Even though engineers, who are white-collar workers, are assigned the task of developing more efficient ways of carrying out production, the white-collarized blue-collar workers are also capable, indeed eager, to improve the handling of their jobs.

In effect, growth in these companies has been self-perpetuating. Perhaps they do such a good job of creating error-free operations that their plants can run without their active supervision and intervention. With some shock, we recognize the emergence of elitism and lack of trust in the United States—managers who isolate themselves from workers, both physically and emotionally; who have no direct experience in the businesses they manage; who see their role as managing resource allocation and other organizational processes rather than as leadership by example. Many of the attributes that characterize Japanese manufacturing management are valued in America too. Recent studies have shown that for American workers, each year of tenure increases earnings by roughly 1.6%.1 In the companies I studied, each year of tenure increases earnings by roughly 4%. Innovations suggested by engineers do not necessarily require substantial investment in capital equipment. When the supply of the probiotic drinks dwindled due to the Yakult factory shutting down and the Yakult Ladies ran out of products to deliver, some decided on their own to deliver water and instant noodles to their customers, for free. In a country as small geographically and as crowded as ours is, it is simply unacceptable to have that many dissatisfied customers ‘unselling’ your product to their friends.” Moreover, the practice in some U.S. companies of shipping off-spec products to remote or less favored customers is unthinkable. Why Japanese businesses are so good at surviving crises As demonstrated after the 2011 earthquake and tsunami, Japanese businesses have a unique capability for long-term survival. By contrast, the conventional management wisdom in the United States, where a much smaller percentage of process equipment is developed in-house, says that equipment manufacture is best left to experts. The fact that Japanese companies tend to favor nearby suppliers reinforced this tight linkage.

As demonstrated after the 2011 earthquake and tsunami, Japanese businesses have a unique capability ... [+] for long-term survival.

High quality, after all, is not achieved by a few random management decisions but by a complex, all-encompassing, interactive management system that has the uncompromising long-term support of top management. You don’t need to have production workers doing rework, or systems that manage the detection and flow of rework through the process. As can be seen, Western Electric employees are absent less than Company A’s employees. Feedback from production workers, quality inspectors, salesmen, vendors, and customers is encouraged. Field service organizations often report directly to the manufacturing manager rather than, as in most U.S. companies, to the sales manager. Salespeople might complain and schedulers might be pushed to the limits of their ingenuity, but the rule was firm. Their willingness to do so was encouraged by their knowledge that management understood intimately the difficulties and pressures under which they operated and was working just as hard as they were. Hence an experienced worker who quits a job in the United States suffers only a small fall in his expected lifetime earnings.2 Exhibit IV shows that the likelihood of turnover in Japanese companies decreases as workers acquire more seniority. Colleagues suggested he close the company’s operations until production could resume, noting that employees could claim government compensation. I observed the same phenomenon at every Japanese plant I visited. As managers and as workers, the Japanese are smart and industrious—and never satisfied. As one Japanese scholar phrased it, “If you do an economic analysis, you will usually find that it is advantageous to reduce your defect rate from 10% to 5%. The company hires the best available workers within the limits imposed by these guidelines. These practices screen out unsuitable applicants. Sixty-one percent of the male workers at Company C are between 25 and 40 years of age. See Wesley Mellow, “Employer Size, Unionism and Wages,” Research in Labor Economics, Supplement 2, 1983, p. 253. The Japanese custom of lifetime employment, which has attracted much attention in the West, dates in its current form only from the end of World War II and is still not the rule in all Japanese companies.

Quality, to the Japanese, means error-free operation. Production schedules were made up two weeks in advance, and at the beginning of each two-week period all the materials required to meet that schedule were distributed along the production line.