How Canon transplanted its standards to a US plant

At Canon Business Machines' immaculate factory here in Orange County, half the 190-member work force is Mexican and the other half is a veritable United Nations of native black, Oriental, or white Americans and recent immigrants from South Korea, Vietnam, Japan, or the Indo-Pakistani subcontinent.

Many of the Mexicans have never worked in an industrial environment before. Signs throughout the factory are in Spanish and English.

Yet the plant's output of desktop calculators, drums for office copiers, and other components of business machines is up to the standard of Canon's plants in Japan.

President Ryuzaburo Kaku is proud of this achievement. He calls it proof that management rather than national or cultural environment is the principal factor in ensuring efficient, high-quality production.

Kenzo Seki, executive vice-president of Canon Business Machines and general manager of the plant, agrees. But it has taken him four years of strenuous effort to reach this result.

In the process, he has had to scrap hallowed Japanese concepts such as lifetime employment and to resort vigorously to firings and layoffs. During 1982 he fired or laid off about 100 workers, from a vice-president and a director down to workers on the line. This year there have been no layoffs, morale is good, and Mr. Seki seems confident he has an operation that is lean enough and efficient enough to compete with any Canon plant in Japan.

Canon Business Machines was established in the mid-'70s, originally to assemble knocked-down calculators from Japan. Soon the bottling of toners for office copiers was added. But the plant was just struggling along when Mr. Seki arrived 51/2 years ago. There were nearly 300 employees, with a monthly turnover of 10 percent, or 120 percent per year.

For two years, Seki says, he just sat and observed. After three years, ''I began to understand how Americans thought,'' and after four years, he decided to act.

Both American and Japanese members of the staff told him that he could not lay off employees, that it would spoil the image of Japanese companies in the area and lead to great worker unrest. Seki was not deterred. ''On Jan. 4, 1982, I assembled the whole work force, explained the difficult business climate to them, and announced there would be layoffs.'' Thirty people got their notices that morning and left.

Then, in the afternoon, 30 minutes before quitting time, he assembled the work force once more and explained to them his vision for a lean, efficient, productive, and prosperous company. Layoffs continued for several months thereafter, eventually reaching 100.

''I knew what I was about,'' he recalled in a recent interview. ''By the time I acted, I knew the efficiency, the attendance record, and the attitude of each worker on an individual basis. Since then these same criteria have been the basis of a semiannual review.''

Mr. Seki was distressed by the dirtiness of the factory when he arrived, by the papers and dust he saw everywhere. ''Let's give the workers five minutes to tidy up at the end of each day,'' he proposed. ''We tried that,'' his subordinates replied, ''and the workers just went home five minutes early.'' ''Well, then, give them brooms.'' ''They'll only be stolen,'' came the reply. ''I don't care if 20 or 30 are stolen, I want the place clean.''

So brooms were installed, with huge chains to attach them to the workbenches. But there were no dustpans. Finally Seki got everything he wanted, and the appearance of the work floor improved. ''But it took me a year and a half to get this done.''

A more important matter, synchronizing factory times with office staff times, took four years, Seki said. Factory workers who are paid on an hourly basis were used to coming in at 7 and working to 3:30, while salaried office workers came in at 8 and worked till 5. That meant that for an hour the hourly workers had no supervision. Seki preferred to have them come in at 8 and work till 4:30.

He plugged away patiently at this objective, hampered by the fact that many workers preferred the 3:30 closing time because it meant they could have second jobs. But eventually he achieved his goal.

''I also moved my managers out of their one-man offices and into one big room , from which they could observe what was going on in the factory itself,'' Seki said. In all these moves he constantly had to fight the resistance of both American and Japanese subordinates who told him he was ''going against tradition.''

Ultimately, Seki said, the difference between Japanese and American management styles boiled down to ''kan'' - a Japanese word translated as instinct, intuition, or feeling. The Japanese, being a homogeneous people, know instinctively what the other fellow is thinking. A lot of things do not have to be spelled out. But the United States is a melting pot of many races. Unless each and every thing required by the management is spelled out, there will be trouble.

Errors and problems are most likely to arise in areas where one person's responsibilities overlap with those of another. In Japan people work as a team, and an individual is willing to take on a little bit more than his own specific assignment. But in the US this kind of unspoken give-and-take (if you do a bit of the other fellow's job today, he may do a bit of yours tomorrow) does not exist.

How to define clearly the edges of a specific job or assignment so that overlapping areas are taken care of is one of the secrets of good management in this country, Seki believes.

From the workers' viewpoint, for all the layoffs Mr. Seki carried out, there still seems to be a feeling that Japanese companies are more family-like than others. ''The first thing I noticed about Canon,'' says Virgie Alee, who was a line worker before moving up to a supervisory assignment, ''was how Mr. Seki would come by and say 'hello' and 'good morning' every day. I'm loyal to Canon because I know they will keep me as long as there is work I can do.''

Vice-president Douglas Michie, materials director John Haehl, and manufacturing director Afzal Sami all said they were at first surprised at the amount of conferring and consultation that took place within management, in which they were asked to take part even in cases that did not directly concern their area of responsibility. But gradually, they said, they came to see the strength of this system, in that when decisions were made all department directors knew what they were about and how they should respond.

So far, Canon has been successful in its efforts to avoid having a union. But there have been attempts to organize workers. Mr. Seki says he feels unions are themselves enterprises, more concerned with their own survival and aggrandizement than with the welfare of the individual worker. So long as there is adequate communication between management and the worker, he feels there is no need for a union. It is only when the employee begins to question ''Who is thinking more about me, management or the union?'' that unions gain a toehold in a factory. At Canon, he says, so far that has not happened.

Seki retains great respect for the American tradition of self-reliance. In Japan an individual may form part of an effective, strong group, but by himself he does not amount to much and is consequently unwilling to take risks. But in America, he said, an individual relies primarily on himself. He may not always succeed. But that sense of individual entrepreneurship and risk-taking is the very essence of the free-enterprise system. Therefore, he said, for all his complaints about what he considered slipshod ways of doing things in America, there remained an underlying strength, a capacity to launch into innovative, uncharted areas that Japanese entrepreneurs ignored at their peril.

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