Shockwaves continue to roll through Japanese manufacturing -- the very sector that has underpinned this country's economic prosperity for decades.
In the auto industry, it has emerged that Subaru Corp.'s vehicle inspections were being conducted by uncertified staff, with licensed inspectors allowing them to rubber-stamp the paperwork after the fact -- almost exactly the same practice as was recently uncovered at Nissan Motor Co. At Subaru, the illicit inspections had been going on for more than 30 years, apparently effectively becoming a normal part of factory operations. As a result, the company is now mulling recalling over 250,000 vehicles.
While Nissan may have been doing the same thing as Subaru, it further inflamed consumer distrust with its initial response. When the inspections by unqualified workers were uncovered, Nissan publicly vowed to tackle the problem. However, the unlicensed inspections continued.
Taking one quite large step deeper into corporate bad behavior, there is also the case of Kobe Steel Ltd. The firm, a maker of metal parts used in everything from cars and bullet trains to Japan's H-IIA rocket and equipment for the Self-Defense Forces, falsified the strength data of its products even when obtaining Japan Industrial Standards (JIS) certification. JIS is extremely demanding, and helped elevate the reputation of Japanese products overseas -- making Kobe Steel's actions all the more damaging.
Because that is the real worry in all this: that distrust of Japanese products will spread internationally.
It was not just Japanese companies that were using Kobe Steel parts, but many foreign firms including automakers in the United States as well, prompting the U.S. Justice Department to open an inquiry into the scandal. The European Aviation Safety Agency (EASA), meanwhile, has advised aircraft makers to stop using Kobe Steel products. It should be noted that the U.S. and Europe are also major markets for Nissan and Subaru.
There is a real danger that this string of scandals involving some of Japan's best-known companies will demolish the "Japan brand," which owes so much to high product quality.
Japan became a prosperous country in the decades after World War II by importing raw materials and making them into finished products for export. China has used its cheap labor costs to attract manufacturers and transform the country into the "factory of the world," but Japanese goods have remained competitive because of their excellent quality.
The font of this quality advantage is Japan's meticulously detailed production processes combined with a sincerity of purpose among its workers. If distrust of Japan's quality management mounts, then confidence in Japanese products will sink. It would not be surprising, then, to see foreign consumers and firms begin to shy away from buying Japanese.
Observers have said that the roots of the recent rash of illicit practices lie in Japan's labor shortage and prioritizing meeting deadlines above all else, causing sloppy quality management. Intensifying international competition is also pushing Japanese companies to cut costs, and we wonder if the pressure to save, save, save has been shifted primarily to the factory floor.
The companies that caused the present crisis must promptly clarify exactly what has gone on and quickly move to regain trust. Toyota Motor Corp. has reported to the Japanese government that the firm has no problems with its vehicle inspection regime. We urge other companies to perform their own internal reviews as soon as possible.