Out of the Sweatshops

Japan continues to flood the world with exports of low price and high quality, earning itself the grudging admiration of competitors but also upsetting world markets and aggravating the U.S. balance of payments deficit. Indeed, a discussion of steps to ease the U.S.-Japanese trade imbalance will be high on the agenda when President Nixon and Premier Tanaka meet in Hawaii late this month. Westerners commonly believe that Japan has built its towering trade surplus because its workers are selflessly willing to toil for sweatshop wages. But TIME Tokyo Bureau Chief Herman Nickel argues that this is not the real reason for Japan's success. The high productivity of Japan's modern, well-automated plants is a much more important factor.

To back his point, Nickel cites an industry in which Japan is by far the world leader: shipbuilding. Japan now has orders for 34.5 million tons of ships, almost five times as much as the country in second place, Sweden; the U.S. has orders for only 2.7 million tons. To examine Japan's success, Nickel visited one of the world's most advanced yards, the Nippon Kokan Shipyard at Tsu in central Japan, which builds vessels of up to 250,000 tons. His report:

A visit to Tsu makes a shambles of the sweatshop theory of Japanese competitiveness. Workers earn only $335 a month, compared with wages averaging $588 a month in Sweden or $718 in U.S. shipyards, but the real competitive edge is Tsu's production technique.

Rube Goldberg would have loved this yard. The six supertankers and ore carriers that it completes in a year come as close as any ships yet to being untouched by human hands. Tsu is a world apart from the shipyards that I have seen in Europe; it is cleaner and quieter and often seems eerily empty.

Hull Trick. Completed three years ago in less than 20 months on land reclaimed from Ise Bay, the yard was designed to build two huge ships at the same time with a minimum of manpower. Steel plates are delivered by sea from Nippon Kokan's Fukuyama steelworks 300 miles away and fed into a computer-controlled process in which they are marked, cut, shaped and welded into major hull blocks. Two giant cranes that straddle the building dock then lift these components into place, and they are welded to the hull--again mostly by an automatic process. Another labor-saving device is the yard's ingenious T-shaped production layout. This allows ships to be floated out of the yard at two points, instead of the normal one, eliminating the task of moving a half-finished hull forward--a tricky operation that would take two full days. In all, a quarter-million-ton ship can be built in less than three months, which is fast by international standards.

The economics of this process are impressive. Shipyard Manager Akira Takeuchi says materials and interest on loans add up to 80% of the yard's total production costs; labor costs account for 20%. In Western yards, labor costs run as high as 30% or more.

While wages are relatively modest, the well-known Japanese fringe benefits help to inspire both hard work and loyalty. For 20-c-, a worker can eat a company-subsidized lunch, and for $13.35 a month he can live in a company-subsidized, three-room apartment. He can take a free vacation at one of the company-owned lodges, or Nippon Kokan will pay the first $3.30 of his daily hotel bill. Medical care for workers and their families is almost totally company financed; an appendectomy costs about $2. Workers can use the company gym and playing field and can shop in the company-operated discount store. Most important, shipyard employees are virtually assured of a job until retirement, and then receive a one-lump severance payment, averaging $20,000 for 30 years' service.

Such benefits help produce Tsu's placid labor relations. Tsu has no time clocks or sign-out procedures for parts or tools--and no complaints of pilferage or tardiness. Even more rewarding, Tsu has never had a strike; in fact, all of Japanese industry has been relatively strike free. When there is a strike in Japan, it usually begins on Saturday afternoon and ends Monday morning. "The basis of our labor relations is mutual trust," says Takeuchi. Adds Masao Ando, head of the company union: "We know that the health of the workers depends on the health of the company." Tsu is not only healthy but also highly productive; it requires only around 25 man-hours to mold each ton of steel into ships, compared with Sweden's 32 man-hours and the U.S.'s 51 man-hours. It is this kind of efficiency, typical of Japan, that puts the country ahead in the great export race.

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