From: ar12@quads.uchicago.edu (Richard Nixon)
Newsgroups: soc.culture.usa
Subject: HOW JAPANESE CARTEL DESTROYED U.S. ELECTRONICS INDUSTRY(PBS-TV)
Date: 12 Apr 92 06:36:12 GMT
Reply-To: ar12@midway.uchicago.edu
Distribution: na
Organization: University of Chicago Computing Organizations



HOW JAPANESE CARTEL DESTROYED US ELECTRONICS INDUSTRY (PBS special)

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I found this at monu6.cc.monash.edu.au. It is in pub/Nihongo and is quite
interesting.


----------
This is the text from an episode of PBS Frontline about 
Matsushita, the Japanese electronics giant. This TV program is 
written from a Japanese viewpoint by Shuichi Kato, who narrates the 
program. 

This is really an absolutely shocking account of how Japanese
industry organized itself to seek out and conquer several industries
throughout the world via the use of cartels, illegal secret
agreements, discipline and high quality, racism against non Japanese
(ie. American) employees, government coercion, product dumping on
immense scales and intents to avoid using non Japanese suppliers.

This edition of PBS Frontline talks specifically about how the
Japanese company, Matsushita, ascended to become the world's largest
TV maker and a major power in semiconductor and electronics
technology.  They talk about the Japanese industrial cartel and how
it successfully destroyed the American TV industry by taking
technology from RCA and others and dumping televisions into the US
market while forbidding entry of U.S. televisions into the Japanese
home market. 

Later it discusses the disappointments which resulted when
Matsushita bought the American TV maker Quasar from Motorola. Quasar
was gutted and facts detailing that American workers were treated as
a sub class with a different hierarchy in the company emerged. For
example: jobs for life applied only to Japanese (not Americans, most
of whom were fired when Quasar's technology and production was taken
to Japan), and Japanese workers would get raises and power while
Americans would not.

Mr. Kato also talks about the down side of all of this for ordinary
Japanese people, who are also victims of Japanese corporate
behavior, but in a different way.

The program is a bit slow at first, but quickly gets interesting as
it goes along. Ironically in all of this, George Bush's, utter lack 
of vision and understanding of the importance of this problem is 
clearly demonstrated near the end of the script.

To understand the script:

The name in [ ] is the person talking and remains so until a new
name in [ ] appears. The words in ( ) explain a bit what they are
showing on the TV at this place in the script.

The first few seconds got garbled (about 1/2 of an
introductory sentence), but all the rest of the text is fine).


SCRIPT BEGINS:
-----------------------------------------------------------------

[Shuichi Kato; narrator]
...first couple seconds of the program is garbled...

...Not the japanese people who had followed them so blindly. The
Americans defeated us and liberated us. In crushing our military,
they gave us back the meaning of our lives. Looking back, it is
clear I underestimated one central fact. I was part of a defeated
country, the dynamic between victor and vanquished had been
set...and it would resurfaced. This is now my tenth trip to the
United States spanning 30 years and the tension between the two
countries had always been there, though not as overt and as visible
as today. 

Today there is bitterness everywhere. Japan's new wealth seems to
cause a crisis of identity for americans who are hard pressed to
grasp a world which they may not be number one. But Japans great
strength has also created a crisis for the Japanese , and this I
believe is not so well understood. Our wealth has brought us all
over the world, and wherever we go, we find ourselves in collision
with our own culture. This, in the broadest sense, is the subject of
discussion of this film.

I was in America at Frontline's invitation, to look a one great
Japanese company in the United States. The film would be a
collaboration, Frontline would investigate, and I would bring my
perspective as a Japanese writer. Ours would be a case study of
Japan's troubled expansion to the outside world.

(news casts...sample newscast of Matsushita's purchase of
MCA/Universal Pictures)

It captured America's attention for a single day, the largest
acquisition ever by a Japanese company. For many Americans, this was
the first time they had ever heard of Matsushita. But with its brand
names Panasonic and National, this company is in fact, the 12th
largest in the world and it has a tangled and bitter history in the
United States, reaching back many years.

Konoske Matsushita, founder of the Matsushita Electric Company at
the end of World War II. With his company and his country in ruins,
Matsushita made an unlikely promise, Japan would again be a power
among nations he said, this time through peaceful means. The world
was entering the age of electronics. Japan would be a leader in this
field.

[Hajime Karatsu, former executive, Matsushita]
The first time Matsushita went to America was I believe around 1950.
It was a shock for him. He was seeing America in its golden age. He
set out to achieve that kind of prosperity for Japan.

[Shuichi Kato; narrator]
To understand Japan, you must know that it is a tiny string of
islands with almost no natural resources. To thrive in the modern
world, we must export. But for centuries, Japan had almost no
contact with the outside world. We need the outside world, yet it
has been largely alien to us.

[Hiroshi Kohno, writer]
Konoske Matsushita was a simple man from the country. The needs of
the American people were a mystery to him. He thought about what he
should make. He considered televisions. The US dealers concurred.

[Shuichi Kato; narrator]
Matsushita set his sights on the U.S. TV market. Some 20 years
later, most of the US television industry had disappeared.
Matsushita would be embroiled in legal investigations and his
company would be the largest manufacturer of televisions in the free
world.

(sample RCA commercial is shown)
[Shuichi Kato; narrator]
It seems hard to recall that 30 years ago, the United States
dominated the market for television sets. All across the world,
companies like RCA, GE and Zenith were considered the most
competitive. Japan's market was closed to foreign companies. Unable
to sell their own sets in Japan, RCA and GE licensed their
technology to Japanese manufacturers, including Matsushita.

Frontline's investigation reaches back to 1956. In that year, and
again in 1964, K. Matsushita helped to organize a cartel that
included Sanyo, Toshiba, Hitachi and Sharp. This cartel's history is
known in Japan, but it is mostly Americans who will speak about it
publicly. 

[John J. Nevin, former CEO, Zenith]
We know that the Japanese television industry organized what we in
this country would call a cartel as early as 1956 and uh, they were
setting prices for the Japanese market, they were setting the
discounts that the retailers would be permitted to earn, they were
setting the discounts that the wholesalers would be permitted to
earn, uh they had a fix on the market.

[Shuichi Kato; narrator]
By setting artificially high prices for televisions and other
appliances in Japan, the companies could generate high profits. They
could then use these profits earned at home to undercut foreign
competitors abroad. This kind of price fixing was illegal in America
and Japan. 

[John J. Nevin, former CEO, Zenith]
In uh, 1956 and again in the early 60's, the Japanese equivalent of
our Federal Trade Commission which was really established by US
authorities after the war umm twice charged the Japanese industry
with unlawful cartel action. In both instances the Japanese industry
please no lo contendre, didn't really deny the charges. The cartel
may have had the tacit support of the Japanese government, but the
manufacturers had to hide their double pricing system from U.S.
authorities. They did this through a plan that required the
collusion of U.S. dealers such as Alexander's and Sears.

[Hiroshi Kohno, writer]
Sales proceeded very smoothly. Matsushita the man is still today
considered the god of sales. He took very good of the important
dealers in America.

[Shuichi Kato; narrator]
This is how the plan worked. When Japanese manufacturers sent a
television through customs, they would declare an official price,
high enough so that the U.S. Customs would not investigate. The
manufacturers would then offer a secret refund to the U.S. retailer,
often through a Swiss bank account. The U.S. dealers proved
enthusiastic. 
(picture shown of a check written by Matsushita to Sears Roebuck)

[Shuichi Kato; narrator, picture of Japanese doing exercise and
other rituals]

This is the face of Japanese corporations that strikes fear in
Americans. 1962, Matsushita celebrates its first shipments of the
year. Secretly, the Japanese manufactures were exporting their goods
at prices far lower than in Japan, and perhaps below the costs of
manufacture. Japan's television industry expanded rapidly.

[John J. Nevin, former CEO, Zenith]
The effect of trying to compete with this dumping of Japanese
television receivers at very low prices in the United States was to
force the American television manufacturers including companies like
General Electric, GTE Sylvania, Ford Motor Company that owned
Philco, Maganavox, to the wall. And uh, one after an other, they
either went through bankruptcy, or were acquired by foreign
competitors. 

[Shuichi Kato; narrator]
This price fixing cannot on its own explain one country's failure,
or another's success. It is obvious other economic factors were at
play. The Matsushita company refused to be interviewed about its
history. But the cartel founded by K. Matsushita met until at least
1977, by which time at least 90% of the U.S. industry was gone.

Konoska Matsushita was perhaps the most respected industrialist in
Japan, revered as a moral authority. How could he be seen so
differently outside out shores. And why did he devote himself to
this plan. 

One of the themes of Japanese life has been a moral double standard.
We protect those within our family or group, and we are often
indifferent to those outside it. In our society, even the Japanese
can be outsiders. But the ultimate outsider is the foreigner. K.
Matsushita believed that business would restore Japan, transform our
country into a paradise on Earth. But for business to prosper, he
and his country needed the outside world. How the rest of the world
would fit into Japan's revival, this has never been clear.

America insists on seeing a world in its own image. Your world view,
in its own way, has been as insular as Japan's. Perhaps it is your
religious past, but America is one of the last countries still to
believe in a holy war. You find energy and purpose when you have an
enemy, and today some Americans would like Japan to fill that role.
But had America been attentive, Matsushita and other Japanese
manufacturers could not have harmed the U.S. industry as they did.
In the 60's and 70's, this country seemed so vast and rich, it could
afford to be careless with its future. Japan was all but ignored.
America's heart and mind were elsewhere, consumed by the cold war,
the holy war of its day. 

(an old 60's newsreel on Kennedy's visit to Japan is shown)

When Japanese companies took aim at the U.S. television market, they
faced in many ways, an easy target. U.S. companies had been drawing
large profits from the television business. When challenged, many
firms simply gave up the field in favor of short term profits
elsewhere. In this way, they abandoned not just television, but
related fields such as video recorders, and semiconductors for years
and even decades to come. As for the U.S. government, I think its
actions were negligent. Frontline investigated:

The television dispute became public in 1968, when U.S. producers
charged the Japanese with dumping goods at illegal prices. After a
three year inquiry, the treasury department ruled the Japanese had
been dumping. At the time, no penalties were assessed. 

[John J. Nevin, former CEO, Zenith]
I joined Zenith as president in the spring of 1971. It was a matter
of a month or so after the United States government had come down
with a dumping finding with respect to Japanese television
sets...and I sort of at that point in time discounted the Japanese
threat, I thought it was resolved by the dumping finding. 

[Shuichi Kato; narrator]
As Japanese televisions poured in to the U.S., the estimated duties
climbed to tens or hundreds of millions of dollars. The government
collected 1 million dollars in 1972, then, all collections stopped
for 6 years. At about this time, Japanese housewives met with the
Matsushita company. Japan's consumers had learned how cheap
Matsushita televisions were in the U.S. and had come to protest high
prices at home. Too often this is overlooked, for a company to sell
goods at artificially low prices in one country, it must typically
overcharge in an other. Japanese consumers, and U.S. producers were
on the same side of this battle. But if U.S. policy makers
understood, they showed no sign.

In 1972, Prime Minister Tanaka requested a 1 year delay in all trade
disputes. President Nixon agreed. 

(scene of Nixon giving a speech with Tanaka)

[Shuichi Kato; narrator]
America remained absorbed by the cold war. Japan's only importance
was as an instrument of that policy. So the two countries move to an
unspoken agreement, one I believe was corrupt and harmful to both
sides. Japan would unfailingly support U.S. policy, in return, the
U.S. would overlook our transgressions in trade. 

[John J. Nevin, former CEO, Zenith]
The government of the United States position I think in the simplest
terms, when it looked at the television trade dispute, was that it
was an annoyance. It was a problem that ought to be swept under the
rug. It was not a problem that the Nixon administration, or the Ford
administration, or the Carter administration was willing to confront
at the price of an argument with the Japanese government.

[Shuichi Kato; narrator]
In 1977, a new man took charge of trade, Robert Strauss. There are
now 6 U.S. television manufacturers, compared to 25 when the U.S
industry filed its complaint, yet according to Frontline's inquiry,
no more dumping duties had been collected, and no reasons given.

The U.S. customs estimated that nearly 400 million dollars was owed,
and they sought to collect. The treasury department overruled them.
Furious, the customs officials took their story to a American
journalist. 

[Seymour Hersh, New York Times]
The customs agents, they're cops. And they though the boys in top in
Treasury were fixing the case, that's all, throwing the case, its as
simple as that, good old police talk. They were just convinced that
they were being undercut to use a fancy word, sabotaged to use a
more direct word and they uh.. smelled a rat.

[Shuichi Kato; narrator]
Unknown to the customs agents, Robert Strauss had reached a secret
agreement with the Japanese government. Publicly, Japan put a limit
on future television exports. In return, Strauss wrote a secret
letter assuring that the justice department would not press charges
on unfair pricing, that other investigations would be curbed, and
that the treasury department would quote: resolve promptly, the
dumping charges. 

[Paul Cullen, Attorney]
What happened was that the ability of customs to enforce the law
properly was undercut through pressures from the treasury department
and indirectly through pressures from other parts of the government.

[Shuichi Kato; narrator]
The American government and much of the U.S. industry seemed always
several steps behind. By the time this case was settled, it was
1980. Frontline estimates the government collected perhaps 10% of
what was owed. But even this is not the point, for by 1980, this
dispute was irrelevant, the American industry was mostly gone, and
Matsushita, like other Japanese companies, had seen the writing on
the wall. Trade tensions were too high, Matsushita had to move to
America.

I was in my 30's when I first travelled out of Japan. I remember the
shock of the west, the outspokenness, the assertion of strong
individual style. This was foreign to me, and it took me a long time
to grow used to it. 

I'm sorry Matsushita did not allow me to meet their Japanese
managers here. I would have liked to compare my experience with
theirs. 

Perhaps I had an easier time, I came to do medical research, and
also to write, and I came on my own, but managers arrive as a group.
Japanese society is built on the idea of loyalty to the group, and
so managers must focus inward on their fellow Japanese, even while
living abroad. Its important to remember, they are not free. Theirs
is a divided and precarious position. 

[Trevor Reisz, former manager, Matsushita/Quasar]
There was a young man that was from Japan that truly wasn't the old
traditional Japanese real conservative guy. He was single, at that
time I was single, and we became friends and he happened to play
tennis so we played tennis and we got to know each other quite well.

Then all of the sudden, he disappeared. I don't mean from the
company, but I mean from our get togethers Friday night over at the
bowling alley, umm and I finally called him up one time and I said
'what happened', you know we hadn't seen you for quite a while. And
he says 'well uh. I was kind of told that I'm becoming too
American'.  And I said 'Well, isn't part of your game plan here to
learn about us?', and he says 'yes, but only to a certain extent'.
So the rules for Japanese were also very very strict and could not
be broken, and when they crossed the line they were reprimanded.

[Shuichi Kato; narrator]
The Quasar facility, bought by Matsushita in 1974, its very first
acquisition outside Japan. 

[Jerome Hellmann, former manager, Quasar]
Well, when I first joined Quasar, I went there because I knew they
had a good marketing department and I knew that it was just
purchased recently by the Japanese so the quality and the
manufacturing ought to be improving quite a bit and so just looking
down the road, to me it was a place to be in electronics. Good
marketing, good product and good reliability, that's the place to
be. What the Japanese did to reliability is unbelievable. They took
a product line that had a high repair rate and made it almost a
product that repairs were just not required at all.

[Yoshi Tsurumi, professor international business, Baruch College]
Why was Matsushita able to make this company productive and
profitable when Motorola could not? They consider this the Japanese
paradox. How can the Japanese take corporation that Americans have
thrown away as unprofitable, the Japanese buy it, and within a short
term, turn it around within 6 months or a year, take over and bring
it up to profitability. Its something like a miracle.

[Shuichi Kato; narrator]
Japan's management methods have begun to attract attention
worldwide. K. Matsushita and his company were considered the guiding
spirits of this management style. But now that it had bought Quasar,
Matsushita faced a new and unfamiliar problem. It would have to
practice its corporate philosophy with managers who were not
Japanese. 

[Hiroshi Kohno, writer]
It was Matsushita's first experience in production oversees. The
Matsushita philosophy was based on the Yamato spirit. The Japanese
national spirit. He tried to apply this to the American management
as well and it was completely, flatly rejected. The Yamato spirit,
it means the Japanese nationalist spirit, unity against foreign
enemies and self protection at all costs. Konoske Matsushita applied
this spirit to his management philosophy. 

[Trevor Reisz, former manager, Matsushita/Quasar]
This was at the beginning when I first joined Quasar, and it was a
cafeteria line and I get my tray and you could sit anywhere, and I
uh automatically sat down with the Japanese because I thought it
would be a good opportunity to learn more about the Japanese etc.
And I did this for a couple of times and I didn't see any problem
with it until one of my cohorts told me that maybe it might be a
good idea that if during lunch I ate with the Americans instead of
the Japanese. And I asked 'why?'. He said, 'well, we're discussing
the things that relate to Japan'. And I said 'Aren't I part of it?'.
He said 'no'.

[Almon Clegg, former general manager, Matsushita/Quasar]
Within America, the [Japanese] American companies, there are really
two organizations, there's the Japanese organization and then
there's the American organization. In some companies, in fact in
some parts of Matsushita, I saw complete seperation. The Japanese
had their own organization, the Americans had theirs and they
virtually didn't communicate with each other. They had their own
little cultures and their own little thing going and you could walk
across the hall for example and it was just as though it was a
different company.

[Jerome Hellmann, former manager, Quasar]
Well we would be in a meeting, say it was a product development
meeting, and deciding which models were going to be introduced at
what time and I'd be presenting a plan why I thought this ought to
be happening at this time, this ought to happen at this time and
they'd be maybe four Americans and four Japanese in the meeting. And
after I'd present my position, many of the times, all of the sudden,
the conversation [would] all turn to Japanese. And then they'd be
discussing back and forth, in Japanese what I assume I had just
talked about. 

[Yoshi Tsurumi, professor international business, Baruch College]
The Japanese management system is loved and adored by the average
employee, but not by the engineers, the managers, the professional
level, people who like to have responsibility handed over to them. 

Your going to have all kinds of opposition here, problems,
confrontations. The Americans felt excluded from the decision making
process, felt that the Japanese monopolized it. 

[Jerome Hellmann, former manager, Quasar]
Almost every significant management position had a co-Japanese
manager. Uh, kind of making sure that they could relate back to
Japan what was going on, what was being decided, how it was being
decided and put in their comments and given direction. Although they
were co-managers, there were really separate and independent
personnel structures so to speak. I had my boss, and my co-manager
had his boss, they weren't the same boss. Uh, we had different grade
levels, different salary structures, different chains of command
totally.

[Almon Clegg, former general manager, Matsushita/Quasar]
The Americans play what I would call a support role, they are
advisors, they are staff specialists, they are marketing geniuses,
they are sales experts, but uh, when you are talking about power,
when you are talking about who runs the company, I think that had to
do with who owns this place, and in Matsushita, you know who owns
the company and who runs it, and its the Japanese, and they're very
clear about that.

[Trevor Reisz, former manager, Matsushita/Quasar]
We were not, uh how to put it, part of the family, and I really say
that with a little bit of emotion because a number of us really
tried to become part of the family; really learn the rules of the
game so we could operate within the format, but I feel it was
Japan's goals to make sure we didn't know the rules of the games, so
that we could not become part of the family. And so that we would
make those obvious mistakes and we would constantly be kept outside.


[Shuichi Kato; narrator]
To function oversees, Japanese companies need foreign managers. But
to include them within the group carries risk. The company may fear
losing the discipline that has brought it so much success. 

(scene of a Japanese tending a rock garden)
Perfection is Japan's enduring national value. More important than
religion, or ideology, perfection to us is almost an aesthetic
sense, deep in our culture and hard for other countries to imitate. 

This artisan tradition of perfectionism has been very useful in the
making of cars, or vcr's.

[Trevor Reisz, former manager, Matsushita/Quasar]
One has to get a feeling of the whole manufacturing environment,
when you walked the production line, and if you can picture 50 or 60
people in a row putting a little part in and passing a part down,
that when a group of people were ushered into this environment, that
no one looked up! At every line, the lines basically competed
against each other for quality, for zero defect, so there was a
tremendous pride instilled in the factory environment, that they're
part of a whole mechanism, part of the wheel. 

(scenes of Japanese doing morning exercises)

[Shuichi Kato; narrator]
Matsushita's strengths and its weaknesses are in many ways the same.
Like other great Japanese companies, Matsushita has tapped into the
conformity and anxieties of the Japanese worker, and mobilized these
into a vast group effort.

Village life, and the extended family had vanished from our culture,
and the company has taken their place. 

This group spirit, the source of Matsushita's insularity is part of
its great industrial strength. 

[Almon Clegg, former general manager, Matsushita/Quasar]
A well run company, well managed and always looking after the best
interest of the company on a long term view. Interestingly enough,
and many Americans have taken this as a humorous attribute, but
Matsushita actually has a 250 year plan. There's a serious attempt
on the part of top management to view the company as a very long
term entity. 

[Shuichi Kato; narrator]
In the 1980's, matsushita's fortunes were tied to a single product,
one that would make them far richer and more powerful than they had
ever been. 

[Yoshi Tsurumi, professor international business, Baruch College]
The VCR, like the microchip, is a symbol of some of the battles
between the United States and Japan. Ampex had been selling it at
the time for $100,000. It was a huge ungainly piece of equipment. 

(sample Matsushita/Panasonic commercial)

[Almon Clegg, former general manager, Matsushita/Quasar]
They just simply don't give up. And if they once have determined
they're going to enter this market or that market, they just say
"we'll keep trying", redesigning the product, revising it, improving
it. 

[William Holstein, writer and editor, Business Week]
They are a real machine when it comes to making things. Uh, in one
case, a VCR factory in Washington State that I visited, they were
able to throw up the factory and get the production line moving in
four months. Its staggering how fast they can move.

[Shuichi Kato; narrator]
Matsushita, at one point, was producing two thirds of all VCRs
worldwide. An American shopping for a VCR might have looked at GE,
RCA, Sylvania, Magnavox, Montgomory Ward, Quasar, or Panasonic and
have no idea all were Matsushita made. 

(sample Matsushita commercials from Japan are shown)

[Shuichi Kato; narrator]

Matsushita had proven itself one of the greatest manufacturers of
all time. 

At the end of World War II, this company had been near collapse. The
Japanese had looked to America to revive their companies, their
economy. Now, the tables were turned.

(scenes of a groundbreaking party in a U.S. town where Matsushita is
building a factory)

[an unnamed American]
Its a great day in Algien, beautiful weather, and we're having the
groundbreaking for Matsushita, their building a new facility here in
Algien, something the likes that we haven't seen.

[an other unnamed American]
Its a very credible company, and really means good economic things
for the Algien area. 

[Shuichi Kato; narrator]
Today, Americans are competing for Japanese investment, hoping to
lift their economy and improve their living standards that have been
stagnant for 20 years. The U.S. is ambivalent, even as it clamours
for this investment, it also resents it. One can sense wounded
nationalism in the air.

European money pours into the U.S. unnoticed, Japan's causes an
uproar. Is this racism? Perhaps, there certainly is fear of the
outsider. But there is also a belief among Americans that they have
not been served well by Japanese business. There has been fear,
there's also been disappointment.

[William Holstein, writer and editor, Business Week]
When we threw open the gates in the mid 80s to a flood of Japanese
investment, we had certain assumptions about how it would be. We
thought that there would be all these ripple effects, the so called
multiplier effect of a plant, it would ripple through our whole
supplier base, and the tax revenue would be tremendous and that the
technology transfer would be significant. We thought that these
investments would be a part of the revitalization of American
competitiveness. But we didn't do a very good job in spelling out
what we wanted the rules to be. We didn't spell it out because we
assumed that they would do it the same way we would do it.

[Shuichi Kato; narrator]
Americans like to think capitalism the world over is run American
style. This is not always true. Coming from Japan, our corporations
have brought with them their own ways, and their own long standing
relationships.

(scene of a Japanese ritual)

[Shuichi Kato; narrator]
At the time of this filming, this young manager is preparing to fly
to America. He is drawn by the bonds that tie one Japanese company
to another. 

[a Japanese priest]
"Take care of yourself and work steadily for the country, I pray for
you"

[Shuichi Kato; narrator]
For many years, this small company, Matsui, has been a supplier to
giant multinationals in Japan, including Matsushita. These ties will
now continue in the new country. When large Japanese companies move
abroad, studies have found they will typically use suppliers they
know from their home country, even when it is more expensive to do
so. The close ties between Japanese companies can make for a
separate society. They are in the United States, but not fully a
part of it. 

[William Holstein, writer and editor, Business Week]
The host country does not get the same kind of benefits that they
would have expected. The trade imbalance with Japan doesn't
disappear in the same way, because the unit is still buying from
back home. 

[Shuichi Kato; narrator]
At times, Americans have been slow to recognise this problem.
Consider for example: Quasar.

(sample news clip about Matsushita/Quasar plant in the suburbs of
Chicago)

Quasar's success was celebrated in the American media. But Frontline
found that Quasar was being gradually hollowed out from the inside.
The parent company soon began shipping equipment and parts from
Japan. 

[Trevor Reisz, former manager, Matsushita/Quasar]
Quasar was a company that manufactured nothing. We were a sales
company, we were a distribution organization. Who did we buy from,
we didn't have the luxury to go out into the marketplace and say
'well lets see who we can buy from this week, who has the best price
on the market', we were forced, or obliged as you may, to buy from
Matsushita, the manufacturing organization. Of course what they did
is that they began shipping their own guts so to speak or the
chassis from Japan and uh, putting them into cabinets, turning
Franklin Park, or what was left here into pretty much a final
assembly operation. 

(sample Quasar commercials shown)

[Shuichi Kato; narrator]
Publicly, Quasar was an American television not subject to import
duties or quotas.

[an unnamed American, probably an ex-employee of Quasar]
Inside the TV set, there was no doubt that the entire product was
Japanese, or Japanese sourced. As was if you looked at the net
effect of a Matsushita taking over Motorola and moving in the
direction that they did is the,..you lose technical skills, you lose
tax income, you lose jobs.

[Shuichi Kato; narrator]
Shortly after buying Quasar, Matsushita shut down two plants in
Illinois. Later, Quasar's American research and engineering staff
was phased out. The next phase took place in 1986. The television
industry was in recession. 

[Jerome Hellmann, former manager, Quasar]
Well in March of 86, Quasar sent me to Japan to go to director's
school, and on that trip, I came back with a new head Japanese guy
for Quasar. And, when we came back, rumours kind of milled around
that he had had previous experience where significant layoffs had
taken place. Then in early May, 60 days later, one evening, I heard
something's coming down tomorrow. 

[Shuichi Kato; narrator]
The Matsushita company had pioneered the system of lifetime
employment. It was proud that in its 70 years, it has never laid off
a Japanese employee.

[Jerome Hellmann, former manager, Quasar]
I came in the next morning, and of the sudden, I kept hearing 'this
guy just got it, this guy just got it, this guy just got it', then
my phone rang about 10 'o clock. It was personnel, then I'm walking
down the hall knowing what's going to happen. I went into the office
and basically they said to me "I guess you've heard what's
happening, I just wanted you to know that its going to affect you".
Well I kind of prepared myself for this walking down the hall "its
no big deal, if its got to happen, its got to happen, lets go on
with your life, go find an other job and keep going. no big deal".
But what really affected me, and hit me with a ton of bricks is I
asked "what kind of time frame are we talking about here?". He said
"we'd like to have your desk cleaned out by noon."

[Trevor Reisz, former manager, Matsushita/Quasar]
My response when I heard about that reduction in force was I don't
believe that they could have let the few key people that could
really save Quasar, could continue its existence, that those were
the ones let go. My first question was "how many Japanese
left", because I knew the answer, and the answer was none.

[Jerome Hellmann, former manager, Quasar]
Well if you took all the employees of Quasar, and listed all the
Americans in one column and all the Japanese in the other column,
all the people that "got it" that day, all came out of the American
column. Its as simple as that. 

[Shuichi Kato; narrator]
It would come as no surprise to Americans that a lawsuit followed,
and it tells the story. Three quarters of the American managers were
let go, while the Japanese were kept. The American managers who
remained had their salaries frozen, the Japanese managers received
wage increases. This grim cultural divide had slipped into public
view.

(scene of K. Matsushita's funeral)

[Shuichi Kato; narrator]
In April of 1989, employees of Matusushita had mourned the death of
their founder. He had been a standard bearer for Japan's revival

(speaker reads the following letter from George Bush, president of
America)

[George Bush letter read out]
"Mr. Matsushita was an inspiration to people around the world. He
urged Japan to take its place as a full member of world society, and
to help others achieve the prosperity that Japanese had worked so
hard to attain. We will miss him, but his spirit will always be with
us, my best wishes to all your family at this time of sadness.
Sincerely; George Bush."

[Shuichi Kato; narrator]
Many feel that the changing of the generations will solve Japan's
problems with the outside world. "The old guard is passing" it is
said, "the young will prove more worldly". I do not believe so. 

For some years, this company has tried to change. Its slogan is
kokusaka, internationalization. Its leaders know they must join the
rest of the world. But for the Japanese employees, the large
companies are a passport to a life. Exclusive source of income and
friends for their adult years. Under these circumstances you cannot
afford to be an outsider. The sole Matsushita executive we were
allowed to meet was pessimistic about internationalizing the
company's culture. How long would it take we asked. He said "100
years".

(more Matsushita commercials are shown)

[Shuichi Kato; narrator]
Today, Matsushita company makes products all over America. Cathode
ray tubes in Ohio, workstations in Colorado, electronic pagers in
Georgia, in flight communications in California. Controversy seems
to have followed. There was price fixing of VCRs, dumping of
electric typewriters. In the courts, there are charges of patent
infringement for television cameras and optical disks. 

[William Holstein, writer and editor, Business Week]
Its almost like we have rushed into marriage, economic marriage
which we have, so deeply interpenetrated, yet we're now beginning to
wake up and say to the person whom we've married "who are you?". And
we were in this very awkward situation, and "I want you to change",
and you say to me "I want you to change", its not gonna happen
really that way so inevitably, there are going to be strains.

(scenes are shown of L.A. with pictures of very large Japanese banks
who own tall buildings in L.A.)

[Shuichi Kato; narrator]
Here in Los Angeles, you feel how fully these two economies are
married. The past three years, SONY has bought Columbia, and
Matsushita has bought MCA/Universal; to name just two purchases
among many.

(scenes of a shopping mall in L.A. with Japanese writing in all the
stores)

[Shuichi Kato; narrator]
An entire shopping center serves the Japanese community. As our
numbers here grow, we begin to make an enclosed community, an easy
target of American resentment. 

(scene of a Japanese restaurant)

[Shuichi Kato; narrator]
The Thousand Cranes Restaurant in downtown Los Angeles. It is all
too easy for Americans to despise us, just as 40 years ago, rich
Americans abroad were despised. But the men here are no one's enemy.
If you were to listen in, what you would hear might surprise you.
Late in the evening, you may hear jokes about superiors, weary
sarcasm about the companies for whom such men work.

Managers have surrendered their time and their lives to their
companies. And privately, many feel anguished about it. This is what
Americans have not understood. The walls of Japanese corporate life
that shut you out, shut us in. The power of Japanese corporations is
a problem for Americans and for us as well. More than any other
institution, the corporation enforces our national conformity. As
the great companies gain power, there is less choice in Japanese
life. When I fly home, I prepare to re-enter a society where freedom
is found only at the margins. I am going to a country where there is
little room for the outsider, whether foreign or Japanese. Can this
change? Only if individuals will stand up to the group and stake a
claim against conformity. This I believe, is the central crisis of
Japanese life. If we can confront it, then perhaps we will have less
conflict as we encounter the outside world.


THE END
-----------------------------------------------------------------

Such corporate policies are, in the long term, bad both for 
America and the ordinary Japanese people, to whom nothing is held  
against by this article.

These kinds of actions on the part of gigantic Japanese
multinationals are as big a threat to our way of life in America as
the Soviets ever were. In fact, they are probably even a bigger
threat because the Soviet system was not sustainable over the long
term, but the Japanese industrial system is. America cannot remain
a world leader if it does not have the revenue generating commercial 
technology base to support the country. Don't kid yourselves, simply 
borrowing billions every year to maintain America's status will not 
succeed in the long term. Like the Soviet experiment, such an action 
is not sustainable, and in the end, is doomed to lead to very dire 
consequences for our country and our living standards.

The consequences of economic warfare and military warfare are
strikingly similar. Driving American industry out of business (be it
cars, semiconductors or industrial equipment) through economic
warfare is tantamount to dropping bombs on it. In both cases the
factories are gone, the workers are unemployed and the technology is
lost. This is what America is currently up against.

If what you read above disturbs you, tell your friends, and help
protect our own country's industries by looking for quality and buying 
American whenever you can. A threat like this can be fought, one 
American at a time. Hopefully, we will eventually elect politicians 
who will stand up and take substantial actions to defend our country 
from such economic attack. We are in essence, fighting a war, but 
unfortunately, most of us don't even realize it yet.

---
PBS Frontline: Coming From Japan
WGBH Boston

To order the video:
1-800-328-PBS1

or write:
PBS Video
1320 Braddock Place
Alexandria, VA 22314

(Please support PBS, they are there to serve you)

-------------------------------------------------------
I would be interested to hear you comments on the above article.



-andre
ar12@midway.uchicago.edu
----
Today, Nintendo, Honda and Japanese flat computer screen makers are 
doing the same thing today...

"A Japan that can say no", an other equally disturbing piece written
by Akio Morita (CEO of SONY) and a Japanese politician
is also available via ftp
at:
monu6.cc.monash.edu.au     in    pub/Nihongo