Reckoning

by David Halberstam

  If that was not bad enough, a second struggle broke out, this time over the size of the factory. The failure to move quickly had already proved costly, and by 1959, with the coming of the Datsun 310, which was an immediate success, the old Nissan production lines were sorely overloaded. (In 1959, as Michael Cusamano pointed out in his excellent book on Nissan and Toyota, they ran at 94.2 percent of capacity—and by 1961 at 113.6 percent of capacity.) The men and the machines were stretched to the breaking point.

  The product people were extremely confident about the future. They knew they had tapped into something formidable that was only just beginning, and they wanted a big factory. The responsibility of arguing for a large new plant fell on a young engineer named Shiro Matsuzaki, who ran the engineering section at the Yokohama plant and had a very clear idea of the degree to which Nissan’s facilities were overwhelmed. Matsuzaki had studied the history of both the American and the European auto industries, and he believed that Japan was just on the edge of takeoff. He also knew how cautious Kawamata was. If only, Matsuzaki thought, Kawamata could be like Yataro Nishiyama of Kawasaki Steel. Nishiyama was a hero of Matsuzaki’s, as he was of many of the young production people in Japan. For he had taken on and beaten the feared Hisato Ichimada, the very conservative head of the Bank of Japan, a man so powerful and autocratic that he was known as the Pope, a man whose instinctive response to every proposal was negative. Nishiyama, absolutely sure of the prospects of Japanese steel, had proposed a vast expansion of Kawasaki—“ten times what we had in capital,” he later told Matsuzaki. Ichimada had, of course, opposed him, and Nishiyama had gone elsewhere and obtained the financing; the result was that his firm became a leader in Japanese steel’s very successful move into a highly modernized future.

  Matsuzaki had visited Nishiyama at his mill and had been impressed by him and the gleaming realization of his dream. This, he thought, is a great man, one with courage. Nissan, he was certain, could do the same thing. The visit with Nishiyama encouraged him to push ahead at Nissan. He asked his superiors if he could see Kawamata personally, in order to ask him to approve his own plan for massive expansion. His superiors were perfectly happy to let him, a relatively junior figure, make the case to Kawamata. Matsuzaki and his colleagues knew what they needed: a new factory, one that could produce twenty thousand cars a month. The ability to produce twenty thousand more cars a month would carry Nissan past Toyota.

  So it was that Matsuzaki went to see Kawamata. He respected Kawamata because he was a superior, and he wanted Kawamata to share Nishiyama’s vision. He felt he was taking his life in his hands. He decided that if Kawamata approved the plan and the new capacity proved to be more than the company needed, he would leave Nissan. He found Kawamata unsympathetic to the idea, considering it too risky. “In order to get that much money,” he said, “do you know what I would have to do?” Matsuzaki said nothing, for he knew he was not supposed to reply. “I would have to bow my head many times to the bankers. And if the project failed,” Kawamata added, “I would have to enter the priesthood. Do you still want me to do it?” Matsuzaki, feeling his entire career was on the line, said yes, he thought Nissan had to push forward, that all of the company’s engineers were in agreement on this. But he soon saw that Kawamata was adamant. The cost of so large a factory—perhaps $100 million—was beyond his mental capacity. He refused to budge.

  Kawamata called in an American consulting team which had already done some work for Nissan, and it suggested a compromise figure for the new factory’s capacity—seven thousand cars a month. Again Kawamata refused to budge. He insisted on five thousand, and five thousand it was. Thus from the start the Oppama plant was overloaded. The factory had to go on a double shift, which was hard on the workers. Even with the double shift, production was inadequate. Almost immediately Nissan’s engineers had to build an additional factory at a site near Zama. From then on, many of the product people were ambivalent about Kawamata. They were aware how hard many of his decisions had been in those years; the cost of the Oppama plant, even in its scaled-down size, was greater than the paid-up capitalization of Nissan, which was the kind of statistic that would strike terror into the heart of any good conservative American manager. But they thought he had been too careful and squandered a chance to move ahead of Toyota, perhaps permanently. Years later one of them said: “I don’t know whether to be grateful to him for saving the company or angry at him for crippling it.”

  Yet for all of their frustrations with him, there was no doubt as the decade of the fifties ended that this was Kawamata’s company. He had moved aside all of his potential challengers. If he was less than confident of his judgment on product and cautious about investing in plants, he was vigorous in the use of his political skills to solidify his control. The basis of his strength was the union and its leaders—Masaru Miyake, who had formed the company-approved union at Nissan that had beat out the radical one, and Miyake’s ambitious number two, Ichiro Shioji. If executives outside Kawamata’s circle challenged or seemed to challenge Kawamata’s people, the union intervened and made their lives as difficult as possible; suddenly there would be slowdowns on certain shifts, or supplies that had been ordered long in advance would not show up on time. Those who played along with Kawamata and the union looked good; those who did not play along would always fail. Kawamata was the beneficiary—but there was a quid pro quo. Miyake and Shioji in effect had a veto power over all personnel changes. Some of their supporters were soon given key jobs in middle management, pushed ahead of more senior but less trusted, less well-connected executives. Nothing happened in the company without their approval. Technically they were union men, but in effect they were not only management but top management. To other employees it was as if they ran the company.

  In some ways Nissan was not that different from other Japanese companies. Though the Japanese prided themselves on the harmony of their working environment, the truth was that most companies were beehives of competing cliques and political factions, and there were often enormous tensions just below the surface. The differences might not be visible to outsiders, but they were nonetheless very real. In day-to-day workings, much of that hostility was submerged; middle-level executives would go out together after work and drink a good deal and complain bitterly about their superiors, but the next morning they would be back at work, as respectful as ever. What they had said the night before no longer existed; it was whiskey and sake talk, and those embittered complaints might as well have been uttered by someone else. The post-work sessions were important; they were the one way of ventilating a system that allowed little dissent. Since the dissent was under the influence of alcohol, it could always be disregarded later. In the end, the faction that lost out accepted the winner’s mandate out of a traditional sense of obligation to authority and hierarchy, but the losers did it as well because they had absolutely no option in their lives. Thus the world of Japanese business was filled with intrigue that persisted until the very last seconds, when the contestants healed their differences and got on with the job.

  Inevitably Kawamata’s rise, and his use of the union leaders as his spear carriers, created resentment in the upper echelons, and resentment led to mutiny. In 1955, Kawamata’s enemies decided to make one last stand against him, and therefore against the union. The leader of the dissidents was Asahara, then Nissan’s president, made nervous by the growing power of his executive director and pushed as well by his peers, for he was not a confrontational man. In substance it was the old Nissan against the new Nissan. Asahara and his colleagues conferred with officials of the Industrial Bank of Japan, the IBJ. The sins of Kawamata were enumerated: He was too crude, he was too ambitious, he was too close to the union. A decision then was made to move Kawamata to a far less prestigious subsidiary, Nissan Diesel.

  The coup caught Kawamata by surprise. In the early morning he found out that he had been ousted, and he immediately sent his cousin Kuniyaki Tanabe, a Nissan middle manager, to tell his closest ally, Miyake,
head of the union. “They’re getting rid of him,” Tanabe told Miyake, “and he wants you immediately.” Miyake had gone to Kawamata’s house and had found him in despair. “They’ve trapped the bear,” Kawamata told him, and he pleaded with Miyake to do something. It was the only time, Miyake told friends later, that he had seen Kawamata shorn of his arrogance and rudeness. Miyake, of course quickly agreed to help. His participation was not entirely altruistic. His power, which was considerable, derived from Kawamata. If Kawamata went, his own wings might be clipped next.

  Miyake went to the IBJ that morning and spoke with Sohei Nakayama, the head of the bank, whom he had known in the past. That gave Miyake a sense of connection. In addition, he had considerable leverage of his own. Other executives might speak for the company, but Miyake, who commanded the union, spoke for the work force. In the politest manner possible he said that he thought it was a mistake for the bank to intervene in the internal affairs of the company unless someone had failed. Clearly Kawamata had not failed. “Listen,” Nakayama told him, “the last thing in the world the bank wants is to get involved in something messy like this. This is your business, not ours.” To remind all parties of the power of the union, Miyake ordered a strike at the Yokohama plant; it was largely a gesture. With help from a few others, Miyake won the day, and Kawamata did not go to Nissan Diesel.

  From then on Asahara’s own days were numbered. Two years later he decided he wanted to leave the presidency and become chairman. He was tired of the job and all the conflict it brought him, none of which he had sought. As a replacement he wanted Kyoichi Harashina, one of his oldest friends. Harashina was considered by the product people as the ablest candidate in the company, a man of technology and cars, and there was no doubt in the mind of anyone who worked there that, on merit, he was the natural successor to Asahara. He had gone to Todai, worked for Nissan before it was Nissan, back in the thirties when it was only Tobata Casting. He was a graceful and sophisticated man, popular with the product people, as Kawamata was not. The officials of the IBJ, however, favored Kawamata, and what swung its decision was the union. Miyake had made it very clear to the bank that Harashina was unacceptable. The union would accept Kawamata and no one else. Thus in 1957 Kawamata became president of Nissan, and about two years later it was Harashina who was shunted off to Nissan Diesel. Kawamata had firmed up his power, and henceforth he would owe allegiance to Miyake and Shioji.

  Soon Kawamata became quite grand. Status, the place of a man in the hierarchy, was important in Japan, but it seemed particularly important to Kawamata. There had been early signs of that. At the first dealers’ meeting after he had joined the company, the heads of the dealers’ association had been at the head table, the company officials at the second one; the next year the company officials were at the head table, the dealers at the lesser one. These things mattered. What surprised and irritated some of Kawamata’s colleagues was the aura that he began to give off as the company grew more successful, his implicit message that he had done it, as if he had not so much ridden the wave as created the wave, and, even more, that he was not so much a banker as an industrialist. That more than anything offended his colleagues, the immodesty of it. He had always been bored by anything dealing with technology. His decisions had almost always been cautious in the extreme, the minimal acceptable level of daring. He was not, they thought, an industrialist, and he had no right to pass himself off as one. Soichiro Honda was an industrialist, more a man of machines than of business, but Kawamata was not.

  That quibble did not seem to bother Kawamata. He often spoke to various groups now as an expert on labor relations. His subordinates soon learned that the best way to deal with him was through flattery. They let him know how much they needed him, and they lauded his ability to handle problems, including minor ones they themselves could readily have handled on their own. Supplier company executives mastered the delicate art of managing to lose to him on the golf course, while still seeming to play a competitive game. Soon there was a statue of him—from the waist up—mounted at the new Oppama plant, the one he opposed and then severely compromised. That sort of thing was rare in Japanese companies. Perhaps in a family company a grandson might put up a statue of a grandfather or even, though it would be exceptional, of a father. But a statue to a living executive was almost unthinkable. In this case it was Miyake, who accurately understood his superior, who was responsible. “I did not want to accept,” Kawamata explained in his memoirs, “but everybody in the company wanted it for me.”

  23. THE BOSS

  ICHIRO SHIOJI, NUMBER TWO in the Nissan union, had never been a man destined to spend much of his career as anyone’s deputy. It was as if some larger force carried him to the top now. This was an era in which the Japanese establishment was exercising its reclaimed mandate, bringing discipline and control to the work force, and Shioji was an instrument through which that establishment’s notion of national purpose was turned into reality on the factory floor. In short, he was the muscle.

  Miyake, his superior, was soon vulnerable. Having saved Kawamata from the coup and played the deciding role in assuring him the presidency, Miyake had wanted his due: He wanted to go on the Nissan board. He had asked Kawamata to put him on, and Kawamata refused—he wanted Miyake to wait a few years. Others, contemporaries of Miyake’s, hearing of his demand, were scandalized. The board was an almost sacred place; it was for senior people. This was too much. Such a demand was made only by a man who lacked respect for the system. Therefore he was dangerous. A union man should know his place. Soon there was a power struggle between Miyake and Shioji. Shioji claimed that at one point Miyake even got him drunk in a restaurant, kidnapped him, and, while he was incommunicado, tried to stop the production line. The upshot of it was simple: Miyake’s power was curtailed, and he eventually left the company with a job elsewhere, arranged by Kawamata. Shioji took his place, not just as the leader of the union but as the man Kawamata depended on.

  It was really Shioji’s union anyway. Slowly and very carefully, he had been building his authority within it. The men just below him in the union were loyal to him, not to Miyake. His ambition was more intense than that of Miyake, and it was a very different kind of ambition. Miyake had always wanted to be a member of management; he had stumbled into the union somewhat involuntarily. Even as head of the union he had coveted a high management position and a place on the board. Miyake wanted success—defined by title and affluence. Shioji, by contrast, wanted power—that was success enough. Indeed, he sought the kind of power found in America and not in Japan, power openly exercised. Shioji was a completely political man; he understood better than almost anyone of his generation that Nissan was not only a manufacturing organism but a political organism as well, with all kinds of tiny interlocking personal relationships and dependencies. Power could be exercised through those dependencies; there were always favors to trade. He loved creating the alignments that advanced his and the union’s power, moving his men into the right positions, calling in the due bills when the time was right, coming down on those who stood in his way. That for him was the real satisfaction. He needed no grand management title. As head of the union he was as powerful as anyone on the executive side. Everyone had to take him seriously. He did not want to be some gray-faced middle manager who waited thirty years for a chance to have a marginal decision-making role in company with other gray-faced middle managers. A labor leader was a man who commanded men and gave orders and whose orders were obeyed.

  He was different from the men around him. In a society carefully arranged so that there would be a minimum of confrontation, Shioji loved confrontation. He was good at it. Most contemporary Japanese liked to conceal as much as they could about themselves, most particularly their ambition and ego. Shioji concealed nothing. His ambition, like his anger, was surprisingly visible. His enjoyment of the pleasures of his job was equally open; in the years to come, there would be constant complaints in the press about his life-style, the Ginza high life, and the cos
t of his yacht. What enraged him about the attacks was that comparable attacks were not made upon company executives who lived this way. A top executive could live the high life, own a yacht, keep a geisha somewhere, and no one said anything; an executive was supposed to do those things. But let someone from a labor union do them and everyone came down on him. The rule was clear; the upstart was violating an accepted pattern of behavior and, in so doing, threatening an entire system. “They always want Shioji to stay in his place,” he once told a reporter. “They would like me to be unimportant and bow to the managers. But I am in my place—this is the right place for me. It is that which they cannot stand.”

  The people who complained bored him. As far as he was concerned, that was the old guard, the old Japan, telling him what his limits were, and to stay within them. Be a good boy. He was not a good boy. He liked to offend the establishment. He fulminated against the prejudice against him and against the secret snobbery of Japan as exercised through the educational system. There was supposed to be no snobbery in Japan, but in the university system there was nothing but snobbery, a snobbery he believed followed most Japanese the rest of their lives. There was Todai for those who passed the entrance exams and Keio, where the sons of the right people went, and then there was the next rank of schools, and then the third-rate schools like Meiji, where he had gone—even worse, where he had gone as a night student. No one with an education like his was ever supposed to be truly important in the society, he was convinced. It was to be his purpose to serve others. He was to accept without question decisions made by his superiors. Instead, he flaunted his independent behavior. He loved going to important meetings in a blazer instead of ą suit, and he knew full well the signal he was giving: I will go on my terms, not yours, and you in fact will have to meet my terms. The fact that he wore a blazer meant that he had no superior who could disapprove of his dress and tell him to be more formal. In a world of suits, the blazer was a symbol of freedom.