Chapter Four: Economy of business enterprises

Grass-roots industry in the town of Sakaki: an alternative perspective of the Japanese post-war "miracle"

Copyright (C) 1992, 2004 by Christopher Romig Keener

Small companies are strongly tied to the founder's family

Nearly all Sakaki firms are centered around the families of their founders. The name of the firm almost invariably contains the name of the family, usually followed by some description of the business of the firm (e.g. Nissei Plastics, Takeuchi Manufacturing, Hioki Electric, Miyago Industries, etc.). There is a strong symbolic and concrete connection between family and firm headship. The rules determining headship of the firm are synonymous with those which determine headship of the family, and the roles go together. A system of apprenticeship for male heirs reinforces inter-company relationships and insures the survival of the firm by bringing in new technology and experience. There is a strong delineation between family members and workers. The roots of these practices seem to be derived from mercantile traditions which are quite different from the practices of large urban corporations.

The importance of family labor in startups

Family relationships are especially important at the smallest of firms and during the early stages of their development. The smallest of Sakaki firms are operated by couples. The husband is the engineer or has the technical skill and his wife handles the day-to-day finances of the company. The power of wives and female family members is in poignant contrast to the role of woman as tea-pourers and menial laborers in large offices and factories of the cities.

Other family members play important roles in the early development of the company. Siblings are often encouraged to give up jobs elsewhere to work in the family firm. One employee of Nissei Plastics whose home I visited told me of the plans underway for him to start his own business together with his father, a retiree with experience in several companies. Okada Manufacturing was started in 1968 by the son of the founder of a local construction company; it is now a company of 38 employees. Soon after founding his company he convinced his brother to join him; his wife does the books. The company manufactures electrical parts. When the son, now 28, returned from several years of employment at Hitachi, he brought with him skills with new machinery as well as new contracts with Hitachi.

Many a shacho has told me that his firm would never have made it through the inevitable economic trials of starting out if it were not for family relationships. The labor of family members provides the ultimate flexibility; family members can forgo salaries in lean times. The initial plant is usually built on family-owned land with family savings. Family connections provide a hook for securing workers in a local economy so industrialized that there is nearly no untapped human potential.

The relationship between family and firm headship

In the majority of companies, the heir to the family and the heir to the company are the same individual; headship is most commonly passed from father to first-born son. Even in the largest of Sakaki companies with over 100 employees, the first-born son almost invariably occupies a position very close to his father. Often he is given a rather ignoble start within the firm, having to prove himself as a worker on the line for the first few years of employment. This is perceived as building a bond of trust and empathy with the workers.

Natural conditions provide a whole manner of variations which are governed by corresponding rules. For example, if there is no son, one may be adopted. The rules for adoption are those that govern general family adoption: a son may be adopted as the husband to a daughter. Sometimes the natural first-son is passed over for someone else. In this case however, the adopted heir doesn't necessarily take on the family name or headship; the two become separate, but the family's connection within the firm is usually unchanged.

In fact marriage to the daughter of a shacho of a Sakaki firm is usually connected to a job at the family company. Either the groom is from a suitable area family with the proper background working in another local firm or he has already displayed his hard work and dedication to the family as an employee. It is usually a politically astute move for the individual and is, in effect, a mechanism by which he moves from the outside group of workers to family membership (with its resulting privileges).

Interesting variations test the unwritten rules of ascendancy in some of Sakaki's first companies. One such company was founded immediately after the war and produces pressed metal parts; there are no more than 30 employees.[1] The founder recently retired and a struggle over control ensued between the first son of the founder and the son-in-law, both who had worked many years in the company. The son lost in this battle and decided to quit the company altogether, taking a job in one of the largest firms in the area.

Sakaki's first firm, Miyano, is another example. Miyano's founder came to the town married and with a son, but his wife subsequently died. He remarried one of the female workers at his plant, a member of a local farming family, and had several children with her. His son by his first marriage was passed over not only as heir to the family, but as heir to the company. He is now president of a smaller company of about 200 employees that was spun off to take over the original business of manufacturing machining tools, while his younger step brother is president to the multinational Miyano which produces factory machinery for lathing such metal parts.

Other settlements of ascendancy issues have directly caused new spin-outs. Another of Sakaki's original firms, Hioki, which manufactures meters and electronic test equipment ended up giving birth to the much-publicized rival called Soar. In this case there was an employee from a local farming family who had excelled in the firm and married the daughter of the shacho. It seemed likely that the founder of the company might pass over his own son as his heir, but he ended up not doing so after all. The disgruntled son-in-law left Hioki bringing with him a band of his followers and started Soar.

Despite variations which occur in determining heir to the company, there is one universal. The heir has to become a nominal member of the family.

Apprenticeship for male heirs

Among the natural sons who are groomed as heirs it is a common practice to have spend a period of apprenticeship in a factory of one of the larger Japanese corporations in Tokyo, Nagoya or Osaka. Often it is at the factory of a client company and it is done as a sort of favor to the shacho of the Sakaki firm although no special undue treatment is accorded the son as employee of the client.[2] The son usually returns to his family's firm after several years of "apprenticeship" at the client. In all cases that I saw, he brought back with him expertise in a particular technology. In the case of Chikaraishi Industries, a metal-plating company (among the first companies in the town, founded in 1946), the son (now age 35) of the president graduated from a prominent Tokyo university and went to work for four years at Uemura Industries, a client in Osaka. When he returned, he brought back know-how of new processes to treat much more complex three-dimensional surfaces. In the case of Okada Manufacturing (mentioned earlier in this chapter), the son brought back programming skills for computer controlled manufacturing machinery and a contract to produce metal bases for Hitachi's super computers. In both cases the technology brought back was a strategic link to the future livelihood of the firm. The apprenticeship system seems to be an especially keen survival tactic of independent companies with fewer than a hundred employees with strong links to firms outside of the town.

One might wonder what the client company gets out of such "deals" with smaller firms. For one thing, they appreciate the extra hands, because labor is tight even in the cities, and because they can be assured that the individual is going to leave after a number of years, there is actually a mitigation of risk and responsibility on their part: unlike other male full-time employees hired into the "lifetime" employment system, sons of industrialists are guaranteed to leave the firm. Furthermore, it helps them to build stronger connections with their suppliers and to ensure the continued health of their smaller suppliers by transferring new technologies. The sons are not given special treatment different from others hired together in their cohort. Technologies critical to the performance of the client will not be transferred to smaller firms; only technologies considered to be somewhat peripheral to the main business will be transferred. For example in the case of Okada, the son brought back a relatively obscure part of the manufacture of super computers- not the design of complex circuitry, but the manufacture of thick metal bases to house the machinery. But if a technology is unimportant to a large client, it can be the center of a thriving business for a small firm. From producing metal bases for Hitachi, a company like Okada might find other clients with similar requirements in very different industries altogether. The technologies that sons bring back with them from their experiences in employment in urban factories are critical to the continued livelihood of many Sakaki firms.

Delineation between workers and family members

Whereas family members are accorded special status, workers in these small companies hold little chance to advance within the company which had provided incentive among more talented engineers to start up their own firms. There are two main categories of employee: full-time salaried employees with benefits and employment security and part-time workers who may put in almost the same hours without benefits or security. The latter are often married middle-aged women seeking supplemental income for their families. Salaried incomes are decided on the basis of length of service in the company and value of the job performed; starting base salaries for recent high-school graduates are approximately $13,000/year. Going rates for part-time jobs are in the $4-5/hour range.

Family members are thought to be the providers and non-family employees are loyal agents. There is an unwritten social contract between the two. Whereas family members might not be remunerated well in times of hardship, employees are expected to be remunerated on a fixed salary or hourly basis which recognizes their experience, skill and length of employment. What employees give up in ability to advance to the highest levels of management reserved for family members, they gain in knowing that they will be looked after by the family; it is a trade off of risk and freedom for security.

The unwritten contract between employer and employee is governed by commonly-recognized social customs which are enforced by the community and only taken to a legal setting in the unusual case that such informal enforcement techniques are inadequate. It is a very unspecific benevolence that they are expected to bestow on their workers, but is supposed to include areas of their workers' lives that are totally unconnected with their work. Managers of large corporations in the city are sometimes expected to help arrange marriages for their subordinates, but it is not clear that this is a common practice in a town like Sakaki where the extended family of the worker is much more active in the marriage process. In Sakaki the controls on firms and their families has more to do with assuring employment security and fair compensation. An employee may not be fired for failing to perform to expectations; he or she may only be fired for an extreme breach of expectations of conduct. Likewise, while there are no written rules, salary is expected to be compensated largely in terms of seniority (presenting a problems of economy for those companies that have an older work force). In addition, companies are generally expected to compensate retirees with a very substantial severance payment commensurate to the number of years of service and rank at retirement. This has also become a terrific burden in many companies facing large numbers of retirees.

In all cases where the firm fails to live up to this responsibility there is significant social ostracism of the family. Agatsuma was one of the companies which went bankrupt as a result of the oil shock in 1978. The company supplied metal plates used in Brother sewing machines; during its heyday it supplied had 80% of the market in the parts it manufactured and employed over 200 workers. After the bankruptcy court took over control of the company, the shacho and his family fled to Tokyo. Other members of his family who remain (including a younger brother who has his own independent company in the town) have distanced themselves from the incident. The company Soar is another example of the ostracism accompanying bankruptcy. If the company lived up to its name, it also "nose-dived" quite spectacularly within a few years after its founding. The former president is said to still be living in Sakaki, but very little is known about what he is doing; he and his immediate family no longer participate in the town economy, politics, or voluntary organizations. One of the heads of a Yanagisawa branch family was president of a firm that went bankrupt. He was effectively disowned by the family, his heirship to the branch being passed to another sibling. He was also divorced by his wife and very little is known or spoken about his whereabouts. These examples illustrate the serious ramifications on family standing in the town when the social contract that they have with their employees is broken. It is the expectation that they will uphold their commitment; the social cost to them should they fail to is compensation for the exalted status they hold in the firm.

There is a high degree of delineation between family members and others in Sakaki's companies. Family members receive many privileges, but they are also bound by responsibilities to their employees. Should they abrogate these responsibilities (the most serious offense being bankruptcy and laying off of loyal employees), they are ostracized by the larger community. Employees accept a lower status within the firm because of this unwritten social contract for benevolent protection by the family of the company's founder. The old expression "blood is thicker than water" is apropos to the family-centered traditions of Sakaki companies.

A mercantile tradition vs. bureaucratic traditions of large urban corporations

The merchant tradition which seems to have been carried on in Sakaki companies finds opposition in another tradition with apparent roots in the military bureaucratic class of the Edo era which governs the practices of the largest Japanese corporations. Family association is shunned in major corporations even though many of these firms got their starts as family enterprises. Sons of prominent managerial officers are not to be accorded special privileges to ascendancy. It would be unheard of to have a husband and wife team or to have a board of directors composed of brothers, mother, and in-laws; in fact when family members do work in the same firm they are often separated to completely unrelated sections. Logical and bureaucratic processes determine career advancements and occupancy of upper managerial positions in firms adhering to this tradition.

As firms become larger, they tend toward the bureaucratic tradition

The larger Sakaki firms struggle to abandon many of the practices of their mercantile origins in favor of bureaucratic rules, but the legacy of family involvement is hard to erase even after leadership has passed to a second generation. Many of these firms are headed by the son of the founder. The boards are stocked with relatives. But there is a definite attempt to understate family relationship to position. Furthermore, the sheer scale of these companies means that lower and middle management is bureaucratically determined and over time, these managers do win upper management positions.

Another factor complicating the mercantile tradition is the strategic alliances that evolve with the outside giants with which Sakaki firms develop supplying relationships. Alliances are usually made in times of economic crisis of the smaller supplier (the Sakaki firm) in which case the larger client company provides backing in order to assure continuity of supply, or may provide alternative technologies so that the company can retool to provide the client with other commodities. In many cases these alliances are strengthened with capital investment in the Sakaki firm by the outside company. Often times, the smaller supplier must also relinquish some amount of managerial control to the larger client.

Two of Sakaki's largest and oldest firms supplying parts to the motor vehicle industry have received substantial backing from their primary clients. Tsuzuki Manufacturing was the fourth firm to relocate to Sakaki in 1944; it has over 400 employees. Yanagisawa Precision Manufacturing was founded in 1946 by a local son of a farming family; it now employs over 500 workers. Both firms have a history of varied products. Tsuzuki started out making metal cables for the electric industry; Yanagisawa got its start making electric connectors for Fujitsu, later getting heavily involved in sewing machine parts. Both companies developed strong relationships with single external clients; however dependency on a single client left them vulnerable when changes in technology and the economy occurred. Tsuzuki invested all of its energy to become the top specialist in one component for motorbikes and developed a strong relationship with Honda from the early 1950s. But the motorbike dropped in popularity as Japanese consumers became well off enough to buy automobiles. Tsuzuki was forced to retool its plant; in this it received considerable help from Honda. Today 85% of its products are for Honda; Honda owns a 20% stake in the company and appoints a member to the board of Tsuzuki's corporation who is also the day-to-day manager of operations. Yanagisawa Precision also became quite involved with Honda after oil shocks brought an end to its sewing machine contracts, but it was again hit hard when Honda went into a "war" with Yamaha for market share in the motorbike industry Yanagisawa was supplying. In this case, another large client at the time called Kayaba bailed the company out, buying stock and appointing a vice president to the company. Today Yanagisawa Precision produces 50% of its income from work for Kayaba and 25% for Nissan.

Agatsuma (mentioned earlier in this chapter) was not as lucky as Tsuzuki or Yanagisawa. When the bottom fell out on the consumer sewing machine industry in the 70s and Taiwanese models began to out-price Japanese products, clients were not immediately willing or able to step in and save the company. The company was bankrupted, court-appointed management took over the company reducing the company to a mere skeleton. But apparently the new management was corrupt and the company again fell into troubles. Recently the firm was restructured by one of the original middle managers (not family related) of the company with an introduction from Brother to a company which provided capital backing (another, larger supplier of parts for Brother).[3]

Yanagisawa Precision, Tsuzuki and Agatsuma have all paid heavy prices during difficult periods in their histories. As a result they are much more dependent on external capital as well as managerial leadership. They have become dominated by the large clients they supply, many of the aspects of their original family organization have been diluted, as they chart a course for the more pragmatic practices of the bureaucratic urban corporations.

Independent firms

Independents have their own "brand-name" product line

Sakaki companies have followed one of several courses. The first course, which is the least prevalent, but most obvious is the small group of companies which epitomize Sakaki's claim that its companies are not shitauke (subcontractors). These companies began as parts suppliers to others and grew side businesses in finished products. Two of these companies started making parts and now exclusively manufacture the tools and manufacturing machinery for the parts that they used to make themselves, though the level of technological sophistication is obviously greatly advanced during the span over forty years. Nissei Plastics began by manufacturing plastic parts and is now successfully marketing its plastic induction machinery all over the world. Miyano started by making metal files and lighter strikers and now manufactures the machinery for turning intricate metal parts, again selling its machinery itself world wide. Hioki Electric started by making coils and electric meters and now manufactures test equipment containing these products. Takeuchi Manufacturing makes tractors, back hoes and light construction vehicles. In most of these cases, the previous business of the company has been "spun-off" into a smaller, but equally viable enterprise.

Products of the independents compete directly with those of keiretsu

All four of these companies compete against the major industrial groups of Japan. Nissei and Miyano compete with Sumitomo, Mitsubishi and others. Hioki competes with Toshiba and others. Takeuchi competes with Komatsu. In Japan, membership within an industrial group may preclude purchasing supply parts and machinery outside of the network should these be available within, so the member companies of keiretsu have a captive client base within their networks. But a large majority of the potential customers for such machinery both domestically and internationally are not aligned strongly with such groups, so there is an equal chance for smaller companies like Nissei and Miyano to compete.

As one local government official put it to me, the giants like Mitsubishi have their hands in too many pies. They are doing so much that they are unable to track a single industry like a small company whose life blood it is to produce that product. Certainly there are advantages to being small and devoted, but it is no easy feat for companies like Miyano to compete against the keiretsu. To begin with, member companies of large industrial groups may be encouraged by their trading companies, eager to increase market share over the long haul, to sell machinery at much reduced prices undercutting small companies that cannot fall back on other profitable product lines and "sweetheart" loans from group banks. Despite arguments about superiority from fighting spirit, these small firms fight a very hard battle against the giants.

It is increasingly difficult for independents to remain competitive

Another factor highlights the challenges facing Nissei Plastics, Miyano and the other independents. On a tour of one small Sakaki company which manufactures the plastic cases for cameras, I noticed that of two machines in the same room, a Nissei machine sitting beside a Sumitomo machine, the former was idle while the latter was engaged in full production. I asked if they allocate jobs differently according to machine and learned that the Nissei machine, while considerably cheaper than its Sumitomo counterpart with similar features, consumed much greater amounts of electricity, was noisier, hotter, and tended to generate more defects. Try as they may, the independents are fighting a hard battle against their larger competitors.

Given the current shortage of labor in Japan, this problem is made even more acute. Nissei Plastics was once accustomed to hiring prospective engineers out of junior high school and training them in-house, a common practice throughout Japan. However, education levels have increased terrifically in the last twenty years and very few individuals quit school at the end of compulsory education ending with junior high school. In fact there is a great preference for college now because it is thought that a college degree even from an obscure regional private college is more apt to land easy desk work rather than dirty factory work. In addition the great emphasis placed both by young people and their parents on finding employment in the relatively secure setting of a large industrial group, small independents like Nissei Plastics and Miyano are finding it increasingly more difficult to attract young people.

Salary for full-time male workers throughout Japan is largely determined by length of service. This system of remuneration complicates "head-hunting" because firms cannot easily justify hiring individuals with excellent skills by offering wages higher than someone with similar age and length of employment already in their firm. Few colleges and universities endow their students with skills and knowledge that is immediately applicable to the industrial setting, so almost all companies train their employees in-house, preferring to have recent graduates to mold in their company image. However, the stereotype of "lifetime employment" in Japanese organizations is largely false, especially so at the level of smaller firms. There is considerable mobility within the region around Sakaki. Mid-career recruits are offered salaries based largely on their age and experience level presumably roughly equivalent to their age cohort in the firm they where they are hired. Despite considerable mid-career hiring, small independent companies have considerable difficulty maintaining levels of technology comparable to those of their larger competitors. Some of the pressure has been averted by internationalizing particular operations to overseas plants where they can be performed more cheaply, but these companies walk a razor's edge in trying to maintain continued successful independence.


Increasing dependence on large industrial groups

Much of the attention paid to Sakaki highlights the independence of the relatively few firms that sell their brand-name products on domestic and international markets, but the work of the majority of Sakaki companies is not independent, but very much bound into the networks of the large industrial groups. The networks of which they are part are very complex. Many of these companies do not simply work raw materials into finished parts which are distributed to the assembly plants of large companies. In fact the large industrial companies often do not see the final parts or even products until they have gone through a process of refinement and assembly through several such companies.

Kayama Industries is a company of 148 employees which finishes cast metal components used in Honda automotive engines. They receive the raw castings from a specialized supplier out of town. Kayama grinds and drills surfaces within specified tolerances so that the parts may be assembled at another location. They are remunerated by Honda for the number of parts they process based on the degree of complication of the process. Kayama must pay for any defective parts that are due to their workmanship but not for defects caused by sub-standard materials supplied by the casting company.

Other companies even engage in the final assembly of goods that are marketed under major labels. Miyago Industries is a company that makes pressed metal assemblies for several stereo brands. The company by no means commands a large percentage of its client's manufacture, but has developed several close ties simultaneously with several of the largest brand names: Kenwood, Sony, and Pioneer. These assemblies form the cabinets and internal supporting structure for electronic assemblies. Miyago was started in 1963 as a subcontractor to the large company, Azuma Spinning, which the town had attracted in the early 60s (causing the angry relocation of Miyano). When Azuma went bankrupt in 1974, Miyago turned to outside connections in the stereo industry. He retooled his company to manufacture housings for stereos and started a new company in Togura in 1974, Miyago Electronics, which does the final assembly for stereos for several makers.[4] Miyago Industries employs 130, Miyago Electronics 250.

Companies like Miyago, while relying substantially on business from several keiretsu, are still largely independent, but a general trend of greater reliance is typical of companies which become suppliers within these networks. The examples of Tsuzuki Manufacturing and Yanagisawa Precision (discussed previously in this chapter) illustrate this trend. Both have received outside capital and relinquished some amount of managerial control to the keiretsu of which they have become part.

New breed of small-run specialized manufacturers

Another type of company which is emerging is that characterized by a small company called "Art," located in the mountainous outskirts of Sakaki, far removed from the highway where most of the town industry in concentrated. Whereas so many of Sakaki's companies produce large numbers of single parts, this company turns out small numbers, even in some cases, single parts of a particular design. It is highly value-added work.

One scholar, David Friedman (1988), has proposed an alternate view of Japanese industrial "miracle" based on what he saw in companies like Art and even the large-volume producers during several days visiting Sakaki in the mid-80s. He has proposed that Western attention has attributed too much importance to top-down management of industrial groups and government-industry cooperation and proposes that a more realistic explanation for industrial expansion has been the skill with which small companies have been able to produce relatively short runs of parts and switch over operations quickly to new parts and parts for other clients.

Surely Sakaki's companies demonstrate Friedman's point. In fact they have been themselves innovators in such a movement. Companies like Nissei Plastics and Miyano which once manufactured plastic and metal parts (with a large amount of human interaction) have become the producers of factory machinery which automates these processes in other factories. Most contemporary factory machinery is run by computer (rather than an operator), loaded with programs which follow the steps necessary for the process of manufacturing a given part. The operator's job becomes one of merely setting up the machines, making sure they are stocked with necessary materials, and resolving any problems that might occur. Another job is that of the engineer/programmer who develops the program to manufacture the part. In a large volume operation, a given program might be used several months. At Art, programs are developed for single parts and rarely used again.

Automation has been effected as much as economically possible

Other segments of Sakaki industry reflect portions of the manufacturing process which cannot necessarily be automated further. A large number of smaller companies manufacture molds which are used in factory machinery to mass-produce plastic and pressed metal parts. Molds permit the automation of the manufacturing process, so that many thousands of the same part can be produced with little operator intervention. But the manufacture of a mold itself is a very complex process requiring considerable engineering talent. While the machines which are used to make these metal molds are now the same kind of computer-operated devices which mass-produce parts, the time and expense required to produce each mold prevents the manufacture of these items to approach the limits of Art.

Small enterprises buffeted by cycles of the national economy

Sakaki industry has weathered several particularly difficult transition periods during which many companies underwent great hardship, but from which the industry in the town on the whole has rebounded and even gained strength in increasingly competitive markets.

One such difficult period was during the oil shocks in the mid-1970s. Up to that point, Japanese industry and industry in Sakaki was growing at an incredible pace, producing largely export-oriented consumable goods. At that time, many Sakaki companies supplied parts for sewing machines. One large independent, Nakajima All Precision, even manufactured their own sewing machine, though it was sold under other brand names in the US. During the oil shocks, Nakajima had to scramble to keep themselves afloat, switching to another product line in which they could employ their substantial expertise at manufacturing machinery with intricate internal parts. Like other companies supplying the sewing machine industry before the shock, Nakajima reoriented themselves toward the manufacture of typewriters. Today they manufacture electronic typewriters and computer printers. Other companies like Yanagisawa Precision ended up changing more radically from sewing machines to automobile parts. Others like Agatsuma were ultimately bankrupted. The effects of the oil shock were felt by almost every Sakaki company, but the large majority of them weathered it successfully.

The oil shock was a turning point both for Sakaki industry and for Japan. It was after the oil shock that Japan finally shed altogether the image of turning out cheap, shoddy merchandise and became the envy of other Western nations regarding quality control. For Sakaki companies that transition meant shifting focus from cheaper, relatively low-technology parts to high-technology value added subsets of their original business. For a company like Nissei Plastics for example that was manufacturing plastics pre-oil-shock, this meant discarding the business altogether and taking up the work of producing factory machinery for others to manufacture these parts. Many other companies which did not have the ability to shift their operations had to turn to their clients to bail them out. In many cases, it was in the interest of these large industrial groups to preserve their suppliers because they in turn relied heavily on their products.

The mid-80s was another period of hardship among Sakaki companies, but one which, thanks to the adjustments they had made during the 70s, was perhaps more easily weathered. As the value of the yen doubled, the actual gross income received from export sales (when exchanged back into yen) dropped by half, while the cost of labor remained constant. Some of the loss in income could be made up with corresponding drops in the cost of imported raw materials, but since most companies had turned to high-value-added, labor-intensive work, this meant cutting out all the inefficiencies in labor and automating to a greater extent than before in order to be able to turn out final products at a lower cost.

The 60s and 70s were one boom period in Sakaki. The late 70s and early 80s were another. In each of these cases, Sakaki companies overcame obstacles, enabling further expansion of industry. These were the most intense periods of company founding and growth. Sakaki is in a relatively lean period now. Few new companies are being formed these days. The excitement generated by foreign and Japanese scholarly attention has died out, as have several of the major companies which were on the tour for these outsiders. Sakaki companies are up against very substantial barriers which prevent further expansion, and one has to question whether they can surmount them this time in the way that they have during past crisis periods. Surely some industry will survive in the town, but one has to wonder whether a collusion of external and internal factors is going to cause the push out of much of local industry.


[1] Because of the nature of the situation, I will not mention the names of the company or other parties in this case.

[2] The flip side of this from the perspective of the client firm's employees is a perception that first sons of rural families never stay very long and that they have fewer ambitions for advancement. Sons of rural industrialists have other incentives to learn skills, for the skills they a cquire in employment in large urban factories become their justification of privilege when they return to the family firm.

[3] The recent restructuring of the company had the related benefit of clearing the slate on calculation of income and retirement benefits based on seniority. The group of original employees who returned had to accept that they would not receive the benefits deserved them by their long employment at the firm; but the burden of these responsibilities would have prevented the manager from finding outside capital for the company. Jobs were saved, but at a price.

[4] The finished stereos assembled at Miyago Electronics are loaded into their final packing boxes and shipped to warehouses for the manufacturers. One wonders what, if anything, the keiretsu themselves manufacture anymore!

Grass-roots industry in the town of Sakaki: an alternative perspective of the Japanese post-war "miracle"

Copyright (C) 1992, 2004 by Christopher Romig Keener.

         CHAPTER 1
         CHAPTER 2