Putting out feelers for Japan’s car industry

Date: 30/01/1997

By Tim Jones

ONE of the proudest boasts of the British government is that the UK has become a magnet for Asian manufacturers keen to find a foothold in the European Union without paying excessive continental social costs.

Only last week, Japanese carmaker Nissan announced that it had decided to invest 290 million ecu to build a third model at its Sunderland plant in north-east England, becoming that region's single largest employer.

Nowhere else in Europe, say spokesmen for the British Conservative Party, is there the same blend of a highly-skilled and flexible labour force and low employers' contributions towards the funding of the social security system.

This, they argue, will be under threat if the UK is ever forced to sign up to the social chapter of the Maastricht Treaty.

While steering clear of political debate, Shigeru Sasaki, the director-general of the Brussels-based Japan Automobile Manufacturers Association (Europe), thinks it is not quite as simple as that.

Several of the recent decisions to invest in Wales or north-east England have involved commitments as large as 1 billion ecu.

“A manufacturer will consider many issues when making such a huge investment,” he says. “It is true that some of our members' biggest investments are in the UK. But many are in Spain, the Netherlands and Portugal, while there are also motorcycle plants in Italy, Suzuki in Hungary, Toyota in Turkey and major research and development plants in Germany and Belgium.”

While he admits it is certainly true that the workforces are adaptable and the social security costs low at the Nissan and Honda plants in the UK, the biggest jewel in the country's crown lies elsewhere.

“Our member companies usually talk about the importance of the English language for Japanese people,” he says. “Look at Mitsubishi and the investment it made in the Netherlands with Volvo. Much of that was to do with the fact that we could communicate in English.”

In December 1995, Volvo and Mitsubishi opened their new NedCar factory in Born, Limburg, employing 4,000 people and with an annual turnover of around 1 billion ecu.

Even in a country with one of Europe's worst reputations for inflexible labour markets, the NedCar company has been able to succeed through a radical restructuring which led to the shedding of 1,500 staff, the out-sourcing of non-core activities and greater use of robots.

“When they invest, companies will also take account of which governments are the most welcoming to them,” says Sasaki.

“It is not just money - wages go up and down - but it can be something as simple as

the similarities of our systems, since the British parliamentary system is similar to ours. It would be foolish to ascribe decisions to one particular factor.”

The Brussels office of JAMA was established seven years ago, having moved from its previous location in Paris. As a classic low-key lobbying organisation in the seat of the European institutions, JAMA collects information from the European Commission and the institutions and tries to make its voice heard in all policy areas that affect car manufacture and use.

“Our office is the eyes, mouth, hands and feet of our industry in Europe,” says Sasaki, adding wistfully: “Unfortunately, the head is in Japan.”

One area where JAMA feels it has a contribution to make is in the Commission's 'Auto-Oil Programme', which aims to improve air quality in Europe's cities by reducing emissions of poisonous gases and making automotive fuels 'greener'.

“When the time comes, we would like to contribute to this debate,” he says. “Our starting point would be that whatever standards are decided for types of cars and technologies should be acceptable everywhere. We want to produce cars that can be environmentally acceptable in Japan, but also in California and the EU. If our members had to produce different cars for different markets, this would become very expensive.”

On the face of it, Japanese manufacturers should stand to benefit from any move towards smaller and more environmentally-friendly cars in Europe since they produce many models in this category.

Sasaki is less sure. “If you look at the model variations of the large European companies such as Fiat, Volkswagen or the French manufacturers, they have a large range,” he says.

“We have a share of around 10&percent; of the European market and that is divided between the big manufacturers. With such a small overall presence, it is difficult to introduce such a model range.”