepping into the past - the past of the once great industrial complex that stretched from Birmingham and the Black Country to Coventry.

The way in which development of the two regions has since diverged symbolises the debate in Britain now about the wisdom of abandoning once great manufacturing traditions in favour of finance and other service industries.

In theory, Greater Nagoya ought no longer to exist, or at least not be facing the future with the kind of confidence that its businessmen and officials still display despite the current recession.

It could easily have been "hollowed out" like industrial centres in other advanced nations - England's West Midlands, the German Ruhr and the US Rust Belt. Or it could have been overtaken by the rise of China as a manufacturing power.

Instead, the three prefectures of Aichi, Gifu and Mie, which make up Greater Nagoya with Nagoya City at their centre, continue to thrive on a tradition of manufacturing excellence - known in Japanese as "monozukuri" - that seems to defy all challenges.

But they also rely on a different balance between industry and finance and between making money and making "things" to that which took hold in Britain from the 1970s onwards.

While once great names in the British motor industry such as Austin, Morris, Wolsey, Singer and Riley long ago passed into history, along with others like Birmingham Small Arms(BSA) and former world leaders in the machine tools industry, their Japanese equivalents are thriving still.

Toyota is the world's largest motor maker, Yamazaki is the leading machine tool producer and Mitsubishi Heavy Industries is in a class of its own.

Why do these and countless others, such as Honda, Nissan, Suzuki, Yamaha, Fanuc, Kawasaki, Fuji Heavy Industries and Moriseki, continue to survive and prosper in the production of everything from motor vehicles to castings and machine parts, or from ceramics and composite materials to industrial robots, while advanced economies such as Britain have rejected such activities as unsuitable to their image of postindustrial societies?

Is Japan still in the process of catching up with "modern" economies or has it just got the balance between manufacturing and service industries more right than Britain?

"Basically the people here are very diligent and have manufacturing skills," Kazunari Sega, director of the Nagoya based local office of Japan's Ministry of Economy, Trade and Industry (Meti) says modestly.

They are proud of these skillsand have not abandoned them to pursue supposedlymore sophisticated types of employment in the way that recent generations in other advanced economies have.

But more important from the perspective of maintaining a stable industrial base, the owners of Nagoya firms - giants such as Toyota or myriad small scale enterprises alike - have not sold out their interests to the highest takeover bidder or private equity investor.

As an official at the Nagoya Chamber of Commerce and Industry puts it: "Many companies in Nagoya don't know how to make money because that is not their target. Maintaining the firm's financial stability is more important than making money."

That and an emphasis on "kaizen" or innovation (Japanese-style),and "surya-wase", which means constantly refining manufacturing systems and techniques to a point where others cannot compete.

This continuing emphasis on manufacturing excellence has not prevented Japan's economy from sinking into recession now, along with those of Britain, the US and others. But the severity of Japan's slowdown is due to an overemphasis in recent years on supplying the US and other credit bubble-driven overseas consumer markets with electronic goods and motor vehicles. Giants like Sony, Panasonic and even Toyota are in trouble for this reason. …