History of Japanese companies in UK

Reflections on the past forty years of Japanese business in the UK – what’s next? – 7

(continued from part 6)

The Japanese consumer electronics companies which were such prominent sponsors of the 1985 Japanese Miracle conference at Oxford University had all set up manufacturing in the UK in the 1970s. Sony was the first, taking over an empty factory in Bridgend, with support from the Welsh development agency. Sony denied that it had been forced to manufacture in the UK because of the upward trend in the yen, or in response protests from British manufacturers at the high level of imports coming from Japan. It pledged to use local components as far as possible, and when asked whether it would introduce Japanese paternalism to UK labour relations, Mr Okochi, the MD, responded “when in Wales do as the Welsh do”.

Panasonic (or Matsushita as it then was) also set up a factory in Wales, near Cardiff and Hitachi adopted an old GEC TV factory in Aberdare. Nissan started manufacturing in Sunderland a year after the conference, the same year Honda opened its plant in Swindon, after having had a partnership with Rover since 1979, and manufacturing under licence.

It is well documented that Honda was extremely shocked by the state of British automotive manufacturing efficiency that it saw at the Rover plant, of tea breaks, working to rule and demarcation disputes. No doubt this was why Nissan and Toyota – who set up in Derbyshire in 1989 – were determined to build an effective, well trained workforce from scratch.

Hitachi and Nissan also brought Japanese style labour relations to the UK, by adopting a one union policy – and as far as I am aware, Nissan has never had a strike in its Sunderland factory since. British workers were in turn favourable towards other Japanese management practices, such as managers eating with workers in the same canteen, and dressing in the same corporate overalls, rather than a jacket and tie.

Sony still has operations in Bridgend to this day, but more focused on B2B rather than consumer electronics, such as broadcast equipment. Panasonic still manufactures home appliances in Wales but Hitachi closed its Aberdare plant in 2001. Hitachi is also now more focused on B2B, particularly energy and rail related businesses, with a rolling stock plant in Newton Aycliffe.

(For more on this period, see our post Hitachi in the UK from TV to Trains)

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Hitachi in the UK – from TVs to trains (part 1)

Hitachi’s first foray into manufacturing the UK in the 1970s was extremely fraught. Undeterred, 10 years later, it established its European headquarters in the UK, where it has been located since. It has kept faith with the UK through turbulent times, establishing the global headquarters for its rail business in the UK in 2014.

Hitachi had a sales arm in the UK since 1970, marketing “portable monochrome television receivers, radios and record-players”. This was heralded in The Times as “another challenge on the home market from a Japanese rival” (1) noting that this was the third Japanese group to enter the UK home market in recent months (the other two being Sony and Matsushita).

The enemy within the walls

As with much of Japanese manufacturing investment overseas at the time, setting up production within the European Community (EC) was done to avoid accusations of dumping, and to ensure there was enough local content to satisfy the European Commission. Hitachi initially considered a greenfield site in Washington in the North East of England for manufacturing TVs in 1975, shortly after Sony and Matsushita had established manufacturing in the UK. This attracted such hostility from UK domestic competitors worried about overcapacity that Hitachi shelved the idea.

Hitachi was hoping to source cathode ray tubes from British firm Mullard, the only UK manufacturer of colour TV tubes, who were initially very reluctant. They maintained in 1977 that they were not ready to accept a Hitachi offer to buy 25,000 of its tubes a year from 1980. Jack Akerman, Mullard’s managing director, sounded positively sniffy about Hitachi’s technology. “We must be absolutely satisfied that our merchandise is going to be used in a technical environment where it will perform well and live well. If all the technical points are answered and we are satisfied, then it would be acceptable for Mullard and Hitachi to trade together in the event that Hitachi’s new factory were welcomed to this country by the Government.”(2)

The Times ran an opinion piece by the commercial editor Derek Harris asking if Hitachi was going to become “the enemy within the walls”. (3) It detailed a rumour that Finnish made TV tubes (from a partly Hitachi owned company) might supply Hitachi in the UK instead, in return for British fighter aircraft exports to Finland, in an offset deal between governments. It described how Mullard’s real concern was not technological compatibility so much that the British TV industry had substantial overcapacity, so Mullard supplying Hitachi would simply result in damage to existing UK customers of Mullard such as Rank, Thorn and Mullard’s sister company Pye (both were owned by the Dutch company Philips).

Harris quotes Akerman as saying “those first few years will be as smooth as silk. But then – watch out. In Japan they are planning for the year 2000, They want to dominate the electronic equipment business and, as we have said consistently, we don’t blame them.”

“Critically endangered” by tube imports from Japan

Derek Harris wrote a further piece in The Times in October 1978 (4) noting the warning from the European Electronic Component Manufacturers’ Association that the European electronics industry was being critically endangered by cheap imports from Japanese TV component makers. The tubes represented a third of the value of a TV set, and out of every 100 colour sets sold in the EEC, 33 contained tubes made in Japan. This was to intensify in the early 1980s when licensing agreements expired, opening the EEC to the larger colour TV sets made in Japan. UK TV manufacturers had an informal agreement with the Japanese industry on import restraint, but nonetheless, it was estimated that Britain’s TV and audio industry was operating at only 50% capacity.

The UK government then introduced Hitachi to the General Electric Company (the UK company that eventually became Marconi, not the US company General Electric) and the two companies formed a joint venture, GEC-Hitachi Television Ltd, in December 1978 and adopted an existing GEC television factory in Aberdare, Wales, along with a workforce of over 2,000.

Hitachi takes over GEC factory

The British continued to manage the plant, and Hitachi invested nearly £3m in new plant and equipment, and provided technical support. At first sales were good, building up a 10% UK market share. By the early 1980s, overmanning and industrial strife led to losses. GEC sold its half of the company to Hitachi in March 1984 and it became Hitachi Consumer Products Ltd. Hitachi instituted a one union policy and reduced the workforce to 800. The plant also began to manufacture hi-fi equipment. Mullard was a supplier to Hitachi, along with Tabuchi Electric who had set up production in the UK in 1985. Philips changed the Mullard name to Philips Components in 1988.

Hitachi also started a video cassette recorder plant in Germany and eventually the German plant also manufactured TVs and the Wales plant also manufacturered VCRs, with German made cylinder heads and chassis being shipped to the UK and British made PCBs being exported to Germany. This meant the local content for both TVs and VCRs were around 80-90%.(5)

The bubble bursts

In the 1990s competition from cheaper TVs and VCRs made in developing countries made it difficult for Hitachi and other UK based Japanese manufacturers to compete. The Aberdare plant was closed in 2001, with the loss of 700 jobs. Hitachi said it would focus on higher value added products in Europe such as plasma screens, projectors for home cinema, DVD camcorders and in-car navigation systems. After several years of losses, Hitachi Consumer Products UK Ltd was wound up in 1995-1997 and the business transferred to Hitachi Home Electronics, until it too was liquidated in 2003, with remaining assets and business transferred to Hitachi Europe.

(1) The Times, 21 August 1970, p 20

(2) The Times, 10 November 1977, p 20

(3) The Times, 18 November 1977, p 21

(4) The Times, 4 October 1978, p 22

(5) Much of this post is based on pages 304-9 of Japanese Manufacturing Investment in Europe, Its impact on the UK Economy, Roger Strange, Routledge 1993

Takiron – first Japanese company in Wales

Takiron was one of the first Japanese manufacturers to set up in the UK, in 1972. It was the first Japanese company to come to Wales and the third to start production in the UK, in 1974, after YKK and Nittan. It manufactured PVC corrugated sheeting after acquiring an existing factory in Bedwas, Gwent, mostly for export to Europe and America.

The Times in 1972 saw this investment as Japanese chemical and trading companies (Itochu and Chugai Boeki were also investors) “launching a big attack” on the European PVC sheet market through a UK subsidiary. (1) Just before it started operations, a spokesman for Takiron said they had been able to hire British workers at 10%-30% lower rates than they would in Japan, thanks to the current exchange rate, so even with the high cost of raw materials in the UK, it would be possible to export to Europe and America at a competitive price. The president of Takiron at the time, Matsui Yanosuke, even thought exports to Japan from the UK would be a possibility. (2)

One of the first employees was also one of the first Japanese people to be “locally hired” in the UK by a Japanese company – Midori Matsui. She had been visiting the UK on a break from teaching English at junior high school in Japan when a childhood friend at Takiron called her to offer her a job at the new company, teaching English to the new expatriates and helping them to set up the business.

She ended up staying at Takiron for 29 years, becoming a director of the company, until retiring in 2000. According to an interview with her in the Japan Times in 2001, she was thinking of returning to Japan, but was expecting to keep visiting Wales, as she said she would miss the warmth of the Welsh people, and the green fields and open skies. Clearly their appeal was too strong, and she continued to live in Wales, until her death in 2016 at the age of 80. She helped to organise the Japan 2001 celebrations and other local Japan related activities, and was awarded an MBE and a Japanese Foreign Minister’s commendation.

Although she says in the interview that the British lack of commitment to deadlines and work was “different now”, it’s a comment still heard regularly from Japanese working in the UK. But so is her point that the British are forgiving of mistakes and differences, unlike in Japan.

Former Wales rugby player Ken Jones was managing director and then chairman in the 1980s and 1990s. When the pound began to strengthen so that by January 1980 it was around Y550 compared to Y350 in 1979, and the UK went into recession, Jones was upbeat in a Daily Mirror interview: “we have invested £120,000 in new machinery” and added that the staff identified themselves closely with the company – “there’s a high degree of participation here. ” (3)

By 1991 Takiron UK employed 68 people (3) but from the mid 1990s it began to lose money and had shrunk to 57 employees by 2001. Takiron blamed the strong pound and continued high price of raw materials for its difficulties and decided to close in 2001.

The plant was supposed to be taken over by a manufacturer of roller doors in 2006 but was still empty in 2007, when it was taken over for the “biggest rave in South Wales.”

Takiron started as Takigawa in 1919, changing its name to Takiron in 1959. It is owned by the Japanese trading house Itochu and in 2017 it merged with C.I. Kasei (itself a merger between Hama Kasei and Kobe Resin) to form C.I. Takiron. C.I. Kasei had invested 32m euros in setting up a factory in Treviso, Italy in 2007, under the name of Bonlex Europe. The local vocational school was one of the key factors for choosing the location, providing courses in woodworking and automotive, relevant to the plastic films to decorate wood panels and car interiors that the factory produces.

Bonlex is the only subsidiary C.I. Takiron now has in Europe.

(1) The Times, October 4 1972 p 20

(2) The Times, June 7 1973 p 25

(3) The Daily Mirror, 27 November 1980 p 6

(3) Japanese Manufacturing Investment in Europe: Its impact on the UK economy, Roger Strange, Routledge, 1993

Mitsubishi Electric in the UK – 1979 to present

In January 1979 Mitsubishi Electric UK took over a colour TV plant in Haddington, East Lothian from bankrupt Norwegian company Tandberg, saving 120 jobs. Exports of colour TVs from Japan to the EU and particularly the UK had risen rapidly in the early 1970s, even though they were restricted to small screen sets. Then demand in the UK came to a sudden end and TV manufacturing in the UK had excess capacity. So the British government encouraged Japanese companies to take over existing plants. Japanese companies also chose the UK for manufacturing in Europe because there were no domestic manufacturers with government connections as there were in France (Thomson-Brandt) and the Netherlands (Philips). (1)

Mitsubishi Electric already had a representative office in London from 1969 and had turned it into subsidiary in 1972. This then became a branch of Mitsubishi Electric BV in the Netherlands in 1996. It has continued as a branch of the Netherlands based European regional HQ since.

By 1987 Mitsubishi Electric had established video recorder production facilities in Livingston, along with many other Japanese manufacturers starting production in Europe, in response to pressure and anti dumping proceedings from the European Commission. (2)

It acquired Britain’s Apricot Computers in April 1990, with a plant in Glenrothes and R&D in Birmingham, employing 442 in 1991. PC production was scheduled to treble to 100,000 per annum in 1993, with exports accounting for 25% of production, half to Japan. (3) Glenrothes was shut in 1999, blaming cheap competition in Asia.

The Haddington plant continued to make colour TVs and also microwave ovens, but when the price of TVs dropped, it was no longer profitable. In 1998 production ended, with 500 jobs lost. Production was transferred to Turkey.

Alister Jack, the then Scottish Tory spokesman on economic affairs, who later became Secretary of State for Scotland, attacked the Labour government on the closure: “There is little point of introducing a New Deal programme if they cannot hold on to existing jobs.”

Mitsubishi Electric hoped to focus on video recorder production and air conditioning at their Livingston plants. However, in 1999 it announced it would cut 6.100 jobs overseas and 8,400 jobs in Japan due to losses caused by falling semi-conductor prices and weak demand for consumer products.

The Livingston operation entirely focused on air conditioning and R&D for Europe moved there in 2013, with Mitsubishi Electric investing £20 million into the operation.

In 2017 air conditioner production started at Mitsubishi Electric’s new factory in Turkey. Thanks to the customs union with the EU, air conditioning exports from Turkey to the EU are tariff free.

Mitsubishi Electric Air Conditioning UK employed over 1000 people In 2019. 77% of its sales of £200m were to non-UK EU countries, 20% to the UK. The plant was profitable despite a large increase in gas and transportation costs.

The UK is seen as a growing market, despite any Brexit impact, because of the need for green, affordable public sector housing. Mitsubishi Electric is dependent on imported components, but it is standard industry practice to hold 2.5 months of inventory, so it is hoping to weather any post Brexit logistics impact.

(1) Japanese Manufacturing Investment in Europe: Its impact on the UK economy” Roger Strange, Routledge, 1993 p 196

(2) ibid p 201

(2) ibid p 264

Photograph of Campbell Gill ~ Personnel Manager and Eric Murray the General Manager with the joint Managing Director Yoshio Noguchi 1984, credit: Angus N Bathgate https://www.facebook.com/groups/oldeastlothain/permalink/2402751853280700

Japan and the legacy of Margaret Thatcher

I suspect it is hard for people in Japan to understand why Margaret Thatcher’s death has aroused such strong feelings of hatred and adulation amongst British people, even 23 years after she ceased to be prime minister.

My generation (people born in the 1960s) is sometimes labelled “Thatcher’s children” – because we grew up under her. We remember 1971, when she was education minister and abolished free school milk for seven to eleven year old school children. Actually many children, myself included, really disliked the free school milk, which was lukewarm and smelly by the time we were given it to drink at morning break each day.

We had already moved to Japan by the time I was seven. I did not escape, however, as we had to drink milk at my Japanese school too, which was even worse tasting, in my opinion, because it was homogenised rather than pasteurised.

People thought we were crazy to move to somewhere as foreign as Japan, but England in 1972 did not feel like a comfortable place to be either – there had been miners’ and dockers’ strikes, followed by declarations of a state of emergency. Wage and price freezes had been announced and unemployment went over 1 million for the first time since the 1930s.

There were economic problems in Japan too – I remember the toilet paper panic buying because of the oil crisis – but as is now well known, the crisis was the trigger for Japan to start innovating in car manufacturing. Just before we left the UK, Honda had started importing cars to the UK, and when we returned to the UK in 1977, we decided to buy a Datsun Sunny 120Y.

My grandparents were horrified. They still had strong memories of the war and had opposed us moving to Japan. They could not understand why we did not buy a British car, like the Triumph Dolomite they owned. It was manufactured by British Leyland, which was then being crippled by a series of strikes.

Margaret Thatcher was extremely patriotic too – but she was happy to welcome any foreign investor who shared her ethic of hard work. While my generation was busy hating her for destroying mining communities, cutting education spending and warmongering, her government encouraged Nissan to open its first factory, in Sunderland, an area in desperate need of jobs thanks to the closure of mines and shipyards.

Thirty years later, there are no British owned volume car producers, but nearly 1.5 million vehicles were produced in the UK last year, closing in on the 2 million peak of 1970, and 86% of production is exported. Only 195,000 people are directly employed by the car industry, however, compared to 850,000 in 1970. The North of England remains a high unemployment, depressed region. This explains the depth of feelings about Mrs Thatcher’s legacy – she was right, from a business perspective, but there was a human cost which was not addressed.

This article by Pernille Rudlin originally appeared in Japanese in the May 15th 2013 edition of the Teikoku Databank News and also appears in Pernille Rudlin’s book “Shinrai: Japanese Corporate Integrity in a Disintegrating Europe” – available as a paperback and Kindle ebook on Amazon.

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Last updated by Pernille Rudlin at 2024-12-17.