Japanese Investment and British Trade Unionism

Thatcher and Nissan Revisited in the Wake of Brexit

Hitoshi Suzuki

• Publisher: Palgrave Macmillan
• Year: 2020
• Print ISBN: 9789811590573
• eBook ISBN: 9789811590580
• Topic: History
• Subtopic: International Business
• Index: History

This book revisits the long contested negotiation between the Thatcher administration and Nissan for the latter's first green-field plant in Europe. From the very beginning, the plant took Britain's EC/EU membership and tariff-free access to the single market as a token. A considerable amount of aid including component supplies was provided to attract Japanese investment and to prevent its transfer to the continent. The successful launch of Sunderland highlighted improved Anglo-Japanese relations and put an end to the Japan-EC/EU trade conflict. But the price was paid by Nissan's slump and fall, and by trade unions in both countries failing to keep counterchecks on management. Brexit and the fall of Carlos Ghosn were a double blow to Anglo-Japanese relations which are in a state of drift and need redefinition.

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2020

H. SuzukiJapanese Investment and British Trade UnionismNew Directions in East Asian Historyhttps://doi.org/10.1007/978-981-15-9058-0_1

Begin Abstract

1. Introduction

Hitoshi Suzuki¹

(1)

Ministry of Foreign Affairs of Japan, Tokyo, Japan

Hitoshi Suzuki

Email: [email protected]

Abstract

Literature on Anglo-Japanese relations have centred on diplomacy, industry, and culture, but failed to incorporate the EC/EU dimension. In this book the Nissan-Sunderland deal will be thoroughly addressed with an eye on the negotiations of the Thatcher administration and Nissan’s European strategy. Britain’s EC/EU membership was at the core of both parties. Another crucial missing piece was trade unions and its misunderstood role in the negotiations, which was the key for both Nissan’s choice of plant location and its “successful” operation. The Brexit referendum of 2016 and Carlos Ghosn’s fall have put the future of Sunderland in uncertainty.

Keywords

Anglo-Japanese relationsEuropean Community/European UnionBrexitForeign direct investmentCar exportsNissanTrade unions

End Abstract

The Nissan plant in Sunderland was launched in September 1986, and although its future was brought into question by the Brexit referendum in June 2016, it remains the largest car plant in Britain and has achieved one of the highest productivity rates among European assemblers. This book aims to examine the history of the negotiations between Margaret Thatcher’s administration, Nissan, and trade unions of both countries. Due to its flood of exports, Japan faced trade conflict with European Communities (EC, from 1993 European Union, EU) member states during the 1970s and 1980s. Britain took the unique position of both criticising Japan’s aggressive export drive as an “abuse of free trade rules” and simultaneously inviting Japanese industry to build its first European green-field plants in Britain. Due to its ambition to overtake its major rival, Toyota, Nissan reached an agreement with the British government in February 1984. It did so regardless of the costs and risks: the overall investment cost of 380 million pounds, the shortage of financial assistance, the need to draw on high levels of local content, doubts about the reliability of British-made components , labour disputes in both countries, and Nissan executives’ own conflict over whether to prioritise the USA or EC market. Soon after Nissan successfully concluded this agreement, Toyota and Honda followed suit and launched their own plants in Burnaston and Swindon, respectively, in 1992. These events created a new dimension in Anglo-Japanese relations, with the EC/EU clearly uppermost in Japan’s mind.

To focus on the details of the negotiations and their wider implications for Anglo-Japanese relations , the history of Japan’s post-war reconstruction and its relations with Britain and the European Economic Community (EEC) will be reviewed together with Nissan’s corporate history and European strategy. Britain’s membership in the EC heavily influenced Japan’s relations with it because the Japanese government and industry started to view Britain as a gateway to the EC market. This shift is not sufficiently illustrated in the current works by Keck and Gilson that focus on Japan’s relations with the EC/EU¹ because they tend to categorise this period as a transition from an era of trade conflict to the current improved relationship between global partners; therefore, the outcomes and lessons of trade conflicts are underemphasised. The Nissan negotiation was first analysed by Conte-Helm.² However, her focus was on local exchanges between the North East and Japan; thus, she mostly neglected the EC/EU factor. This lacuna has been overcome to some extent in recent works written by eyewitnesses who served the British government. For example, Sir Hugh Cortazzi and Robin Mountfield testified to the details of the negotiations.³ These contributions, however, lack the Japanese side of the story, namely, the perspectives of Nissan’s management and trade unions and the Japanese government trade policy. To illustrate these points, this book consults the memoirs of Takashi Ishihara, the president of Nissan, and Ichiro Shioji, the leader of the Japanese trade unions, together with the archival materials of the Japanese (and British) trade unions, with which the English audience is not familiar. This book therefore provides a clearer and fuller picture of the negotiations and explains how, why, and when Japanese industry chose Britain as its gateway to the EC/EU market, how and why Britain “welcomed” Japanese industry, and the wider implications of this development for Anglo-Japanese relations in the wake of Brexit (Chart 1).

Chart 1

Japan’s outward FDI by Country/Region (Balance of Payments Basis, Net and Flow) Unit: US$ million

(Source https://​www.​jetro.​go.​jp/​ext_​images/​en/​reports/​statistics/​data/​country1_​e_​17cy.​xls. Accessed on 4 May 2014 and modified by the authour)

Works on the history of European integration have extensively examined transatlantic relations, but few have systematically analysed relations with Japan. Lord Francis Arthur Cockfield recalled as an eyewitness that economic competition with Japan, along with the US, was the main focus of the EC during the late 1980s and influenced the creation of the EU in 1993. This book widens the scope of integration history by describing how Anglo-Japanese relations helped to shape the present-day EU and its policies and aims to indicate how and in which fields Brexit could affect Britain, Japan, and, last but not least, the EU itself. Among the nine EC member states, why did Britain become the main gateway for Japanese industry to operate plants and export to the single market? Member states and the European Commission jointly criticised Japan’s flood of exports for being concentrated in very specific sectors, constituting an abuse of free trade rules.⁴ This was damaging for declining sectors and local employment. Member states and the European Commission were, however, not firmly unified regarding how to accommodate Japanese investments in the EC due to the controversy. New Japanese plants would create employment in stagnating areas but at the same time could lead to over-capacity in the sector and the closing of European plants. Why and how was Margaret Thatcher’s “brave” decision to welcome Japanese investments made, and who took it to Brussels?

One of the main focuses of the Single European Act (SEA), although not written in the text of the act, was to make Europe competitive with the US and Japan.⁵ The person who prepared the content of the SEA was Lord Cockfield, then Thatcher’s trusted advisor. This book focuses on how the Confederation of British Industry (CBI) formed its Japan policy , when and how that policy was shared with Tory MPs, and how it found its way into the draft of the SEA. Britain chose to accommodate Japanese industry for three reasons. The first was Thatcher’s firm decision that British industry needed rationalisation; for that purpose, she aimed to introduce Japanese production automation and Japanese trade unionism into British plants.⁶ The second was the CBI’s desire to learn from the Japanese approach to competitive production and to collaborate with Japan rather than criticising its aggressive exports. These views were based on recommendations from British firms, such as Rolls-Royce (RR) in aero engines and Triumph and Rover in the car sector, that had collaborated with the Japanese. Finally, the third reason was Japan’s insistence on launching its European plants in Britain on the basis of a joint consensus among the Japanese government, industry, and, to a lesser extent, trade unions.

The Nissan deal bore fruit, regardless of the harsh criticism emanating from British public opinion and other EC member states. The Nissan Sunderland case has been described as an “exceptional” case where domestic manufacturers failed to survive,⁷ but it soon became clear that the Nissan deal was actually an orthodox path defined under the EU’s industrial and foreign trade policy.⁸ The absence of parliamentary debate helped to secure the Nissan deal by bypassing opposition and doubts. This approach was not entirely successful in speeding up the negotiations. Crucial debate regarding whether the deal was adequate and necessary for advancing technological standards and impr...

Table of contents

• Cover
• Front Matter
• 1. Introduction
• 2. Japan’s Post-War Reconstruction, the Car Industry, and Nissan/Datsun
• 3. The British Car Industry and Anglo-Japanese Relations in the Post-War Period
• 4. Negotiations over Financial Assistance and Local Content
• 5. The Deal: Financial Aid and Local Content
• 6. Plant Location Sunderland
• 7. Epilogue
• 8. Conclusion
• Back Matter