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How Japanese Cartels Destroyed US Electronic Industries

by PBS


This is the text from an episode of PBS Frontline about Matsushita, the Japanese electronics giant. This TV program is written from a Japanese viewpoint by Shuichi Kato, who narrates the program.

This is really an absolutely shocking account of how Japanese industry organized itself to seek out and conquer several industries throughout the world via the use of cartels, illegal secret agreements, discipline and high quality, racism against non Japanese (ie. American) employees, government coercion, product dumping on immense scales and intents to avoid using non Japanese suppliers.

This edition of PBS Frontline talks specifically about how the Japanese company, Matsushita, ascended to become the world's largest TV maker and a major power in semiconductor and electronics technology. They talk about the Japanese industrial cartel and how it successfully destroyed the American TV industry by taking technology from RCA and others and dumping televisions into the US market while forbidding entry of U.S. televisions into the Japanese home market.

Later it discusses the disappointments which resulted when Matsushita bought the American TV maker Quasar from Motorola. Quasar was gutted and facts detailing that American workers were treated as a sub class with a different hierarchy in the company emerged. For example: jobs for life applied only to Japanese (not Americans, most of whom were fired when Quasar's technology and production was taken to Japan), and Japanese workers would get raises and power while Americans would not.

Mr. Kato also talks about the down side of all of this for ordinary Japanese people, who are also victims of Japanese corporate behavior, but in a different way.

The program is a bit slow at first, but quickly gets interesting as it goes along. Ironically in all of this, George Bush's, utter lack of vision and understanding of the importance of this problem is clearly demonstrated near the end of the script.

To understand the script:

The name in [ ] is the person talking and remains so until a new name in [ ] appears. The words in ( ) explain a bit what they are showing on the TV at this place in the script.

The first few seconds got garbled (about 1/2 of an introductory sentence), but all the rest of the text is fine).


[Shuichi Kato; narrator] ...first couple seconds of the program is garbled...

...Not the japanese people who had followed them so blindly. The Americans defeated us and liberated us. In crushing our military, they gave us back the meaning of our lives. Looking back, it is clear I underestimated one central fact. I was part of a defeated country, the dynamic between victor and vanquished had been set...and it would resurfaced. This is now my tenth trip to the United States spanning 30 years and the tension between the two countries had always been there, though not as overt and as visible as today.

Today there is bitterness everywhere. Japan's new wealth seems to cause a crisis of identity for americans who are hard pressed to grasp a world which they may not be number one. But Japans great strength has also created a crisis for the Japanese , and this I believe is not so well understood. Our wealth has brought us all over the world, and wherever we go, we find ourselves in collision with our own culture. This, in the broadest sense, is the subject of discussion of this film.

I was in America at Frontline's invitation, to look a one great Japanese company in the United States. The film would be a collaboration, Frontline would investigate, and I would bring my perspective as a Japanese writer. Ours would be a case study of Japan's troubled expansion to the outside world.

(news casts...sample newscast of Matsushita's purchase of MCA/Universal Pictures)

It captured America's attention for a single day, the largest acquisition ever by a Japanese company. For many Americans, this was the first time they had ever heard of Matsushita. But with its brand names Panasonic and National, this company is in fact, the 12th largest in the world and it has a tangled and bitter history in the United States, reaching back many years.

Konoske Matsushita, founder of the Matsushita Electric Company at the end of World War II. With his company and his country in ruins, Matsushita made an unlikely promise, Japan would again be a power among nations he said, this time through peaceful means. The world was entering the age of electronics. Japan would be a leader in this field.

[Hajime Karatsu, former executive, Matsushita] The first time Matsushita went to America was I believe around 1950. It was a shock for him. He was seeing America in its golden age. He set out to achieve that kind of prosperity for Japan.

[Shuichi Kato; narrator] To understand Japan, you must know that it is a tiny string of islands with almost no natural resources. To thrive in the modern world, we must export. But for centuries, Japan had almost no contact with the outside world. We need the outside world, yet it has been largely alien to us.

[Hiroshi Kohno, writer] Konoske Matsushita was a simple man from the country. The needs of the American people were a mystery to him. He thought about what he should make. He considered televisions. The US dealers concurred.

[Shuichi Kato; narrator] Matsushita set his sights on the U.S. TV market. Some 20 years later, most of the US television industry had disappeared. Matsushita would be embroiled in legal investigations and his company would be the largest manufacturer of televisions in the free world.

(sample RCA commercial is shown) [Shuichi Kato; narrator] It seems hard to recall that 30 years ago, the United States dominated the market for television sets. All across the world, companies like RCA, GE and Zenith were considered the most competitive. Japan's market was closed to foreign companies. Unable to sell their own sets in Japan, RCA and GE licensed their technology to Japanese manufacturers, including Matsushita.

Frontline's investigation reaches back to 1956. In that year, and again in 1964, K. Matsushita helped to organize a cartel that included Sanyo, Toshiba, Hitachi and Sharp. This cartel's history is known in Japan, but it is mostly Americans who will speak about it publicly.

[John J. Nevin, former CEO, Zenith] We know that the Japanese television industry organized what we in this country would call a cartel as early as 1956 and uh, they were setting prices for the Japanese market, they were setting the discounts that the retailers would be permitted to earn, they were setting the discounts that the wholesalers would be permitted to earn, uh they had a fix on the market.

[Shuichi Kato; narrator] By setting artificially high prices for televisions and other appliances in Japan, the companies could generate high profits. They could then use these profits earned at home to undercut foreign competitors abroad. This kind of price fixing was illegal in America and Japan.

[John J. Nevin, former CEO, Zenith] In uh, 1956 and again in the early 60's, the Japanese equivalent of our Federal Trade Commission which was really established by US authorities after the war umm twice charged the Japanese industry with unlawful cartel action. In both instances the Japanese industry please no lo contendre, didn't really deny the charges. The cartel may have had the tacit support of the Japanese government, but the manufacturers had to hide their double pricing system from U.S. authorities. They did this through a plan that required the collusion of U.S. dealers such as Alexander's and Sears.

[Hiroshi Kohno, writer] Sales proceeded very smoothly. Matsushita the man is still today considered the god of sales. He took very good of the important dealers in America.

[Shuichi Kato; narrator] This is how the plan worked. When Japanese manufacturers sent a television through customs, they would declare an official price, high enough so that the U.S. Customs would not investigate. The manufacturers would then offer a secret refund to the U.S. retailer, often through a Swiss bank account. The U.S. dealers proved enthusiastic. (picture shown of a check written by Matsushita to Sears Roebuck)

[Shuichi Kato; narrator, picture of Japanese doing exercise and other rituals]

This is the face of Japanese corporations that strikes fear in Americans. 1962, Matsushita celebrates its first shipments of the year. Secretly, the Japanese manufactures were exporting their goods at prices far lower than in Japan, and perhaps below the costs of manufacture. Japan's television industry expanded rapidly.

[John J. Nevin, former CEO, Zenith] The effect of trying to compete with this dumping of Japanese television receivers at very low prices in the United States was to force the American television manufacturers including companies like General Electric, GTE Sylvania, Ford Motor Company that owned Philco, Maganavox, to the wall. And uh, one after an other, they either went through bankruptcy, or were acquired by foreign competitors.

[Shuichi Kato; narrator] This price fixing cannot on its own explain one country's failure, or another's success. It is obvious other economic factors were at play. The Matsushita company refused to be interviewed about its history. But the cartel founded by K. Matsushita met until at least 1977, by which time at least 90% of the U.S. industry was gone.

Konoska Matsushita was perhaps the most respected industrialist in Japan, revered as a moral authority. How could he be seen so differently outside out shores. And why did he devote himself to this plan.

One of the themes of Japanese life has been a moral double standard. We protect those within our family or group, and we are often indifferent to those outside it. In our society, even the Japanese can be outsiders. But the ultimate outsider is the foreigner. K. Matsushita believed that business would restore Japan, transform our country into a paradise on Earth. But for business to prosper, he and his country needed the outside world. How the rest of the world would fit into Japan's revival, this has never been clear.

America insists on seeing a world in its own image. Your world view, in its own way, has been as insular as Japan's. Perhaps it is your religious past, but America is one of the last countries still to believe in a holy war. You find energy and purpose when you have an enemy, and today some Americans would like Japan to fill that role. But had America been attentive, Matsushita and other Japanese manufacturers could not have harmed the U.S. industry as they did. In the 60's and 70's, this country seemed so vast and rich, it could afford to be careless with its future. Japan was all but ignored. America's heart and mind were elsewhere, consumed by the cold war, the holy war of its day.

(an old 60's newsreel on Kennedy's visit to Japan is shown)

When Japanese companies took aim at the U.S. television market, they faced in many ways, an easy target. U.S. companies had been drawing large profits from the television business. When challenged, many firms simply gave up the field in favor of short term profits elsewhere. In this way, they abandoned not just television, but related fields such as video recorders, and semiconductors for years and even decades to come. As for the U.S. government, I think its actions were negligent. Frontline investigated:

The television dispute became public in 1968, when U.S. producers charged the Japanese with dumping goods at illegal prices. After a three year inquiry, the treasury department ruled the Japanese had been dumping. At the time, no penalties were assessed.

[John J. Nevin, former CEO, Zenith] I joined Zenith as president in the spring of 1971. It was a matter of a month or so after the United States government had come down with a dumping finding with respect to Japanese television sets...and I sort of at that point in time discounted the Japanese threat, I thought it was resolved by the dumping finding.

[Shuichi Kato; narrator] As Japanese televisions poured in to the U.S., the estimated duties climbed to tens or hundreds of millions of dollars. The government collected 1 million dollars in 1972, then, all collections stopped for 6 years. At about this time, Japanese housewives met with the Matsushita company. Japan's consumers had learned how cheap Matsushita televisions were in the U.S. and had come to protest high prices at home. Too often this is overlooked, for a company to sell goods at artificially low prices in one country, it must typically overcharge in an other. Japanese consumers, and U.S. producers were on the same side of this battle. But if U.S. policy makers understood, they showed no sign.

In 1972, Prime Minister Tanaka requested a 1 year delay in all trade disputes. President Nixon agreed.

(scene of Nixon giving a speech with Tanaka)

[Shuichi Kato; narrator] America remained absorbed by the cold war. Japan's only importance was as an instrument of that policy. So the two countries move to an unspoken agreement, one I believe was corrupt and harmful to both sides. Japan would unfailingly support U.S. policy, in return, the U.S. would overlook our transgressions in trade.

[John J. Nevin, former CEO, Zenith] The government of the United States position I think in the simplest terms, when it looked at the television trade dispute, was that it was an annoyance. It was a problem that ought to be swept under the rug. It was not a problem that the Nixon administration, or the Ford administration, or the Carter administration was willing to confront at the price of an argument with the Japanese government.

[Shuichi Kato; narrator] In 1977, a new man took charge of trade, Robert Strauss. There are now 6 U.S. television manufacturers, compared to 25 when the U.S industry filed its complaint, yet according to Frontline's inquiry, no more dumping duties had been collected, and no reasons given.

The U.S. customs estimated that nearly 400 million dollars was owed, and they sought to collect. The treasury department overruled them. Furious, the customs officials took their story to a American journalist.

[Seymour Hersh, New York Times] The customs agents, they're cops. And they though the boys in top in Treasury were fixing the case, that's all, throwing the case, its as simple as that, good old police talk. They were just convinced that they were being undercut to use a fancy word, sabotaged to use a more direct word and they uh.. smelled a rat.

[Shuichi Kato; narrator] Unknown to the customs agents, Robert Strauss had reached a secret agreement with the Japanese government. Publicly, Japan put a limit on future television exports. In return, Strauss wrote a secret letter assuring that the justice department would not press charges on unfair pricing, that other investigations would be curbed, and that the treasury department would quote: resolve promptly, the dumping charges.

[Paul Cullen, Attorney] What happened was that the ability of customs to enforce the law properly was undercut through pressures from the treasury department and indirectly through pressures from other parts of the government.

[Shuichi Kato; narrator] The American government and much of the U.S. industry seemed always several steps behind. By the time this case was settled, it was 1980. Frontline estimates the government collected perhaps 10% of what was owed. But even this is not the point, for by 1980, this dispute was irrelevant, the American industry was mostly gone, and Matsushita, like other Japanese companies, had seen the writing on the wall. Trade tensions were too high, Matsushita had to move to America.

I was in my 30's when I first travelled out of Japan. I remember the shock of the west, the outspokenness, the assertion of strong individual style. This was foreign to me, and it took me a long time to grow used to it.

I'm sorry Matsushita did not allow me to meet their Japanese managers here. I would have liked to compare my experience with theirs.

Perhaps I had an easier time, I came to do medical research, and also to write, and I came on my own, but managers arrive as a group. Japanese society is built on the idea of loyalty to the group, and so managers must focus inward on their fellow Japanese, even while living abroad. Its important to remember, they are not free. Theirs is a divided and precarious position.

[Trevor Reisz, former manager, Matsushita/Quasar] There was a young man that was from Japan that truly wasn't the old traditional Japanese real conservative guy. He was single, at that time I was single, and we became friends and he happened to play tennis so we played tennis and we got to know each other quite well.

Then all of the sudden, he disappeared. I don't mean from the company, but I mean from our get togethers Friday night over at the bowling alley, umm and I finally called him up one time and I said 'what happened', you know we hadn't seen you for quite a while. And he says 'well uh. I was kind of told that I'm becoming too American'. And I said 'Well, isn't part of your game plan here to learn about us?', and he says 'yes, but only to a certain extent'. So the rules for Japanese were also very very strict and could not be broken, and when they crossed the line they were reprimanded.

[Shuichi Kato; narrator] The Quasar facility, bought by Matsushita in 1974, its very first acquisition outside Japan.

[Jerome Hellmann, former manager, Quasar] Well, when I first joined Quasar, I went there because I knew they had a good marketing department and I knew that it was just purchased recently by the Japanese so the quality and the manufacturing ought to be improving quite a bit and so just looking down the road, to me it was a place to be in electronics. Good marketing, good product and good reliability, that's the place to be. What the Japanese did to reliability is unbelievable. They took a product line that had a high repair rate and made it almost a product that repairs were just not required at all.

[Yoshi Tsurumi, professor international business, Baruch College] Why was Matsushita able to make this company productive and profitable when Motorola could not? They consider this the Japanese paradox. How can the Japanese take corporation that Americans have thrown away as unprofitable, the Japanese buy it, and within a short term, turn it around within 6 months or a year, take over and bring it up to profitability. Its something like a miracle.

[Shuichi Kato; narrator] Japan's management methods have begun to attract attention worldwide. K. Matsushita and his company were considered the guiding spirits of this management style. But now that it had bought Quasar, Matsushita faced a new and unfamiliar problem. It would have to practice its corporate philosophy with managers who were not Japanese.

[Hiroshi Kohno, writer] It was Matsushita's first experience in production oversees. The Matsushita philosophy was based on the Yamato spirit. The Japanese national spirit. He tried to apply this to the American management as well and it was completely, flatly rejected. The Yamato spirit, it means the Japanese nationalist spirit, unity against foreign enemies and self protection at all costs. Konoske Matsushita applied this spirit to his management philosophy.

[Trevor Reisz, former manager, Matsushita/Quasar] This was at the beginning when I first joined Quasar, and it was a cafeteria line and I get my tray and you could sit anywhere, and I uh automatically sat down with the Japanese because I thought it would be a good opportunity to learn more about the Japanese etc. And I did this for a couple of times and I didn't see any problem with it until one of my cohorts told me that maybe it might be a good idea that if during lunch I ate with the Americans instead of the Japanese. And I asked 'why?'. He said, 'well, we're discussing the things that relate to Japan'. And I said 'Aren't I part of it?'. He said 'no'.

[Almon Clegg, former general manager, Matsushita/Quasar] Within America, the [Japanese] American companies, there are really two organizations, there's the Japanese organization and then there's the American organization. In some companies, in fact in some parts of Matsushita, I saw complete seperation. The Japanese had their own organization, the Americans had theirs and they virtually didn't communicate with each other. They had their own little cultures and their own little thing going and you could walk across the hall for example and it was just as though it was a different company.

[Jerome Hellmann, former manager, Quasar] Well we would be in a meeting, say it was a product development meeting, and deciding which models were going to be introduced at what time and I'd be presenting a plan why I thought this ought to be happening at this time, this ought to happen at this time and they'd be maybe four Americans and four Japanese in the meeting. And after I'd present my position, many of the times, all of the sudden, the conversation [would] all turn to Japanese. And then they'd be discussing back and forth, in Japanese what I assume I had just talked about.

[Yoshi Tsurumi, professor international business, Baruch College] The Japanese management system is loved and adored by the average employee, but not by the engineers, the managers, the professional level, people who like to have responsibility handed over to them.

Your going to have all kinds of opposition here, problems, confrontations. The Americans felt excluded from the decision making process, felt that the Japanese monopolized it.

[Jerome Hellmann, former manager, Quasar] Almost every significant management position had a co-Japanese manager. Uh, kind of making sure that they could relate back to Japan what was going on, what was being decided, how it was being decided and put in their comments and given direction. Although they were co-managers, there were really separate and independent personnel structures so to speak. I had my boss, and my co-manager had his boss, they weren't the same boss. Uh, we had different grade levels, different salary structures, different chains of command totally.

[Almon Clegg, former general manager, Matsushita/Quasar] The Americans play what I would call a support role, they are advisors, they are staff specialists, they are marketing geniuses, they are sales experts, but uh, when you are talking about power, when you are talking about who runs the company, I think that had to do with who owns this place, and in Matsushita, you know who owns the company and who runs it, and its the Japanese, and they're very clear about that.

[Trevor Reisz, former manager, Matsushita/Quasar] We were not, uh how to put it, part of the family, and I really say that with a little bit of emotion because a number of us really tried to become part of the family; really learn the rules of the game so we could operate within the format, but I feel it was Japan's goals to make sure we didn't know the rules of the games, so that we could not become part of the family. And so that we would make those obvious mistakes and we would constantly be kept outside.

[Shuichi Kato; narrator] To function oversees, Japanese companies need foreign managers. But to include them within the group carries risk. The company may fear losing the discipline that has brought it so much success.

(scene of a Japanese tending a rock garden) Perfection is Japan's enduring national value. More important than religion, or ideology, perfection to us is almost an aesthetic sense, deep in our culture and hard for other countries to imitate.

This artisan tradition of perfectionism has been very useful in the making of cars, or vcr's.

[Trevor Reisz, former manager, Matsushita/Quasar] One has to get a feeling of the whole manufacturing environment, when you walked the production line, and if you can picture 50 or 60 people in a row putting a little part in and passing a part down, that when a group of people were ushered into this environment, that no one looked up! At every line, the lines basically competed against each other for quality, for zero defect, so there was a tremendous pride instilled in the factory environment, that they're part of a whole mechanism, part of the wheel.

(scenes of Japanese doing morning exercises)

[Shuichi Kato; narrator] Matsushita's strengths and its weaknesses are in many ways the same. Like other great Japanese companies, Matsushita has tapped into the conformity and anxieties of the Japanese worker, and mobilized these into a vast group effort.

Village life, and the extended family had vanished from our culture, and the company has taken their place.

This group spirit, the source of Matsushita's insularity is part of its great industrial strength.

[Almon Clegg, former general manager, Matsushita/Quasar] A well run company, well managed and always looking after the best interest of the company on a long term view. Interestingly enough, and many Americans have taken this as a humorous attribute, but Matsushita actually has a 250 year plan. There's a serious attempt on the part of top management to view the company as a very long term entity.

[Shuichi Kato; narrator] In the 1980's, matsushita's fortunes were tied to a single product, one that would make them far richer and more powerful than they had ever been.

[Yoshi Tsurumi, professor international business, Baruch College] The VCR, like the microchip, is a symbol of some of the battles between the United States and Japan. Ampex had been selling it at the time for $100,000. It was a huge ungainly piece of equipment.

(sample Matsushita/Panasonic commercial)

[Almon Clegg, former general manager, Matsushita/Quasar] They just simply don't give up. And if they once have determined they're going to enter this market or that market, they just say "we'll keep trying", redesigning the product, revising it, improving it.

[William Holstein, writer and editor, Business Week] They are a real machine when it comes to making things. Uh, in one case, a VCR factory in Washington State that I visited, they were able to throw up the factory and get the production line moving in four months. Its staggering how fast they can move.

[Shuichi Kato; narrator] Matsushita, at one point, was producing two thirds of all VCRs worldwide. An American shopping for a VCR might have looked at GE, RCA, Sylvania, Magnavox, Montgomory Ward, Quasar, or Panasonic and have no idea all were Matsushita made.

(sample Matsushita commercials from Japan are shown)

[Shuichi Kato; narrator]

Matsushita had proven itself one of the greatest manufacturers of all time.

At the end of World War II, this company had been near collapse. The Japanese had looked to America to revive their companies, their economy. Now, the tables were turned.

(scenes of a groundbreaking party in a U.S. town where Matsushita is building a factory)

[an unnamed American] Its a great day in Algien, beautiful weather, and we're having the groundbreaking for Matsushita, their building a new facility here in Algien, something the likes that we haven't seen.

[an other unnamed American] Its a very credible company, and really means good economic things for the Algien area.

[Shuichi Kato; narrator] Today, Americans are competing for Japanese investment, hoping to lift their economy and improve their living standards that have been stagnant for 20 years. The U.S. is ambivalent, even as it clamours for this investment, it also resents it. One can sense wounded nationalism in the air.

European money pours into the U.S. unnoticed, Japan's causes an uproar. Is this racism? Perhaps, there certainly is fear of the outsider. But there is also a belief among Americans that they have not been served well by Japanese business. There has been fear, there's also been disappointment.

[William Holstein, writer and editor, Business Week] When we threw open the gates in the mid 80s to a flood of Japanese investment, we had certain assumptions about how it would be. We thought that there would be all these ripple effects, the so called multiplier effect of a plant, it would ripple through our whole supplier base, and the tax revenue would be tremendous and that the technology transfer would be significant. We thought that these investments would be a part of the revitalization of American competitiveness. But we didn't do a very good job in spelling out what we wanted the rules to be. We didn't spell it out because we assumed that they would do it the same way we would do it.

[Shuichi Kato; narrator] Americans like to think capitalism the world over is run American style. This is not always true. Coming from Japan, our corporations have brought with them their own ways, and their own long standing relationships.

(scene of a Japanese ritual)

[Shuichi Kato; narrator] At the time of this filming, this young manager is preparing to fly to America. He is drawn by the bonds that tie one Japanese company to another.

[a Japanese priest] "Take care of yourself and work steadily for the country, I pray for you"

[Shuichi Kato; narrator] For many years, this small company, Matsui, has been a supplier to giant multinationals in Japan, including Matsushita. These ties will now continue in the new country. When large Japanese companies move abroad, studies have found they will typically use suppliers they know from their home country, even when it is more expensive to do so. The close ties between Japanese companies can make for a separate society. They are in the United States, but not fully a part of it.

[William Holstein, writer and editor, Business Week] The host country does not get the same kind of benefits that they would have expected. The trade imbalance with Japan doesn't disappear in the same way, because the unit is still buying from back home.

[Shuichi Kato; narrator] At times, Americans have been slow to recognise this problem. Consider for example: Quasar.

(sample news clip about Matsushita/Quasar plant in the suburbs of Chicago)

Quasar's success was celebrated in the American media. But Frontline found that Quasar was being gradually hollowed out from the inside. The parent company soon began shipping equipment and parts from Japan.

[Trevor Reisz, former manager, Matsushita/Quasar] Quasar was a company that manufactured nothing. We were a sales company, we were a distribution organization. Who did we buy from, we didn't have the luxury to go out into the marketplace and say 'well lets see who we can buy from this week, who has the best price on the market', we were forced, or obliged as you may, to buy from Matsushita, the manufacturing organization. Of course what they did is that they began shipping their own guts so to speak or the chassis from Japan and uh, putting them into cabinets, turning Franklin Park, or what was left here into pretty much a final assembly operation.

(sample Quasar commercials shown)

[Shuichi Kato; narrator] Publicly, Quasar was an American television not subject to import duties or quotas.

[an unnamed American, probably an ex-employee of Quasar] Inside the TV set, there was no doubt that the entire product was Japanese, or Japanese sourced. As was if you looked at the net effect of a Matsushita taking over Motorola and moving in the direction that they did is the,..you lose technical skills, you lose tax income, you lose jobs.

[Shuichi Kato; narrator] Shortly after buying Quasar, Matsushita shut down two plants in Illinois. Later, Quasar's American research and engineering staff was phased out. The next phase took place in 1986. The television industry was in recession.

[Jerome Hellmann, former manager, Quasar] Well in March of 86, Quasar sent me to Japan to go to director's school, and on that trip, I came back with a new head Japanese guy for Quasar. And, when we came back, rumours kind of milled around that he had had previous experience where significant layoffs had taken place. Then in early May, 60 days later, one evening, I heard something's coming down tomorrow.

[Shuichi Kato; narrator] The Matsushita company had pioneered the system of lifetime employment. It was proud that in its 70 years, it has never laid off a Japanese employee.

[Jerome Hellmann, former manager, Quasar] I came in the next morning, and of the sudden, I kept hearing 'this guy just got it, this guy just got it, this guy just got it', then my phone rang about 10 'o clock. It was personnel, then I'm walking down the hall knowing what's going to happen. I went into the office and basically they said to me "I guess you've heard what's happening, I just wanted you to know that its going to affect you". Well I kind of prepared myself for this walking down the hall "its no big deal, if its got to happen, its got to happen, lets go on with your life, go find an other job and keep going. no big deal". But what really affected me, and hit me with a ton of bricks is I asked "what kind of time frame are we talking about here?". He said "we'd like to have your desk cleaned out by noon."

[Trevor Reisz, former manager, Matsushita/Quasar] My response when I heard about that reduction in force was I don't believe that they could have let the few key people that could really save Quasar, could continue its existence, that those were the ones let go. My first question was "how many Japanese left", because I knew the answer, and the answer was none.

[Jerome Hellmann, former manager, Quasar] Well if you took all the employees of Quasar, and listed all the Americans in one column and all the Japanese in the other column, all the people that "got it" that day, all came out of the American column. Its as simple as that.

[Shuichi Kato; narrator] It would come as no surprise to Americans that a lawsuit followed, and it tells the story. Three quarters of the American managers were let go, while the Japanese were kept. The American managers who remained had their salaries frozen, the Japanese managers received wage increases. This grim cultural divide had slipped into public view.

(scene of K. Matsushita's funeral)

[Shuichi Kato; narrator] In April of 1989, employees of Matusushita had mourned the death of their founder. He had been a standard bearer for Japan's revival

(speaker reads the following letter from George Bush, president of America)

[George Bush letter read out] "Mr. Matsushita was an inspiration to people around the world. He urged Japan to take its place as a full member of world society, and to help others achieve the prosperity that Japanese had worked so hard to attain. We will miss him, but his spirit will always be with us, my best wishes to all your family at this time of sadness. Sincerely; George Bush."

[Shuichi Kato; narrator] Many feel that the changing of the generations will solve Japan's problems with the outside world. "The old guard is passing" it is said, "the young will prove more worldly". I do not believe so.

For some years, this company has tried to change. Its slogan is kokusaka, internationalization. Its leaders know they must join the rest of the world. But for the Japanese employees, the large companies are a passport to a life. Exclusive source of income and friends for their adult years. Under these circumstances you cannot afford to be an outsider. The sole Matsushita executive we were allowed to meet was pessimistic about internationalizing the company's culture. How long would it take we asked. He said "100 years".

(more Matsushita commercials are shown)

[Shuichi Kato; narrator] Today, Matsushita company makes products all over America. Cathode ray tubes in Ohio, workstations in Colorado, electronic pagers in Georgia, in flight communications in California. Controversy seems to have followed. There was price fixing of VCRs, dumping of electric typewriters. In the courts, there are charges of patent infringement for television cameras and optical disks.

[William Holstein, writer and editor, Business Week] Its almost like we have rushed into marriage, economic marriage which we have, so deeply interpenetrated, yet we're now beginning to wake up and say to the person whom we've married "who are you?". And we were in this very awkward situation, and "I want you to change", and you say to me "I want you to change", its not gonna happen really that way so inevitably, there are going to be strains.

(scenes are shown of L.A. with pictures of very large Japanese banks who own tall buildings in L.A.)

[Shuichi Kato; narrator] Here in Los Angeles, you feel how fully these two economies are married. The past three years, SONY has bought Columbia, and Matsushita has bought MCA/Universal; to name just two purchases among many.

(scenes of a shopping mall in L.A. with Japanese writing in all the stores)

[Shuichi Kato; narrator] An entire shopping center serves the Japanese community. As our numbers here grow, we begin to make an enclosed community, an easy target of American resentment.

(scene of a Japanese restaurant)

[Shuichi Kato; narrator] The Thousand Cranes Restaurant in downtown Los Angeles. It is all too easy for Americans to despise us, just as 40 years ago, rich Americans abroad were despised. But the men here are no one's enemy. If you were to listen in, what you would hear might surprise you. Late in the evening, you may hear jokes about superiors, weary sarcasm about the companies for whom such men work.

Managers have surrendered their time and their lives to their companies. And privately, many feel anguished about it. This is what Americans have not understood. The walls of Japanese corporate life that shut you out, shut us in. The power of Japanese corporations is a problem for Americans and for us as well. More than any other institution, the corporation enforces our national conformity. As the great companies gain power, there is less choice in Japanese life. When I fly home, I prepare to re-enter a society where freedom is found only at the margins. I am going to a country where there is little room for the outsider, whether foreign or Japanese. Can this change? Only if individuals will stand up to the group and stake a claim against conformity. This I believe, is the central crisis of Japanese life. If we can confront it, then perhaps we will have less conflict as we encounter the outside world.

THE END -----------------------------------------------------------------

Such corporate policies are, in the long term, bad both for America and the ordinary Japanese people, to whom nothing is held against by this article.

These kinds of actions on the part of gigantic Japanese multinationals are as big a threat to our way of life in America as the Soviets ever were. In fact, they are probably even a bigger threat because the Soviet system was not sustainable over the long term, but the Japanese industrial system is. America cannot remain a world leader if it does not have the revenue generating commercial technology base to support the country. Don't kid yourselves, simply borrowing billions every year to maintain America's status will not succeed in the long term. Like the Soviet experiment, such an action is not sustainable, and in the end, is doomed to lead to very dire consequences for our country and our living standards.

The consequences of economic warfare and military warfare are strikingly similar. Driving American industry out of business (be it cars, semiconductors or industrial equipment) through economic warfare is tantamount to dropping bombs on it. In both cases the factories are gone, the workers are unemployed and the technology is lost. This is what America is currently up against.

If what you read above disturbs you, tell your friends, and help protect our own country's industries by looking for quality and buying American whenever you can. A threat like this can be fought, one American at a time. Hopefully, we will eventually elect politicians who will stand up and take substantial actions to defend our country from such economic attack. We are in essence, fighting a war, but unfortunately, most of us don't even realize it yet.

--- PBS Frontline: Coming From Japan WGBH Boston

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(Please support PBS, they are there to serve you)

Today, Nintendo, Honda and Japanese flat computer screen makers are doing the same thing today...

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