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mitsubishi chemical

Home / Posts Tagged "mitsubishi chemical"

Tag: mitsubishi chemical

Japan’s new “job type” system explained

Many Japanese companies such as Hitachi and Fujitsu are introducing a “job-type” (job-gata in Japanese) system. The term “job-type” will not be familiar to Europeans, so we will draw on a series in the Nikkei Business  to explain the background to this change.

It’s common practice in Japan to hire full time, permanent staff, usually straight out of university, known as “seishain” with a ‘blank contract’ and no clear definition of the content of the work or the location of employment. Many Japanese commentators call this the “membership type” system, because the new recruit has in effect become a member of a corporate community. I like to use Trompenaars Hampden-Turner’s description of Japanese companies being a “family” company too, even if the founding family are no longer in control.

In contrast to this, the “job type” system is commonly used in Europe and the US, where the company and the individual have a carefully worded employment contract, and the content of the job and remuneration are clearly set out in advance.

Job type Membership type
Duties In principle, duties outside the job description are not undertaken Boundaries of the role are not clearly defined. Job rotations are common.
Salary Salary is based on job evaluation/duties Salary is based on ability and position in a career track, which in turn is based on years of service
Job location Job location is defined and limited. In principle there is no relocation Job location and assignment is not defined. Relocation is the norm
Training for immediate applicability – up to the individual to acquire long term employment is the precondition, so the company trains the individual.

3 decades of HR reforms

There is plenty of criticism that this is just a repackaging of the much criticised seikashugi or performance based system. Many Japanese companies introduced this after the economic bubble burst in the 1990s but it was seen as simply a cost cutting exercise.  Managers started looking for ways to reduce employees’ bonuses, which up until then had mainly been based on company or divisional performance. Nikkei Business notes that the “3 lost decades” in Japan  have seen a series of crises followed by changes to HR systems, but somehow the change is watered down and the company reverts to seniority based HR management.

Companies that have introduced the job type system include Mitsubishi Chemical. When they first introduced it in 2017, it was still the manager who made the decision on promoting employees, and as a consequence the seniority element remained. So from October this year they are introducing an open application system, to increase fairness and transparency.  Mitsubishi Chemical’s HR Director Nakata Ruriko notes that their workforce is no longer the homogenous group of lifetime employees recruited as graduates. There are more mid career hires and dual income couples, trying to balance child and elderly care. Nakata is introducing choice and the ability to build your own career, to respond to this diversity.

The telecoms company KDDI has skipped trying to negotiate with the labour union to introduce the job type system to current union members and is only introducing it to managers and new graduates from April 2021. There will no longer be the same salary for all new graduate recruits – compensation will depend on skills and internships undertaken before entering the company.

Fujitsu has ended “side by side” cohort based training and a mandatory retirement age. The position of manager will be open to all, but if you do not ask to be a manager, you will not be promoted.

Working from home and relocations

Having a job type system also helps with working from home, as people have more autonomy and clarity on the boundaries to their work. Several Japanese companies are also ending the “tanshin funin” job relocation where the employee (usually male) would be assigned to another location and move there without their family.

From the management side the intentions behind bringing in a job type system depend on the sector, but at least one of three main reasons are usually cited:

  1.  the need to bring in people from outside the company who have the skills to support the company with technological innovations such as AI
  2. to counter the constant increase in labour cost brought about by the seniority based system
  3. a unified, globally applicable HR system which will improve internal job mobility across multinational operations

Over half of Japanese employees prefer the job type system

Nikkei Business surveyed over 1100 employees and found that nearly half preferred the job type system, compared to 24% who preferred the membership type system. When asked “do you think you can survive a switch to the job type system?”, 62.4% felt they could.  More than 75% of the respondents said they would like to continue to work from home even after the pandemic was over.

But better state support and retraining are needed

The chairman of Rengo, Japan’s Trade Union Confederation, points out that Japanese employees are still very dependent and tied to their companies. If the aim of a job type system is to increase labour mobility, there needs to be more of a state safety net provided than there currently is. Some companies will simply be looking to reduce costs and those employees whose skills are no longer needed will find it very hard to switch to another company if they are no longer satisfied with the pay they receive for the work they do.

Takeda Yoko, a Director at the Mitsubishi Research Institute recommends FLAP as a way to succeed in a job type system – Find the work you want to do, Learn how to do it, Act upon this learning and then Perform – be evaluated and treated correctly.

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Mitsubishi Chemical – “we can still do well in the West”

The Japanese petrochemical industry has had a tough time due to slowing domestic demand and competition from developing countries.  Mitsubishi Chemical has spent 10 years restructuring and shifting to new markets in automotive and IT sectors.  In order to compete with major rivals, further restructuring of the Japanese petrochemical will be necessary, says Hitoshi Ochi, President of Mitsubishi Chemical Holdings in an interview in Nikkei Business.

Ochi was General Manager of the corporate planning office at Mitsubishi Chemical Holdings 10 years’ ago, when Yoshimitsu Kobayashi was president – together they embarked on the restructuring of chemical related Mitsubishi group companies which has resulted in Mitsubishi Chemical, Mitsubishi Rayon and Mitsubishi Plastics being merged into one, and brought together in 2012 in one building, with the classy address of 1-1-1 Marunouchi.

Mitsubishi Chemical has withdrawn from generic chemical production and is now focusing on high added value materials for the automotive and IT sectors as well as nurturing the pharmaceuticals side of the business.

According to Ochi, the reforms are not finished.  “We now have to restructure our portfolio” he says.  Reaching a certain scale in the business will still be important, but the new challenge is to get this to bear fruit.  “We’ve grown into a large tree, but now we have to cut back some of the branches”.  He does not rule out withdrawing from certain businesses.  For example, transferring the ABS resin business to a new joint venture with JSR and Ube.

Mitsubishi Chemical was also able to combine sales of different product lines from Mitsubishi Chemical, Mitsubishi Rayon and Mitsubishi Plastics to win a combined order from Toyota for the Prius PHV.

Ochi says he really felt the walls dividing the organisations before they were combined, when he was President of Mitsubishi Rayon.  If he asked something of the Mitsubishi Chemical President it would take at least half a year to be processed because of course the Mitsubishi Chemical President would put the profitability of his own company first.  “Now I am the one President, I can just ask for something to be done and it’s done.”

“Former Mitsubishi Plastics people are becoming much more proactive about suggesting sales strategies – a world of difference from having to ask them to sell something before”.

Mitsubishi Chemical is also looking at new ways of conducting research and development – to become more specialised at developing new technologies.  “The Germans are right about Industry 4.1.  Using IT to build supply chains and create a virtual industrial cluster.  This is a scary strategy for Japanese companies.  Japanese companies will have to follow suit. There are several hundred Japanese chemical companies and we will have to collaborate.  We need to earn money not from volume but functionality.”

Ochi does not rule out combining with Asahi Kasei or Mitsui Chemicals however.   Japanese manufacturers have some strong product lines, and if there are synergies, it makes sense to combine, he says, agreeing that there are too many Japanese chemical companies to compete internationally, and that it might be better to only have 3 or so.  “If you look at what is happening to chemical companies in Europe and North America, Japan is clearly behind.  We also need to globalize further.  Not just bringing generic products to Asia but value added products to Europe and North America.  I keep saying that we cannot direct everything from Japan.  We need to let the local managers develop new business lines.  We can still do well in the West.”

For more content like this, subscribe to the free Rudlin Consulting Newsletter. 最新の在欧日系企業の状況については無料の月刊Rudlin Consulting ニューズレターにご登録ください。

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Mitsubishi Motors & Nissan – Is Ghosn prepared to try to nail jelly to the wall?

When it comes to the Mitsubishi group of companies (keiretsu), I did almost literally write the book (A History of Mitsubishi Corporation in London: 1915 to Present Day), although my focus was more on the way the pre-war Mitsubishi Goshi evolved into Mitsubishi Corporation, the trading company, and more specifically, its London office.

It’s generally perceived in Japan that the Mitsubishi keiretsu has been the most cohesive and robust of all the keiretsu (Mitsui, Sumitomo, Fuyo being the other main ones) but as you might imagine, the current Mitsubishi Motors fuel economy data manipulation scandal has put this to the test.

According to Nikkei Business magazine (April 22nd edition, not available online), the cracks are appearing.  Whereas in the previous Mitsubishi Motors crises (recalls for various defects in the 2000s) Mitsubishi Heavy, Mitsubishi Corporation and Bank of Tokyo Mitsubishi UFJ all stepped in and financial support came from Tokio Marine, Mitsubishi Electric and Mitsubishi Materials as well, this time seems different.

Even now, having been hit by the commodity price slump, the automotive sector remains an important profit generator for Mitsubishi Corporation as it is involved in the sale and financing of vehicles in Asia and Europe as well as engine manufacture.  Mitsubishi Corporation also seconds quite a few employees to Mitsubishi Motors, including the current Chairman and CEO Osamu Masuko.

Other Mitsubishi companies do not have such ties.  Even though Mitsubishi Chemical Holdings supplies products to the automotive sector, its main customers are Toyota and Nissan.  Mitsubishi Paper also said “we are busy with our own affairs”.

It’s not just about whether the companies have business together, points out the Nikkei.  It’s also an issue of corporate governance.  The Mitsubishi UFJ Financial Group has been reducing cross shareholdings, where appropriate.  Mitsubishi Corporation is also checking shareholdings regularly for rationale and yield and disposing of them as necessary.  Presumably it is hard to justify “Protecting the Three Diamonds” as the sole reason for support, to external directors and shareholders.

The Nikkei sees this as a chance for the Mitsubishi group to embark on a delayed restructure [the article was written before Nissan stepped in to acquire a 34% share].  In previous restructurings, there was a discussion about selling off the largely domestic ‘mini-car’ business, so this might be finally realised.

A more recent article in the Nikkei Asian Review points out that a key question is whether Nissan’s CEO Carlos Ghosn’s aggressive brand of reform will suit the corporate culture at Mitsubishi Motors “where change is not exactly a buzzword”.  The question I have is what the corporate culture of Mitsubishi Motors actually is, other than a reluctance to change.  The lack of a clear definition of values and vision may indeed be one of the causes of the repeated scandals.  There are the Mitsubishi Three Principles, but not all Mitsubishi companies showcase them, and they lack the strong philosophy and toolkit of something like the Toyota Way.

Along with my official book on Mitsubishi in London I wrote a further unpublishable chapter, called “The Vague Company”.  It talked about the benefits and difficulties of having a vague, unspoken corporate culture.  Employees can enjoy the sense of being treated like adults, to work out for themselves what the right “way” is, but it makes global expansion – particularly post-merger integration – highly frustrating, when new, hybrid cultures need to develop. As one frustrated American employee at another Mitsubishi group company said to me the other day “I can’t get a handle on what the Mitsubishi Way is”. It is, as we say in British English, like trying to nail jelly to a wall.  I suspect Ghosn may quickly tire of this and use his hammer in more brutally effective ways.

 

For more on Mitsubishi Motors’ future, I recommend this blog post by my old friend and former head of corporate communications at Mitsubishi Motors in the Daimler Chrysler days, Jochen Legewie: http://www.cnc-communications.com/blog/the-future-of-mitsubishi-motors/

For more on Mitsubishi corporate culture, I have gathered some resources on Pinterest here

For more content like this, subscribe to the free Rudlin Consulting Newsletter. 最新の在欧日系企業の状況については無料の月刊Rudlin Consulting ニューズレターにご登録ください。

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Governance – interview with Yoshimitsu Kobayashi, external director at Toshiba and Tokyo Electric Power

Yoshimitsu Kobayashi, chairman of Mitsubishi Chemical Holdings, seems to be attracted to intractable problems.  Not only has he become an external director of Tokyo Electric Power Company, post Fukushima but is now also a director of Toshiba, as it goes through a massive restructuring of its business, following its falsified accounting scandal (see our previous post – Toshiba – where did it all go wrong?).  On top of all that he is also the chairman of the Japan Association of Corporate Executives.

Asked by the Nikkei Business magazine why he has taken on both TEPCO and Toshiba, he explains that he regards both as extremely important to the Japanese economy.  “Nuclear power is a Japanese national policy, and Toshiba is a national policy company.  If it is damaged, then it is damage to the whole Japanese economy” (as we explained in another post Shazai and the art of being a corporate shame magnet).  “That doesn’t mean we have to preserve it at whatever cost.  We need to be open about all the bad parts of Toshiba, and take responsibility for explaining what happened.  Then we can rebuild.  Governance needs to have concrete substance, not just on the surface.”

Nikkei Business calls 2015 “Year Zero of Corporate Governance” for Japan.  Kobayashi says it will take 10 years to change corporate culture at the roots.  Toshiba and TEPCO resemble each other, he thinks, in that TEPCO is learning to be a privately owned company, that looks after public infrastructure, which is similar to Toshiba.

“Aspects of Japan that had been good such as life time employment and seniority based promotion have now become a minus, and Japan has lost its competitiveness.  Companies should not rely on politicians.  It is not just about deregulating but changing the spirit behind the regulations.”

Kobayashi points out that while Japanese companies have been investing large amounts in overseas M&A, domestic M&A is still a fraction of that.  There are 3 nuclear power companies, 8 car companies and yet 20,000 chemical companies.  As a consequence, research and development is behind the West and China.

“What’s key is for Japan to keep hold of its traditional technical strength, but work out how to team this up with services.”  “Mitsubishi Chemical Holdings is doing this – working on new materials, for the environment and healthcare… and also for light weight cars”.

Kobayashi also believes that top executives in Japanese companies should walk away once they have finished their stint as chairman.  However he think that it takes 10 years at the top to really understand a company.  The Toshiba system, whereby Presidents only stayed in post for 4 years, but then carried on for many years after as advisors was not healthy.  “Maybe it’s because their remuneration is not as high as in the West that they stick around.  Dow Chemical’s CEO is earning 50 times what I earn.  Although Mitsubishi group companies don’t have so much cross shareholding in common now, we keep an eye on each other’s governance, so oldies are not allowed to hang around”

“Toshiba has a surprising number of businesses.  In companies like that where there are many capable people, there are a lot of big fish swimming in small ponds.  They think they are the company, and forget the public interest.”

For more content like this, subscribe to the free Rudlin Consulting Newsletter. 最新の在欧日系企業の状況については無料の月刊Rudlin Consulting ニューズレターにご登録ください。

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Why everyone loves Nidec’s Nagamori – M&A and ningenryoku

Nidec’s President Shigenobu Nagamori has just been voted the Presidents’ President by other Japanese CEOs in the Nikkei Business magazine.  Nidec, known as Nippon Densan in Japan, is a manufacturer of electric motors found in hard disk drives, household appliances and other equipment.

Around 90% of their 100,000 or so employees are overseas – mostly in ex-Japan Asia, but with nearly 3000 in Europe, they make it into our Top 30 Japanese companies in Europe, nudging out another company that is a quiet Japanese success, Horiba.  See below for the updated chart*.

Nagamori founded the company in 1973 with three colleagues, and has a reputation for being outspoken and unafraid – most recently  hitting the headlines for hiring ex President of Sharp, Mikio Katayama as technology chief, despite his having been pushed aside for his perceived failures there.

Rooting around on the web reveals Nidec feels different from other Japanese companies – for a start many of its Japanese executives in Europe are on LinkedIn.  It is also very transparent and clear about the company and what it stands for (although I am not entirely convinced by the slogan “all for dreams”), and 6 of its 9 strong management team come from other companies.

Nidec decided to focus on the auto industry recently, and to that end acquired the motor and actuator business of the French company Valeo and Italian company ASI, which explains the large number of Italian operations. This talent for M&A was the factor that Nagamori was most highly rated for by his peers, along with the untranslatable “ningenryoku” – literally meaning human strength, skills or ability as opposed to technical skills – perhaps we’d call this leadership, or interpersonal skills, EQ even, in the West.

Nidec’s Japanese roots are still obvious though –  “Employment stability based on sustainable business growth” is cited as its top management creed.

Other Top 30 Best Presidents whose companies are also in the Top 30 in Europe are Akio Toyoda (Toyota) at #3, Shigetaka Komori (Fujifilm) at #5, Hiroaki Nakanishi (Hitachi) at #15, Kazuhiro Tsuga (Panasonic) at #17=, Yoshimitsu Kobayashi (Mitsubishi Chemical Holding) #17=, Carlos Ghosn (Nissan) at #17= and Fujio Mitarai (Canon) at #30

*Seven years on, Nidec now employs over 13,000 people in Europe.  Our latest Top 30 Japanese employers in Europe is here:

Top 30 Japanese companies in Europe 2021

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Last updated by Pernille Rudlin at 2022-01-26.

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