Management the difference for foreign firms in Britain

Tadashi Nagata gestures across the clean, modern Panasonic factory toward a group of Welsh employees doing finali inspections on color television sets. Behind them runs a long conveyor -- for rejects.

"In Japan we need not such a conveyor," the assistant general manager says simply. There, rejects are so few -- perhaps 0.1 percent -- that the inspectors merely set them aside for later pickup.

Part of the problem in their three-year-old South Wales operation: Components or poorer quality than are available in Japan. He says the "death rate" on locally made integrated circuits sometimes reaches 30 to 40 percent.

Another difficulty: a work force unused to such exacting work, ingrained with militant unionism, and riven with absenteeism.

There are the symptoms of the infamous "British disease," said to be marked by low productivity, high costs, and insufferable industrial relations. Again and again, these factors are blamed for the decline of British industry.

Yet Panasonic, and scores of other Japanese, continental, and American companies, have set up very successful operations in Wales -- and, in fact, in many other regions around Britain. Panasonic, a product name of Matsushita Electric, employs 400 people to make 60,000 television sets a year for the British market, and is opening another factory here next year.

Why, when so many companies here are going to the wall, are such operations making Britain work?

This correspondent has asked that question of dozens of industrialists, trade unionists, and financial and management consultants in England, Wales, Scotland, and Northern Ireland over the past 18 months.

The one answer that keeps coming up: sound management. With it comes a corollary: Britain's malaise is in large part the fault of bad management.

To be sure, a variety of other causes are also blamed for Britain's industrial problems:

* The legacy of the Industrial Revolution which leaves the nation littered with antique factories and emcumbered with outmoded processes.

* A combination of financial factors -- high taxes, a strong pound, high interest rates, and a conservative banking system with a "gearing" ration than often requires a greater proportion of initial investment than in other countries.

* A work force that is entangled in a maze of interunion rivalries, is steadily demanding more pay for less work, and (many feel) would really rather not work at all.

A large share of the blame, many agree, does fall on the unions. "But they're not the underlying cause," says a London-based management consultant. The real problem appears to be a management that would really rather not manage.

In a country where managers are often not allowed on the shop floor without a shop steward's consent, it is easy to blame unions for the "we-they" split between workers and executives.

But the split is enforced from the top as well. One English manager recalls how, when he went to work for Boeing in Seattle 20 years ago, he was astonished to find a famous test pilot queueing up for coffee in the same line with a floor sweeper -- and talking with him.

Here the tradition is still one of separate dining rooms and canteens for different grades of workers -- and of corresponding attitudes about separation on the job.

Some trace the problems to a management tradition left over from the great days of the Commonwealth. Then, captive markets required few selling techniques. Cheaply harvested natural resources poured into the country, and profits apparently piled up no matter what the manager did.

Others, noting the remnants of a class system still strong enough to discriminate sharply between different vocal accents, point to an aristocratic tradition which, even into the 20th century, looked askance on those who found it necessary to go into business to make money.

And some point to the problem of size. Under years of incipient or outright socialism, many industries have been nationalized and centralized into such mammoth operations as British Steel and British Shipbuilders.

These require large management teams embracing highly sophisticated management skills -- which, according to a recent report by the Brookings Institution called "Britain's Economic Performance," are precisely the kinds of teams and skills Britain does not easily produce.

Nor has it seemed to want them -- until fairly recently. Whereas the Wharton School began management training in Pennsylvania in 1881, the London Business School was not founded until 1965 -- and was the first graduate school of business in the country.

Companies like Panasonic belong to a different tradition. "We are educated in Japan that shop floor and staff are the same," says Mr. Nagata. The goal of the 17 Japanese managers here, he adds, is "how to support the shop floor."

It is a philosophy with which a senior lecturer in finance at the London Business School agrees. "The only thing that matters," he says starkly, "is the willingness of the shop floor to produce." Everything management does must be aimed at that goal.

The Japanese managers -- whose tradition is strongly paternalistic, extremely loyal to the company, and single-mindedly devoted to work -- are viewed with some awe by the more easygoing Welsh.

But Mr. Nagata finds the work force potentially as good as that in Japan, and says that "our target is to train the British staff" and reduce the number of Japanese.

Foreign management is not essential to success, however. Another company based in South Wales, the American-based Fram, is British-staffed. It recently endured a five-week strike -- which, says E. C. Davies, the personnel relations manager, won them "the right to go in and reevaluate existing work standards." Now they can do productivity studies in such indirect labor areas as toolmaking and maintenance -- the kinds of studies, he says, that are uncommon in Britain because unions won't hear of them.

The result: In the last 12 months, labor efficiency has improved by 12 percent, and indirect labor has been reduced by 20 percent. "We think that stacks up well," Mr. Davies says.

Overseas companies have several psychological advantages. They tend to be founded by successful companies with enough money to endure strikes without, as Mr. Davies says, "pulling the plug," as many British firms would have to do.

And they are known to be the first to close when the going gets rought -- the "branch factory" syndrome.

So their employees, in the current economic crisis, are sometimes less militant and more appreciative of their jobs.

As a result, managers ar more able to take control of their company's affairs. "Now more than at any time since 1973," says the management consultant quoted above, "it's possible for management to bang the table."

Some observers note that overseas companies coming to Britain tend to attract the best of British managers. Jeoff Samson, the English-born managing director of telecommunications at Standard Telephones & Cables Ltd. (A subsidiary of the American giant International Telephone & Telegraph), calls it "synergistic vigor."