Reckoning

by David Halberstam

  In the sixties, Katayama began to sense a change in customer attitudes, an increasingly powerful undercurrent of resentment. The objections to Detroit, he and some of his American people (and their counterparts at Toyota) decided, were different now. They were no longer just about the size and the price of the cars but about the quality and, even more important, about Detroit’s response to legitimate complaints. If something went wrong on a car, no one seemed to be responsible. Not that there wasn’t an acknowledgment that the customer’s complaint was justified; the dealers were rather straightforward about that. They might wink and say yes, they were having a lot of problems with the ignition system or the rear-window cranks on these models, the factory seemed to be a little sloppy; but the burden of repair, often not very successful repair, seemed to fall on the customer. Detroit’s attitude seemed to be that if the customer was truly a good American, he would stop complaining and do the right thing, which was to buy a new car. In those years, Philip Broman, a Ford man who quit and went to work for Toyota, once said, the Japanese companies read the various magazines like Consumer Reports as if they were Bibles filled with absolute truth, and the American companies dismissed them as the product of hostile do-gooders. Volkswagen was treating its customers with respect, Katayama thought, and because of that VW was building the kind of loyalty that had once been reserved solely for American companies. The customers were becoming more sophisticated; for the first time there was a basis of comparison, and they demanded to be listened to.

  That observation was borne out in the next decade. It had always been a part of the basic theology of Detroit that it could roll back the foreigners anytime it wanted. The idea had always been that the imports could have 5 percent of the market, nothing more; if the foreigners went above that magic figure, Detroit would strike back. But in the late sixties, mostly because of Volkswagen, the imports’ share was beginning to rise, and Detroit, though it did not yet realize it, could not so readily roll it back. For in part it was a reflection of the fact that the country was changing, and many middle-class people were changing their ideas of why they wanted a car and what kind of car they wanted. In 1968 the figure reached 10 percent, with VW getting 60 percent of the total import market. Slowly Detroit executives began to take notice again. They were not really worried; they were all making too much money for that. All they had to do whenever they wanted, they assured each other, was tool up some small cars. Soon the Detroit companies were bringing out their new compacts and subcompacts; Ford had the Maverick in 1969 and the Pinto in 1970, and GM had the ill-fated Vega in 1970. But the import sales did not, as in the past, collapse. What Katayama and others had suspected was becoming true. Bonds of loyalty were being severed. It was no longer, as in the past, just an issue of size and price. The issues now were also quality and integrity. Detroit, among many of its less affluent customers, was losing its reputation and not doing very much to try to regain it.

  Katayama gave a small party in March 1964, when total Nissan sales reached five hundred a month, the target that had been set when the company first opened its American operation. Gradually there was a little money for advertising. In the beginning there had been by American standards virtually nothing, simple black-and-white brochures printed in Tokyo with florid English-language descriptions of the cars. Katayama hired a Los Angeles advertising man named John Parker because he was young, did not cost much, and seemed bright. Parker was delighted to take the Nissan account, unlikely though the future for it seemed, because it offered a rare entry into the automobile field. In the beginning it was fairly primitive work, convincing Tokyo, for example, that its handouts should be printed in America. The budgets were tiny, perhaps $50,000 a year at the start. When Nissan needed to shoot still photos for advertising, Parker, his wife, and their son and daughter had served as models. For a long time there was no money for television. The first television commercial was shot in 1963 for a four-wheel-drive wagon called the Nissan Patrol. Parker had no television studio in his company and no film equipment. Hiring a friend who was an L.A. police photographer and who had a 16mm camera, he drove a Patrol into the canyons and they shot a sixty-second commercial for the vehicle; to save money Parker himself was again the model, his film debut. The next year they heard that Roy Rogers, the cowboy actor, liked the Nissan Patrol, and Parker called him up and asked him to do the company’s first full-fledged commercial. “I can’t offer you any money, Roy,” Parker said, “but we’ll give you a Patrol, two pickups, and all the glory a man could want.” To his surprise Rogers was delighted to participate. As the cars began to sell, there began to be a budget for TV ads.

  In the fall of 1964 Datsun made it into the list of the top ten importers for the first time, a list absolutely dominated by Volkswagen. VW had 63 percent of the import market with 307,000 cars sold, an average of over 25,000 a month. In July of 1965 Datsun’s sales reached 1000 a month. Back in Japan sales were rising quickly, which allowed Nissan to keep cutting the price; success was begetting success. The American market now looked more and more promising, though VW still appeared awesome. Steadily Nissan and then Toyota gained on the other imports. In 1966 Nissan was sixth with total sales of 22,000, while the VW Bug sold 420,000. By 1967 Nissan was fourth with 33,000; in 1969 it was still fourth but with 58,000.

  The cars were getting better, but he still needed one critical addition—a jump to a 1600cc engine. At 1400cc, the current cars simply were not powerful enough. Eventually, he kept telling Tokyo, if they did not improve and upgrade the engine, they would level off in the market. Worse, if they leveled off, they would not stay level; they would inevitably decline. On this Tokyo remained surprisingly resistant; if 1400cc was good enough for Japan, it was good enough for America. Katayama pleaded. His cars, he said, were underpowered, and there was no way Nissan would ever have the right car for America unless it went to 1600cc. He tried shock tactics, pointing out that Toyota, with a 1900cc model, was making sizable inroads where Datsun had once been strong. Even this failed. He had never felt so frustrated within the company. “Why does no one listen?” he asked those around him. He had a terrible feeling that Datsun was going to come to the edge of a great success and fail, and fail not because it was unable to make a superior product but because it was so psychologically isolated.

  Then he got an extraordinary break. In the fall of 1965 a man named Keiichi Matsumura joined Nissan. He came over from MITI, where he had been the ministry’s man on automobiles. There was a tradition of this in Japan—a high MITI official, his career completed, would go over into the industry where he had served; the Japanese called it descending from heaven. Kawamata had brought him in to secure a better line of communication for Nissan to the critically important world of the high ministries. But Keiichi Matsumura turned out not to be Kawamata’s man at all. He proved exceptionally independent. Soon it became clear to insiders there was genuine tension between the two men. In the spring of 1966 Matsumura visited America, and he and Katayama began a series of endless conversations about the problems the company was having.

  Katayama had never before met anyone like Matsumura in Nissan, someone at so high a level who was so smart and who was not playing political games. He was sure within one day that this man would become president of the company and that Nissan would quickly pass Toyota. All he wants is the truth, thought Katayama. Very quickly they became, if not friends, at least allies. Matsumura made it his business to go to the United States as often as he could in no small part to talk to Katayama. They were soon discussing not just the technical problems of Nissan America but the larger problems that were burdening the company. For Katayama it was like a great burst of fresh air in a company where everything was so dank, and of hope where there was so much fear. Unlike everyone else Katayama had dealt with, Matsumura simply was not afraid of Kawamata and Shioji; if Kawamata had the bank behind him, Matsumura had MITI behind him. Like many of the top MITI men, he seemed the best of the best, a chosen soul of the nation, a man without doubt, abso
lutely confident of his decisions and his purpose.

  Katayama knew immediately that this was his great chance to upgrade the engine, and so he pushed as hard as he could with Matsumura about the need for l600cc. At the end of their first long session Matsumura said, “Write a letter for me, and I will sign it.” Then he changed his mind. “Make it a telex,” he said. “There’s a board meeting coming up soon.” The next day a long, impassioned telex message went out over Matsumura’s name, which everyone at Nissan knew was from Katayama, not Matsumura. Almost immediately, Katayama got an angry message from Yuji Shimamoto, who was a key man in the export department. Shimamoto had been his chief tormentor in the past and had strenuously fought him on his repeated requests to upgrade the engine. This time Shimamoto was complaining bitterly and publicly of Katayama’s failure to ask him for the 1600cc engine any earlier. That night, April 8, 1966, Katayama wrote in his diary: “I do not know how many times I have asked the head office for more [engine] power. In fact I have been begging for it, but we always had to shut up because their answer was that it was impossible. Now Shimamoto tells me that everyone including Kawamata was shocked by Matsumura’s telex. It is we who should be shocked, not him.” Without Matsumura, the 1600cc engine would have been delayed another year and possibly longer, he wrote. Why did people in a private company, he wondered, have to act as timidly as those in a government bureaucracy?

  A few days later Kawamata arrived in Los Angeles with his wife. Katayama was nervous that the president might be angry with him because of the Matsumura telex. But Kawamata seemed not to mind it at all; indeed he affected to take it as a normal request. It was, of course, immediately approved, and the 1600cc engine went into production. That meant that in 1968 the engine was ready for the new Datsun called the 510. It was a remarkable car, in any real sense Yutaka Katayama’s car, a personal victory of exceptional magnitude in any auto company and particularly in a Japanese one (a point of some sensitivity later with Tokyo). For years he had been pushing Tokyo to use its growing skill in engineering and manufacturing to leapfrog ahead of the American and European small cars: Nissan was at the point, he kept telling the home office, where it was capable not just of improving its small, durable little cars, but of going ahead, giving the low-end customer something that had never been available before, an inexpensive, sporty, mass-produced sedan. Nissan could do it now because its production costs had dropped so low and its engineering was becoming so good. Finally, reluctantly, the home office had listened.

  The 510 marked the beginning of the end of the small car in America as a clumsy, flimsy econo-box. It was the fulfillment in that sense of Katayama’s vision, of taking the best of modern European engineering and marrying it to Japanese manufacturing expertise to produce an inexpensive, small, rugged car that was also high-performing. That vision was special to him, for Katayama was above all else—and this made him unique in an increasingly bureaucratic company like Nissan—a man who loved cars and who loved to drive. The BMW 1600 had immediately excited him; it had taken the pleasures and advantages of a sports car and placed them in a sedan. This was the future. The Japanese, he was sure, could match this. The technology was available, and the ability to manufacture well. Why not do it, then? It was, of course—and this was hard for Tokyo to accept—largely a car for the export market, since it leaped ahead of Japanese domestic needs at the time. Gradually Tokyo came around, probably as much because people there were ready to come around.

  In the months when the car was in its final engineering design, Katayama was on the phone to Japan constantly; one of his American associates thought he was more like an expectant mother than an auto executive. He went sleepless the night before it arrived, and when the ship was finally docking in San Pedro, he was more nervous than anyone had ever seen him. As soon as the first one came off the ship, he himself drove it out of the parking facility. “Finally!” he exclaimed to the friend riding next to him. “Finally they did it!” The car was white with a red interior. “I thought it would take ten years to do it,” he told his friend. But they had really done it in seven. He was impressed by how good Japan’s engineers were; in practical, functional work like this, building a car, they were possibly the best in the world. He had suspected that they were that good, but here now was the proof.

  That night he again could not sleep. He was for the first few months like a kid with a new toy. He made everyone drive it, first his colleagues at the office, then journalists, then anyone who walked near the showroom. He loved the car, and it was inconceivable to him that anyone who touched it would not be equally excited. Taking personal charge of the advertising campaign, he demanded something different—not the usual commercial that would show the car and rattle off lots of words about its extraordinary features. It was a beautiful car, he said, it had high performance, and it should be shown simply for that, and people would know. So he helped design a commercial in which a beautiful girl drove a 510 through the Big Sur country on a dark stormy night. The windshield wipers kept working against the rain, and the car worked against the terrain. In the background was the music of Vivaldi. It was known at Nissan as the Baroque commercial. Not a word was spoken. It was, thought Katayama, all that anyone needed to understand the car.

  The 510 was a landmark car in many ways. Datsun promptly jumped into third place among the importers, with 100,000 pieces sold. The 510 alone sold over 300,000 pieces in five years, and for anyone paying attention it was a sure sign that the Japanese had arrived. They were now able to build not just small, solid cars, but cars with high-tech, high-performance capability. It was not just the first very good Japanese car to hit the market; more significant, it was the first inexpensive, ultramodern, high-performance small car on the American and European market. Its arrival showed that the Japanese were ready in auto making, that the explosive surge that they had already made in so many other industries was how about to take place in this industry as well.

  In essence, as one high Nissan executive admitted at the time, the 510 was a brilliant knockoff of the BMW 1600, the main difference being that the BMW cost roughly $5000 and the Nissan 510 about $1800. The 510 bore witness to the great Japanese admiration for the skills that had gone into the BMW 1600. The 510 had four-wheel independent suspension, an overhead camshaft, and a 1600cc engine with ninety-six horsepower. It was very strong, well put together, fuel-efficient. It was almost immediately a hot car. The professional auto magazines were unusually enthusiastic. Car nuts loved the new Datsuns. Dealers could not keep them on the floor, and for a time there were the inevitable charges that some dealers were taking bribes in order to save cars for customers. In Detroit few of the people at the top of the auto companies took the 510 very seriously, though among the engineering people there was a sudden realization that the Japanese could be more than functional, they could be good. It was, thought Mayfield Marshall years later, a Yuppie car before the Yuppies had been properly identified, a car for bright young urban professionals who were not tied to the past.

  Within weeks of the date the 510 went on sale, Katayama and his associates noticed a new phenomenon: VW dealers who wanted to come over and handle the Datsun cars. The following year, for the first time in two decades, VW’s share of the American market did not increase. Like Henry Ford with the Model T, Volkswagen had stayed with the Bug too long. In the next five years Volkswagen’s share of the import market dropped from 62 to 46 percent, almost all of the lost ground going to the Japanese. In 1968 the Japanese passed the West Germans to become the number-two producer of motor vehicles in the world.

  26. THE EMPEROR SHIOJI

  THE FRIENDS OF ICHIRO Shioji, the men with whom he regularly played golf, noted the change in him. He had never been exactly shy, but he had become a man of the world. His new self-confidence was startling to them. Suddenly, it seemed, he was always just on his way to some international meeting or just back from one. On the links with them or in the locker room after one of these business trips, he would talk expansively of
the Americans he had just spent time with, Reuther and Woodcock and even some American politicians whose names apparently meant a great deal to him although somewhat less to them. As he became ever more influential he brought them gifts from abroad—cigarette lighters (personalized, with his name on them), golf clubs, bottles of Scotch—the gifts of Shioji, they called them. Presented immediately after a trip, they helped contribute to the image that began to grow in their minds, of Shioji as a man on the move, and finally as a man of power. His yacht did not detract from that image. Some of them were invited on weekends to sail with him on this huge beautiful boat with its crew of eight, all of them Nissan employees during the week, working now on their days off. On these occasions his sense of power was even more obvious. He commanded, it seemed, not just the boat, but the company.