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Learning from the Japanese in Mexico

As I See It

My first taste of economic globalization came in the late 1980s when I worked for a Mississippi manufacturer with facilities here and in Matamoros, Mexico.

Our plants’ primary focus was assembling automotive wiring harnesses for what was then the Packard Electric Division of General Motors. However, we also operated a contract manufacturing business that built non-automotive products, including baby strollers for Graco Children’s Products and solar panels for the Solarex Corporation, a subsidiary of Amoco Oil Company.

We were also a third tier (or maybe it was fourth tier) supplier for several Nissan automobile parts, and while my experience in dealing with the Japanese in Mexico was infrequent, the experiences did introduce me to a few aspects of Japanese business philosophy and culture, which now seem much more relevant as we anticipate the opening of Nissan’s auto assembly plant in Madison County.

All good manufacturing people are detail orientated. They have to be. The difference in high-quality and substandard is the attention to detail. It always seemed to me that the Japanese technical personnel were even more precise and detail-conscious than the typical good American manufacturer. Perhaps this explains, in part, why Japanese products have developed such a reputation for good quality.

Re-negotiation trumps litigation

An even more interesting aspect of dealing with the Japanese is their philosophy of business agreements. Americans attempt to cover every possible contingency in their contracts. The agreements tend to be thick and cumbersome. In fact, you can develop lower back problems just carrying American contracts. We insist that every term of the agreement be complied with exactly as stated or legal problems are sure to result. It doesn’t matter if some obscure, overlooked provision of the contract works extreme hardship on either of the contracting parties.

After all, a deal is a deal.

The Japanese contracts, by comparison, tend to be brief and fairly straightforward. That is because they expect all parties to be flexible in resolving questions that arise along the way. In fact, they expect that the terms of the contract will be re-negotiated should they prove unfavorable to either party.

In other words, the Japanese don’t play “gotcha” should they find that a contract provision is unfair to the other party. Just imagine how the American legal community is going to adjust to that line of thinking!

Squeeze those suppliers

Unfortunately, many Americans like to negotiate tough deals with their suppliers: Squeeze every penny they can out of the deal. If the deal is unprofitable for the supplier or customer, then so be it. A deal is a deal. Never leave money on the table. It’s every man for himself.

Contrast that with the Japanese approach: suppliers are part of the family. Relationships are for the long term. If the supplier isn’t making a profit, he won’t be around to supply anybody in the future. This is consistent with the traditional commitment to lifetime worker security, which despite the decade-long recession in Japan remains an important part of the culture.

Since suppliers are part of the corporate family, they should be treated fairly. In fact, if a supplier is having trouble with his operations, it is not uncommon for the Japanese customer to send in a team of experts to help rectify the supplier’s problem. If the supplier improves his efficiency and thereby enhances his profit, so much the better for everyone involved.

Plenty of change coming with Nissan

I think Nissan’s coming to Mississippi is going to be good for our state, but once the plant and the suppliers are operating fully, we’ll see tremendous change to that old Magnolia State culture.

The influx of higher-paid manufacturing workers to the Central Mississippi area will be in stark contrast to the current situation. Likewise, the Asian community will grow in number and influence. Education, arts and social services will likely get a shot in the arm since Nissan, along with other Japanese manufacturers, has a history of financially supporting the communities where they locate.

Of course, not everyone will benefit equally from the arrival of Nissan.

Many of our existing manufacturers will lose key workers to the higher paying jobs at Nissan. For a time there will be hardship in finding and training other workers to fill those slots. But eventually, everything will work out. These existing companies will need the state’s assistance in providing workforce training even more than now.

Hopefully, the Legislature will grasp the importance of helping these long time corporate citizens and increase the budget for worker training to accommodate the problem.

Mississippians have a tendency to be welcoming of “outsiders,” but to also hold them at arms length. It will take time and effort to build warm and meaningful relationships, but well worth it — economically, socially and culturally.

The coming of Nissan is one more step forward for Mississippi’s economy, and I’m looking forward to learning from the Japanese in Canton just as I did in Matamoros a decade ago.

Konichiwa, y’all.

Joe D. Jones, CPA, is publisher of the Mississippi Business Journal. Contact him at cpajones@msbusiness.com.


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