Nippon Telegraph & Telephone Public Corporation (NTT) is the Japanese government telecommunications monopoly. At $17 billion in annual sales and $40 billion in assets, it is a leader among giant Japanese conglomerates.
For years, American and European communications and electronics manufacturers have been trying to break open NTT's tightly locked door to foreign high-quality imports, and for the first time, the Japanese bureaucracy--which regards internal telecommunications as the equivalent of national defense--is yielding a bit.
A key change has been brought about by the arrival two years ago of a new man at the top, 72-year-old Hisashi Shinto, the first NTT president to come from the private sector. Shinto, an engineer and shipbuilding expert who knows the United States well, was president of the Ishikawajima-Harima Heavy Industries (IHI) from 1972-79, when Japanese shipbuilding (now in decline) was at its peak.
But what makes Dr. Shinto especially interesting to American businessmen these days--beyond his effort to open up NTT procurement--is that he has specific ideas on why some American industries have fallen behind in the competitive race with Japan.
"In 1950 to about 1963, when I was working in the shipyards," Shinto told me, "the United States had higher productivity, even though your wages then were five times higher than they were in Japan. Your side was extremely competitive in turbines and main generators--and they were of such high quality!"
To discover the American secret, Shinto visited American shipyards and factories, and he thinks he found the answer:
"Your young engineers who graduated from the university were working in the workshops, along with the production workers. The engineers knew the production program, and they knew how to use machine tools. Because they knew the production process in detail, they were able to get greater productivity and high quality."
It's that simple, says Shinto: "High intelligence is the only source of competitiveness." So by 1956, Shinto installed this American practice in his Japanese shipyards, and other Japanese manufacturers did the same thing: not only was engineering stressed as a high calling to Japan's young people, but once a graduate engineer came out of the university with his degree, he was put to work, initially, on the shop floor.
At the same time, something was changing in the United States--and Shinto doesn't quite know why. But the fact is that after graduation, most American engineers now "get into computerization, not into the workshop. When I visited the States in 1980, I didn't find the same kind of intelligence as before in the workshop. I don't know why, but the fact is that it has disappeared, and I am quite astonished.
"My impression is that a young engineer in the United States attaches himself to a computer keyboard, not to the robot in the shop."
There is a growing view among critics of the American industrial establishment that the American industrial decline was coincident with the mid-1960s drive for mergers, acquisition and immediate financial gains. Bright kids turned away from engineering to law schools and to the schools of business administration.
Now, in terms of numbers of engineering graduates, the United States has fallen behind Japan, which turns out 15,000 to 20,000 electronics engineers a year. That is more than the U.S. total, even though the American population is twice that of Japan.
Shinto's advice to American chief executive officers competing with Japan is to take young engineers, increase their salaries by 50 to 100 percent as an inducement to move them onto the workshop floors: "Your people are so intelligent, that if you do this, within three to four years, your productivity and quality will go up. The United States has a high potential in most areas, and can recover."
But how about American complaints of unfair Japanese competition, the highly publicized "Japan, Inc." syndrome that allows industry to "target" an export market with government help? I asked Shinto to deal with the charge that Japanese semiconductor firms had unfairly grabbed off a big share of the market for 64K RAM semiconductors, currently the most popular micro-processor used in a variety of home computers and electronic equipment.
"If you talk about the 64K RAM," Shinto responded, "the competitiveness of the Japanese product depends almost entirely on quality control. The production process in Japanese factories and yours is quite different. The basis of quality control here is not to depend on the human worker . Quality is determined by the environmental control of the workshop, supervised by intelligent engineers."
What will Japan do if the United States does in fact start churning out engineers instead of lawyers and MBAs, and regains its old skills and productivity? Shinto's answer: "We would just have to work harder, that's all. We can never argue against better productivity on your side. All we could do is work harder."