On 18 October 1999, Carlos Ghosn, the CEO of the Nissan Motor Company announced that the company would implement the ‘Nissan Revival Plan’. The main objective of this plan was to downsize the company in Japan to reduce the number of plants and payrolls by 2002, and open alternative factories in mainland China, in Beijing and Hubei province under a joint venture with France’s Renault and China’s Dongfeng Automobile Company. Under this plan, three vehicle assembly plants in Japan - Murayama, Nissan Shatai Kyoto, and Aichi Machine Industry Minato - and two plants producing engines - Kurihama and Kyushu - were shut down, while tens of thousands of employees were made redundant.
In the Nissan group as a whole, a total of 21,500 employees lost their jobs – 4,000 in the production department, 6,000 in sales management, and 6,500 in sales outlets across the country, while 5,000 workers were displaced as a result of the sales of some businesses. In addition, the number of parts-producing companies trading with Nissan was reduced from 1,145 to less than 600 by the end of 2002. This appeared to be Nissan’s new restructuring plan, yet in fact it was only a copy of the ‘Global Business Innovation’ that was disclosed in May 1998 by Nissan’s then president, Mr Hanawa. The Revival Plan put the Global Business Innovation into a concrete shape. Following is the gist of the Global Business Innovation:
• increasing the operating profit of consolidated net sales by five percent, and reducing the consolidated interest-bearing liabilities by one trillion yen in year 2000;
• reducing the number of kinds of car body from 25 to 14 by the year 2000, then to 10 kinds by 2002;
• downsizing the domestic sales channel from the current four systems to two systems;
• rebuilding the business in the US;
• rearranging the production lines to increase production efficiency;
• reducing overall costs by 400 billion yen by year 2000;
• realising a ‘small headquarter’ under the business innovation scheme;
• selling its real estate and securities;
• reducing the inventory by 250 billion yen by year 2000.
In addition, the plan aimed at reducing the number of indirect employees and improving its operational style to enable the company to earn profits from the domestic production of 1.7 million cars.
Equipped with the Global Business Innovation, Nissan intended to raise as much capital as possible. However, the plan did not work as the company had expected. Meanwhile, Nissan decided to merge with Renault by receiving 640 billion yen, and invited Mr. Ghosn in as a cost cutter.
Nissan’s management policy
As a main reason for the Revival Plan, Mr. Ghosn (CEO) raised poor business results pointing out its drop off in global share, production amount, and domestic shares since 1991, as well as the fact that the company incurred losses seven times in the eight years to 1999. So in those eight years, what policy was taken by Nissan management? The following explains it briefly.
In 1991, Mr Kume, the company’s then president announced 1991 - 1993 medium-term business management plan, which aimed at ‘establishing a profit-making business style’. In order to achieve the goal, it emphasised increasing overall productivity, implementing cost reduction for domestic production as well as for purchases, while increasing efficiency at the headquarters and overall production efficiency by combining development and production. However, with the collapse of Japan’s bubble economy, the business results of the company also deteriorated.
As domestic demand decreased further in 1992, it re-identified its goal as building a structure that produces reasonable profits with the production of two million cars (1.2 million cars for the domestic market and 0.8 million for export), while implementing measures promoted by the 1992 - 1994 medium-term business management plan such as ‘corporate reform toward a high profitability style of business’ and ‘securing reasonable profits between 1992 and 1994’. Though it hoped to have a current account surplus, the result was a deficit.
In 1993, Mr. Tsuji, the company’s then president regarded its 1993-1995 medium-term management plan as a business structural reform, and made drastic restructuring plans, closing the Zama plant, firing its 5,000 workers within two years, and transferring its textile machine division to a new company. Moreover, with the intention of avoiding three consecutive years’ deficit, the plan reduced the amount of the year-end bonus by 60,000 yen (US$565) for each worker. In spite of the restructuring, however, the company recorded a current account deficit for the first time in its history.
As domestic and overseas demand remained low in 1994, Nissan announced implementation of a structural reform plan to achieve a 1.8 million domestic production system by accelerating the 1993-1995 medium-term management plan, following the 1994-96 medium-term plan. Besides, in order to reduce electricity bills, it decided that employees should work on weekends during the summer. The result of these measures was a loss of profits three years in a row.
In 1995, the 1995 - 1997 medium-term management plan was drafted, with the intention of rebuilding the company. The three year goal was maintained, aiming at establishing the 1.8 million production system (already 1.6 million in 1994), improving sales and brand power, while reducing direct and indirect employees by 20 percent. With the closure of the Zama plant as well as the weekend working during the summer, the company somehow had a current account surplus.
In 1996, a labour cost reduction scheme was implemented. This reformed the salary system for the worse (increasing the percentage of the merit-based system) and reducing the salaries of middle-aged and older workers. Also, it recommended an early retirement plan for senior workers as it hoped to reduce labour costs further. As a result, consolidated accounting got into the black in the second year of the 1995-1997 medium-term plan.
In 1997, president Hanawa announced a new goal: it would increase domestic share to 25 percent by 2000, and to 30 percent by 2010. In order to raise sales, 30,000 sales personnel were trained with the necessary skills.
The Global Business Innovation mentioned earlier was introduced in 1998, and working two consecutive shifts was also introduced at some vehicles assembly plants to reduce labour costs.
In 1999, the business of Nissan’s textile division (Nissan Texsys) was transferred and the Fuji plant was converted to a new company, while the forklift division was sold off. It was also this year that the capital alliance with Renault and the introduction of the Revival Plan were announced.
The number of Nissan employees in Japan reduced from 57,000 in 1990 to 38,000 in 1998. It became obvious that Nissan’s management policy was to cut the number of employees as easily as cutting the tail off a lizard. Without knowing the pains experienced by the workers, it gave up the idea of company reconstruction and quickly turned to foreign capital without shame.
Labour Union of Nissan
Despite the gloomy situation surrounding Nissan, the Nissan auto workers’ union, consisting of 40,000 members, had never raised its voice in objection, and conducted no protest actions to the plan. But it was not only the Nissan auto workers’ union that failed to raise its voice. The Nissan workers’ union had set up the Confederation of Nissan Workers’ Union (200,000 members) with Nissan-related companies and dealers, which joined the Confederation of Japan Automobile Workers’ Union, or JAW (800,000 members). Neither the Confederation of Nissan Workers’ Union nor JAW had lodged protests against the plan.
Mechanic in a Tokyo factory
Photo: J Maillard © International Labour Organisation
The Nissan workers’ union and the Confederation of Nissan Workers’ Union made a public announcement on 18 October saying, “… considering the current situation surrounding Nissan Motor Company, as well as the Nissan group, it is unavoidable to accept the structural reform plan of the company”. By saying this, it was clear that they accepted the revival plan, which brought about the closure of five plants and dismissal of the workers, without asking the members whether or not they approved. It was not until 27 October that the union officers finally reported to the members that they would:
• secure employment for workers, which meant that no union members would be forced to leave the company against their will;
• create a situation whereby members could share the pain caused by the plant closure, while also taking the members’ will into consideration;
• ask for better conditions when transferring members to places where it would be impossible for them to commute to;
• secure jobs for members who could not transfer to another plant because of family or financial reasons.
• give sufficient consideration to members affected by the closure of the Zama plant as well as the business transfer of Nissan Texsys.
Brief history of the Nissan union
The Nissan workers’ union was formed in 1953 for the purpose of dissolving the Nissan affiliation to the national centre of all automobile workers’ union, which was called a leftist union at that time, and it made quite an achievement in implementing its objective. It also gained a reputation as a rightist union when Prince Automobile (formerly Murayama plant) and Nissan merged in 1966, as they succeeded in breaking up the national centre of the metal workers’ union - Prince automobile division, and violently attacked those who did not surrender to the break up and stayed in the union. In the 1960s, the union played a part in the rapid growth of the automobile industry and enjoyed a honeymoon period of labour relations. Meanwhile, it acted as a dictator at the workplace, threatening and being violent to rank and file members. However, when the automobile industry faced serious low cost competition and internationalisation while moving into a low growth period, the then president Ishihara and Mr. Shioji, a chairman of JAW, and a ‘boss’ of the Nissan workers’ union were in deep disagreement over further restructuring plans and strategy for the company. After chairman Shoji was finally deposed in 1986, the Nissan workers’ union proceeded in typical Japanese labour relations - cosy relations where the union expresses no complaints and conducts no protest actions - neglecting its role to monitor management and represent the interests of workers. It is thus quite obvious that the Nissan workers’ union is partially responsible for implementation of the Revival Plan.
Struggles with the Revival Plan
The Japan Autoworkers Network made an announcement on 30 October that they were “… opposed to Nissan’s grave restructuring plan”. In the announcement, we pointed out that:
“The plan imposes many sacrifices upon workers while disclosing the company’s negligence and responsibility for the past management system as well as its social responsibility as a well-known company.”
Worker on the assembly line at a Tokyo machine-tool factory
Photo J Maillard © International Labour Organisation
“There is no doubt that as a result of the plant closure, the workers will be transferred to other plants located in remote areas where they are unable to commute, or forced to accept early retirement.”
“The plan will not only destroy the lives of workers at the plants and the parts-producing companies as they may be pushed into bankruptcy by low-cost competition, but also will affect the local economy where host plants and companies are located.”
“We will never allow such merciless plans that impose many sacrifices upon the workers. We will stop the company from implementing this grave restructuring plan and struggle for such a well-known company to accept its social responsibilities towards our members who work together and continue the struggles at Nissan Motor Company Ltd.”
While releasing the protest announcement, we also set up the ‘No to restructuring plan of Nissan! Hotline Committee’ with friends from the network of small- and medium-sized labour unions as well as the Kanto region branch of the All-Japan Shipbuilding and Engineering Union.
The Hotline Committee had conducted a telephone consultation programme across Japan several times, aiming at organising workers who were concerned about the Revival Plan. This telephone consultation programme turned out to be very successful in getting so much attention from society as it was well-covered in newspapers. Meanwhile, a minor labour union of Nissan, which serves as Nissan Motor branch of the All-Japan Metal and Information Machinery Workers Union (JMIU), challenged the Revival Plan making demands such as no more downsizing and providing the workers with an environment where they can continue to work and live without fear of losing their jobs. They also organised workers and set up an organisation called the Office of Local Struggles Against the Nissan Restructuring Plan in co-operation with the national labour centre, the National Confederation of Trade Unions (Zenroren). While their energy was focused on opposing the plant closure, they tried to seek international solidarity with a Renault labour union by inviting a representative from CGT Renault Workers’ Union to their protest rally.
However, their struggles were not enough to prevent the Revival Plan from being implemented. To our surprise, the plan became a model for rationalisation and downsizing tactics taken by other well-known Japanese companies. Nevertheless, the possibility became clear that the workers were able to impede Nissan’s unforgivable rationalisation plans by making tireless efforts at the workplace and seeking solidarity as well as co-operation among the workers at local level. The struggles of the All-Japan Shipbuilding and Engineering Union, the Isuzu Motor Affiliated Society, and the Yasaka Affiliated Society are successful cases that benefited from local co-operation. These cases clearly showed us the importance of local co-operation and solidarity beyond the frame of the companies. For the Japan Autoworkers Network, the international co-operation and solidarity that the Network established with Toyota Motor Philippines Corporation Workers Association (TMPCWA) became a critical aspect.
Current situation at Toyota
Despite the fact that Toyota Motor Company was recording the highest current account profits in its history, it did not stop attacking workers using ‘economic depression’ as an excuse. Production has already reached the limit of plant capacity, yet the downsizing tactics were still on the way to being implemented. Many workers are exhausted from overtime work every day. They say, “When I get home, all I can do is take a sip of alcohol and go to sleep. How could I possibly remove my exhaustion?” It is no wonder that the number of suicides is increasing, and there is no guarantee that we will have no accidents at work as happened at big-name companies like Bridgestone where workers also suffered from restructuring. All those troubles can be attributed to a failure of management and its malicious proposal.
Nevertheless, attack from the management never stops. In addition to the recent degradation of the salary system, the company abolished the age-based salary system totally and proposed a change in the retirement allowance system. The company and the union officers held several meetings to discuss ‘possibilities to change the company’s several systems’. Through the months of discussions Toyota management tried to abolish the age-based salary system of the plant workers, as it had already done to the office workers. This way the management developed an integrated pay system, the ‘merit-based system’. Management emphasised that with the current salary system, we had no chance to ‘win the international economic war with countries like China’. They also told workers that the ‘age-based system is already out of fashion’ and ‘even if you make an effort at work, you won’t be rewarded properly under this salary system’. In fact, they were only making poor excuses such as the rapid growth of Asian countries and domestic economic repression for exploiting workers. In order to increase company profits, it does everything from forcing workers to compete with each other to exploiting them with unacceptable salaries.
The exploitation can also be observed in the change of the retirement allowance system from the ‘basic amount of salary at the time of retirement times the coefficient’ to ‘evaluating one’s performance every year during one’s employment period, and convert the total points to the retirement allowance’. This implies that the workers are only used as slaves while employed by Nissan, while the gaps between workers are expanded. These detrimental changes in the systems are a harsh attack on the middle-aged and senior workers – one third of Nissan employees. There is no doubt that senior employees who noticed the company’s intention to profit by reducing payrolls are starting to show strong opposition to the plan.
At a union discussion, officers were unable to give any convincing explanations to the member’s angry comments like, “I cannot make my retirement plans!”, “Are you [union officers] aware of the pains and difficulties that the members are facing now?” When a worker asked the officers how much workers’ wages would be reduced and to exactly what level, their answer to him was, “We don’t know yet, but be prepared for a great reduction.” As soon as the members heard the answer, they showed the officers their strong rejection of the plan. As this is a major issue among workers these days, their anger towards management never subsides.
This essay is an edited version of a paper presented at a Conference ‘Automobile Workers in Globalising Asia’ organised by Centre for Education and Communication and Asia Monitor Resource Centre in New Delhi, 30 November – 1 December 2003