Virginia Lures Japanese Business

INDUSTRIAL DIPLOMACY

WHEN Japanese carmakers capture 32 percent of the American market, or a Tokyo company buys a major Hollywood studio, American suspicions about Japanese intentions grow and some legislators talk of world economic domination as Tokyo's goal. But these national perceptions coexist with other, more favorable local ones when a Japanese manufacturer builds a plant and provides hundreds or thousands of new jobs.

Virginia, a state steeped in history and tradition, has seen an explosion of Japanese manufacturing investment in the last five years - a 2,000 percent increase, as former Gov. Gerald Baliles puts it - from a few small sales outlets to more than 60 companies representing an investment of $660 million. Both during his governorship (1986-90) and since, Mr. Baliles has been one of the state's most energetic promoters of foreign investment, including Japanese.

At the national level, Sen. Donald Riegle (D) of Michigan accuses Japan of conducting a "predatory financial and economic and trade strategy" that turns American workers into "worker bees" while the profits go home to Japan.

In Virginia, however, state Economic Development Secretary Lawrence Framme III says the Japanese have created "literally thousands of jobs for Virginians that other- wise would not have occurred - millions of dollars in income to Virginians that otherwise would not have occurred."

Virginia worked hard to get the Japanese to come, says Hugh Keough, the top civil servant in Mr. Framme's department. The state's governors have been visiting Japan since the early 1970s, and Virginia has had a trade office in Tokyo for over a decade. But it was only when Canon, a major manufacturer of cameras and office machines, decided to build a copier factory in Newport News that Japanese investment in the state really took off. That was five years ago.

Shinichiro Nagashima, president of Canon Virginia, says he looked at more than a hundred sites in several states before choosing Newport News. Competition among states and counties is keen for this kind of investment, but Nagashima says he found three factors compelling: a qualified work force, excellent land, sea, and air links, and "no Japanese company in this area."

A short, stocky man, and an electrical engineer by background, Mr. Nagashima laughs when a reporter asks why it was so important to have no Japanese company preceding him.

"Many Japanese companies want to cluster around each other," he says. "If we came into a place that already had Japanese companies, we would have to go along with their style. But here, we can establish our own style - Canon's way."

That style, Nagashima says, meant much more involvement with the community than has been the practice of many of his compatriots. Canon Virginia has contributed to community causes, from the United Way to the March of Dimes; Nagashima himself has served as a director of the Virginia Manufacturers' Association and on the board of visitors of Christopher Newport College. This has in turn set the tone for Japanese companies that followed Canon into the area. "Canon has gone beyond the usual corporate posit i

on of just making a profit," says Barry DuVal, the Mayor of Newport News. "They have really contributed to the community."

The heart of any factory is its production system. Most American companies seem to be reconciled to a certain percentage of defects, Nagashima says; if a customer brought back a product that had broken down, the maker would replace it with no questions asked. But Canon is emphatic about having defect-free products. This requires highly trained and motivated workers as well as highly trained managers. Canon Virginia's first American employee was Human Resources Director Rick Hammond, and Nagashima worked

closely with him to obtain and train a flexible, team-minded work force intent on quality and efficiency. Employees were not promised lifetime employment, as in Japan, but stable jobs. They were encouraged to submit kaizen, or proposals for improving assembly-line procedures and tools, thus making their own work easier while saving the company money. So far, they seem to be satisfied. Daily attendance is 97 to 98 percent, Mr. Hammond says, while annual turnover (employees quitting) is a tiny 3 to 4 percent .

Mary Copeland, a black grandmother working on the gleaming assembly line, says that when she walked into the plant she was terrified by an array of tools and machines she had never worked with before. But the training was so thorough that within a week she felt enough at ease to exchange a smile and an occasional comment with her co-workers on the line. Of a work force of 1,200, 55 percent are women and 40 percent belong to minorities.

Nagashima says he has proved that multiracial American work force operates as well and sometimes better than the homogeneous Japanese workers he handled in the factory he previously headed in a suburb of Tokyo. "Measured by attendance rate, work efficiency, and quality, there is absolutely no difference," he said, between Canon Virginia's output and that of its Japanese rival.

In Canon's wake, other Japanese companies have come - not only some of its own suppliers, but also totally unrelated enterprises, from makers of soy sauce and noodles to automobile parts and components suppliers. "If Canon chose Virginia, it must have had a good reason," the others think, according to economic consultant John McCaleb.

About 7,000 Virginians are now employed in Japanese enterprises. Cultural exchanges are increasing. "Since colonial days," Framme said at a recent dinner of the Japan-Virginia Society, "Virginia has been ichiban - No.1 - in leading the United States. In recent years, we have realized again that Virginia is a leading state in attracting and supporting Japanese corporations and the people of Japan."

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