Reckoning

by David Halberstam

  Convincing the new Japanese titans was even less pleasant for Amaya than bargaining with the Americans. The people at both Toyota and Nissan, seeing themselves as self-made men about to be deprived of a success that was rightfully theirs, were enraged. They pointed out quite angrily that MITI had done a great deal for steel, shipping, and computers, but it had done very little for the auto industry—and therefore Toyota and Nissan owed MITI nothing. Toyota executives were particularly virulent. They assembled their friends in the press and unleashed against Amaya a barrage of the most acrimonious name-calling in recent Japanese memory, in which he was referred to as “a whore for the foreigners” and “Reagan’s concubine.” Nissan executives were almost as angry, although they did not go to the newspapers.

  Amaya began to fear that the issue was getting out of hand, that there was a danger of its becoming a focal point of tension and hidden resentments on both sides of the Pacific. The name-calling did not bother, him, but he was made nervous by any issue that could appeal to such emotions. So he invited Ishihara, the head of both Nissan and the Automobile Manufacturers Association, to a restaurant in the Ginza to persuade him to agree to a compromise. Until then Ishihara had taken a very hard line on the issue. He felt, in the most personal way, that he was being cheated out of his own success. It was not fair that his company should have to pay for the Americans’ mistakes. Amaya heard him out, then bowed on the tatami mat and begged him not to repeat the mistakes of the past by fighting the Americans. Do not, he entreated, be like Yosuke Matsuoka when he led the Japanese out of the League of Nations and thus intensified Japanese nationalism. (Asked later about the moment when he prostrated himself, Amaya said a little theatrics never hurt.) It had, however, been a difficult night for both him and Ishihara. Amaya had not doubted for a moment that he would win. He knew that Ishihara would have to concede, that his obligation to his country was greater than his obligation to his company. Ishihara, for his part, was also aware that he did not really have a choice. If he and the other auto makers rejected this compromise (which was not that bad a deal, after all), the full power of the government, the press, and public opinion would be turned against them. The ceiling was set at a rather high 1.685 million cars.

  The irony of what he had done did not escape him. When he, Naohiro Amaya, saw America at the moment of its ultimate strength in 1945, when he was young, the idea that he might participate in negotiations placing limits on Japanese auto exports to the land of Henry Ford would have struck him as the unlikeliest of events. But it had happened. The oil century had started with Henry Ford, and it had been ended in part by Naohiro Amaya. Nor was the profound symbolism of what he had accomplished lost on his fellow countrymen. Some commentators referred to it as the reverse of Japan’s signing the surrender aboard the battleship Missouri. But Amaya took no particular pleasure from it. The world as he knew it depended on a strong America. There must be a strong America to help sustain a strong Japan.

  PART ELEVEN

  41. THE DEFECTION OF MARVIN RUNYON

  BY 1978, MARVIN RUNYON HAD pretty much decided to take early retirement from Ford. Aside from personal considerations—his wife was not happy in Detroit and he wanted to find a job in the South for her sake—he was frustrated by the difficulty of keeping up the plants and with the overall problem of trying to build a good car in America. He was also disturbed by the firing of Iacocca and Bourke, two of Ford’s best product men. He found Philip Caldwell, Iacocca’s successor, extremely hard to deal with. Caldwell, he thought, understood the rule book but not the true essence of the Ford Motor Company. Runyon was coming up on fifty-five, which was a good demarcation point, for he could retire with considerable benefits. He began looking for work in the South and soon was considering offers from various supplier companies. As he neared his own appointed date for retirement, Nissan’s officials, having decided to open a factory in America, were looking for an American to run it. They learned through headhunters that Runyon, then vice-president in charge of assembly plants, was thinking of leaving Ford, and approached him. Runyon let them know he was interested, and newspapers soon reported that Nissan was talking to a high Ford executive. Runyon’s superiors knew it was he, and they made their distaste for what he was doing—going over to the enemy at the height of the battle—quite apparent.

  By his last day at Ford, Runyon still had not made up his mind. Normally when an executive at his level left Ford, he was given an inscribed silver tray and a Ford car of his choice as a going-away present. This time an emissary from Caldwell appeared in Runyon’s office asking for his signature on some papers saying that he would not go over to a competitor. Runyon asked if this was standard procedure for all departing Ford executives. The emissary hedged. Runyon refused to sign. Later Runyon was informed that he would not be given a car. He was also told that there would be no silver tray because Ford had run out of them. At the last minute someone reversed the decision and he was notified that he could have a car. Runyon said not to bother, he had already rented two Lincolns from Budget. At his going-away party no silver tray was presented, although again there was a change of mind, and he received it later. So it was that Marvin Runyon made his departure from the Ford Motor Company.

  Runyon did decide to join Nissan, but he did not leave Ford after thirty-eight years because he was offered a job by a Japanese competitor; he left because of accumulated frustrations and because he was angry over the firing of Iacocca and Bourke. He believed, furthermore, that he was taking a job in an American company, one that would provide Americans with jobs, even though its parent company happened to be in Japan. It seemed unfair to him that he was judged so harshly by the very men whose pedantic style and unwillingness to take manufacturing seriously had made Ford so vulnerable. The new Nissan plant was located in Smyrna, in a lovely rural area of middle Tennessee. (Tennessee was just one of the states competing to get the Nissan factory by offering various incentives, including tax benefits and state-subsidized training for the workers. The competition had been so intense that Jim Thompson, the governor of Illinois, had flown to Tokyo twice to woo Nissan, and Governor Jim Rhodes of Ohio had gone to the Columbus airport with popcorn to greet Mitsuya Goto, the Nissan representative, and then had flown him around the state in his own plane, while making sandwiches himself for Goto and the other Japanese.) Smyrna was selected by the Nissan people because of its good rail connections and its right-to-work laws and because it was assumed to be far enough from the industrial North to be beyond the reach of the UAW. Runyon was eager to be free for the first time in his life of the limitations imposed by the UAW as well as the bureaucracy and heavy centralization of Ford. He was looking forward to working for a company that believed in the primacy of manufacturing.

  Nissan asked him to make an estimate of what it would cost to run the plant. When he finished it, he typed it up, signed it, and—according to the procedure he had been taught at Ford—brought it to his new boss, Takashi Ishihara, president of Nissan, to sign. Ishihara seemed surprised when he looked at it, and said nothing. A few days later he brought it back to Runyon with his signature at the bottom. “Frame this,” he said, “because it is the last piece of paper I will sign for you.” Runyon looked puzzled. “We searched very carefully for the man to run our factory,” Ishihara continued, “and we picked you, and you are our man and we trust you. We don’t have to sign papers anymore. From now on it is just yes or no with us.”

  The Japanese had been slightly startled by Runyon’s initial figures, which they thought were too high. When Runyon asked how much too high, they suggested cutting them 10 percent. Then the Japanese discussed it some more and finally came back to tell Runyon not to cut anything he really needed; they did not want him to start a factory and then make himself and their product vulnerable. The Japanese, he thought, differed from the Americans in this respect, at least. They had learned long ago that manufacturing was basic to quality. They were aided in this respect by their relationships with their banks, which allowed
them to make long-range investments in expensive machinery that would have been impossible for an American company. Nissan budgeted the plant for $500 million and accepted that it would not turn a profit for five years. Runyon was sure that while an American firm might have pledged to wait just as long, management would have announced a year later that the stock analysts said the company needed a greater profit in the coming year. He had altogether too many memories of being at Ford and winning approval of a $50 million project and then, halfway into it, $25 million already spent, receiving a series of hold-downs from the Glass House, so that in the end the guts of the project would be cut out.

  Ishihara had always been nervous about coming to America and doubted the quality of American workers and their capacity to make cars. Thus, to minimize the potential weaknesses of American workers (and the potential power of a union), Nissan wanted a highly automated factory; it also was decided to manufacture only trucks at Smyrna, at least in the beginning. When Runyon asked Ishihara why he planned to build trucks rather than autos, Ishihara replied, “Because we are unsure about the American workers and we are concerned about quality—and if the vehicles are not going to be up to our quality, then at least we want them to be our lowest-selling item.”

  The man, thought Runyon, is nothing if not blunt. “We can build a car as good as the Japanese,” Runyon said.

  “Perhaps,” said Ishihara, “but we have not seen it yet.”

  “You haven’t seen us build to Japanese design,” Runyon answered, and they let it go at that.

  Smyrna became the most automated car or truck factory in America, a quick look into the future. In other factories, men operated machines that made vehicles, but at Smyrna, in vast areas such as painting and welding, machines did the work and men simply cared for the machines. Instead of the classic blue-collar line worker of limited education and skills, Nissan was hiring a new breed of worker, people who often had electrical and electronic skills and could repair immensely complicated machines. Some of these employees had not finished high school but had been electricians for fifteen years; others had attended junior college or spent four years as maintenance and repair men in the air force. Nissan administered a battery of psychological tests designed to pick up any predilection on the part of a new worker to join a union. The pay was good, virtually the equivalent of UAW money; by Tennessee standards, it was very good.

  Runyon’s management style was very much his own—a combination of the best of Japanese and American methods. He spent only about twelve hours a year in board meetings and eliminated the endless red tape in which, to his mind, Ford had specialized. At Ford there were twelve layers of management; in Smyrna he cut it to five. He himself became a fixture on the factory floor. Rather than a suit, he wore the Nissan worker outfit, a kind of blue fatigue uniform. He was not Mr. Runyon, but, as it said on his shirt pocket, Marvin. He simplified the executive hierarchy so that his managers were on the floor as well. Because he was free of UAW restrictions, he was able to move his workers around and expedite plant procedures. Morale was unusually high among the workers, men and women who were grateful for jobs that had almost instantly lifted them from the lower middle or even working class to middle or upper middle class. They were called technicians, and, with overtime, they made as much as $29,000 a year, wages equal or superior to the salaries of college professors in the same region. On the Smyrna factory floor, it seemed as if fifty years of labor-management bitterness had been wiped away, as if there had never been a Henry Ford or a Harry Bennett, who had treated workers with such cruelty. It also seemed as if there had never been a UAW, which had grown unwieldy in building itself up to combat those same indecencies. The Nissan workers got the benefits of UAW pay without being unionized, for Nissan had to meet the going rate, and Runyon and the Japanese had the benefit of learning from the mistakes of both American labor and management in their new streamlined plant.

  The Nissan plant was an almost immediate success. It began truck production in June 1983 and a year later had the capacity to build ten thousand trucks a month. Encouraged by its early success, Nissan decided in 1984 to begin manufacturing cars. That year the plant was named by Fortune magazine as one of the ten best-managed factories in America. The first cars rolled down the line in March 1985, and by the end of the year the factory, with a total of three thousand workers on two shifts, had produced a total of 240,000 cars and trucks. Some critics in the Japanese press claimed that the level of profit was not nearly as high as that of the Honda factory in Ohio. But the Nissan people pronounced themselves pleased with the early results and Ishihara went so far as to claim that the American trucks were of higher quality than the ones being made in Japan.

  Although he made an effort, it was difficult for Runyon not to be critical of the system he had just left. Sometimes he would mention to the press that steel and auto unions had succeeded so well in driving up wages that one day they looked around to discover there were no jobs left. At other times he would remark to community groups that for twenty years management and labor had spoken only with each other while they kept the customers cooling their heels outside, until one day they opened the door to the waiting room and found it empty. On other occasions—as when he went before the Detroit Economic Club in February 1986 to give a speech entitled “Has Detroit Gotten the Message?”—he chided his former colleagues for abusing the opportunities granted them every time they received a tariff advantage against the Japanese. Instead of using the edge provided by the tariffs to charge less than the Japanese, Detroit had raised its prices to maximize profits. It was shortsighted and ill advised, he said (implying that it was greedy as well), since the Americans could not compete with the Japanese on quality. They should therefore, he argued, exploit the advantage in price. They were giving away an advantage just won for them by their government.

  Nissan’s approach, thought Runyon, was much more sensible. The board was full of former manufacturing men; the importance of making things right permeated the company. Designers worked to the specifications conducive to high-quality manufacturing. Finance people were aware that machinery had to be maintained properly. Runyon felt he was no longer talking to the deaf.

  One autumn evening in 1982, millions of Americans turned on their television sets and were treated to an extraordinary sight. They saw black-and-white FBI films of John DeLorean, once the fair-haired boy of Detroit, participating in a colossal drug deal, bartering part of his dying auto company for a large share of the $60 million transaction. The background of the story was complicated. Federal agents had been pursuing other dealers when suddenly DeLorean, in desperate trouble with his car company in Northern Ireland, had walked right onto their stage. He had seemed, to those watching the government films, a willing, indeed eager, participant in the drug deal, or what his onetime friend David Davis called his “new career as an importer of controlled substances.” He had been set up; the men he thought were his newest partners were in fact federal agents. Though he was eventually acquitted of the charges, many who had watched the case felt that he was free not so much because the jury believed him but rather because ordinary Americans did not like the idea of their government setting up its citizens, no matter how tawdry their behavior. The film seemed oddly indelible, as if although acquitted he had not been cleared.

  The trial itself was the end of DeLorean’s long, slow fall from grace. Earlier that year his new car, the DeLorean, had appeared, and it had been a disaster. The cars were more expensive than expected, the quality was unacceptable, orders began to decline, and the company was in ruins. Serious questions about DeLorean’s personal and corporate finances remained, particularly about $18 million that seemed to have mysteriously disappeared from the company’s coffers.

  The city of Detroit had watched with fascination as the entire saga of John DeLorean unfolded. No one had ever doubted his talent, for he was one of the most creative young men of his generation. Many thought that his was the most plausible attempt by an American at a sta
rt-up company since that of Henry Kaiser, even if it was being undertaken in Ireland rather than in Michigan. Since Henry Kaiser had failed in the fifties, the auto industry had become ever more closed. Dominated by the three large firms—oligopoly was the term for it—and free of fresh challenges, it grew increasingly cautious and conventional. As the number of automobile companies continued to decline, with old names like Packard and Studebaker and Nash and Hudson disappearing from the highway, the cost of doing business kept going up, which guaranteed that it would be harder and harder to create a new company. The ticket was simply too high: If the price had been $300 million in 1945, when Kaiser tried it, then by now it was many times that. Certainly $2 billion, said one Detroit expert, was the minimum. That requirement was sufficient to scare off would-be entrepreneurs. Thus in the late seventies when DeLorean tried to create his own auto firm, the city of Detroit watched with utter fascination. Nothing else told more about the society and the industry—the changed values of both—than DeLorean’s quest.