by Jon Day
TOKYO, Oct. 21 (Xinhua) -- Revelations that Japan's second-largest automaker Nissan Motor Co. has been involved in improper inspection practices has dealt a hammer blow to the embattled automaker itself, as well as the broader manufacturing industry, informed sources here said.
The inspections that failed to meet the Transport Ministry standard has led to a domestic recall of some 1.2 million cars sold in Japan over the past three years, and also Thursday's announcement of a suspension to production of domestic automobiles for at least a fortnight.
Sources close to the matter have revealed that the depth of the malpractice is, in fact, far deeper than first thought.
Japan's public broadcaster NHK reported that improper final inspections on vehicles has become an inherent practice at the Yokohama-based automaker and dates back as far as 20 years.
Specifically, according to the reports, Nissan has routinely not been following standardized procedures and protocols for final inspections that are required by Japan's transport ministry to be conducted on all vehicles sold in Japan.
Nissan CEO Hiroto Saikawa remarked on Thursday that the automaker's training system for certifying vehicle inspection staff had not changed for 20 years, with sources close to the matter more than intimating that, in violation of government requirements, final inspections had been routinely conducted by uncertified technicians.
Nissan has been quick to claim that the long-running scandal has had no impact on the quality of its vehicles and it will continue to export its products to overseas markets.
But experts here believe the inherent culture of cutting corners and second-rate corporate governance at the automaker, on the back of other far-reaching scandals involving, most recently, Kobe Steel's falsification of inspection data, point to rapidly declining standards of practice in Japan's manufacturing industry.
These events have diminished the reputation of the once revered "Made in Japan" brand.
According to Jin Jianmin, a senior fellow at Fujitsu Research Institute in Tokyo, the problems inherent in Nissan's business practices are, indeed, manifold.
"It tends to be the case that both in terms of corporate culture and the flow of communication at automakers in Japan, senior management and the on-site production management teams drift apart," Jianmin told Xinhua.
"The upper management strata placeS too much trust on the on-site production teams, who themselves are battling with a shortage of hands, with workers often under heavy pressure to carry out ever-increasing tasks and meet deadlines, which, to some extent, can lead to the kind of misconduct we have seen," Jianmin explained.
Saikawa himself fessed up to as much stating: "The communication gap between management and shop floors is big, bigger than what we imagined."
Jianmin further suggested that while the corporation governance mode in Japan emphasizes trust on human beings, the necessary supervision and all-important checks and balances can, indeed, be sorely lacking.
While a simultaneous top-down and bottom-up communication model is essential in any industry involving precision manufacturing, such as Nissan's, ultimately, analysts here said, the burden of responsibility sits squarely with the firm's CEO.
Saikawa took over from Carlos Ghosn only six months ago, yet industry insiders have questioned his ability to rule from the top. Accusations have been rife about the gulf between Nissan's plush offices and the shop floor, where highly-technical machines are made.
While Saikawa is still finding his feet at the top and had very large shoes to fill following Ghosn moving on, Jianmin suggested that sometimes, when a scandal first comes to light, this can just be the tip of a very large iceberg, regardless of who's top dog.
"After misconducts happen, senior management tend not to shoulder the responsibility, which leads to the repetition of malpractice in the future and so the cycle of passing the buck is perpetuated," Jianmin said.
This, other experts opined, can reach a point where it becomes a national or, in the case of Takata and Kobe Steel, international scandal that cuts right to the core of Japan's manufacturing standards. However, in doing so they have derailed decades of industry supremacy, rendering the nation's once stellar image for precision manufacturing, untrustworthy at best, and, at worst, unsafe.
From this point of view, Saikawa's somewhat meek and evasive remarks on how he plans to deal with the firm's colossal and potentially decades-long oversights, failed to appease a very nervous and increasingly irate market, which spans affiliates, investors, stock holders and of course, customers.
"The existing management's responsibility now is to prevent recurrence and to normalize operations and put the company back on a growth track," said Saikawa, in a recent press briefing on the matter.
"From my point of view if I see any mistakes, I'd like to take drastic measures. This is my job and I'm the one to lead it," the beleaguered CEO said, highlighting the very flaws in corporate governance referred to by Jianmin and scores of other industry pundits.
"The company will reconfigure the inspection process, and plans to add additional final inspectors," Saikawa added.
Experts were quick to highlight that Nissan had already revealed that after the initial unauthorized inspections were revealed publicly, the malpractice was allowed, incomprehensibly, to continue unchecked at four plants in Japan.
This underscored the innate nature of negligence and misconduct that can and does take place at bellwether firms in Japan like Nissan.
Recent scandals have included rigged fuel economy tests rocking Suzuki Motor Corp. last year and almost identical improprieties carried out by Mitsubishi Motors Corp., as well as the catastrophic fiasco caused by Takata Corp.
It is no wonder that with Nissan and Kobe Steel both getting in on the misconduct act, the government here is less than impressed, analysts noted.
Transport Minister Keiichi Ishii said that the negligence of compliance is undermining the nation's regulatory system and, as such, the ministry will take action.
But while the ministry's actions may eventually lead to something akin to improved corporate governance and compliance, the seemingly inherent culture of lax and neglectful procedures at Japan's once-revered blue chip firms, may mean that Japan, as a global leader in the manufacturing industry, may now be a thing of the past, experts on the matter have attested.
