Wary of 1992, Japan Sets Up Shop in Britain

CONCERNED that the European Community is about to turn itself into an economic fortress, giant Japanese companies are setting up shop within the 12-nation group's borders. One of their chief targets before the creation of a single European market by 1992 is Britain. There, Japanese firms with yen to spare and a desire to expand operations in the EC are finding a welcome.

The Toyota Corporation - the world's most profitable car manufacturer - is the latest Japanese firm to opt for Britain as the doorway to a post-1992 Europe. Toyota has announced that it will center its main European car-making plant in Britain. This will leave it well placed to increase car sales to EC countries.

Britain is already host to Toyota's rival, Nissan, which completed a large car plant in Wales two years ago. The company used the latest industrial techniques and insisted - successfully - that British trade-union practices have no part in the enterprise.

Today the Nissan factory operates under a single-union agreement. It is reckoned to have the lowest unit costs for car production in the EC.

Virtually all EC officials say that when 1992 arrives, the Community will not close its doors to foreign penetration. That is certainly the line taken by Jacques Delors, president of the European Commission in Brussels.

But Japanese manufacturers think otherwise, and are moving to secure access to European markets.

They are attracted to Britain by low taxes, an increasingly docile labor force, and a benign government. Before deciding on a new center for car making, Toyota considered Spain and Belgium but decided that neither held the attractions of Britain.

Japanese investment in Britain rose to over $2 billion last year - five times higher than four years ago.

Already Japan has a strong grip on manufacturing in the EC. Last year it sold 1.5 million cars in the EC - 2.5 percent more than the previous year. It dominates the European market for home electronic goods such as televisions and VCRs, and plans to step up the manufacture in Europe of electronic semiconductors. Japan's trade surplus with the Community stands at $20 billion, and is on the rise.

Few EC governments are prepared to discourage Japanese investment on the current large scale. Prime Minister Margaret Thatcher has said she welcomes it, and has commended the way Japanese firms have helped to break down trade-union power and improve industrial efficiency in Britain.

The vigor with which the Japanese are setting out to penetrate Europe is beginning to create a backlash, however. The Commission has drawn up a list of goods which, it says, the Japanese may be tempted to ``dump'' in Europe.

This in turn has fueled Japanese fears that, come 1992, the EC will put up the shutters to foreign traders.

One technique being used by Brussels is to increase the amount of local content demanded of goods manufactured in the EC. Japan's current drive to establish manufacturing plant within the Community is a response to these demands.