This article was downloaded by: [Tufts University]On: 12 November 2014, At: 14:28Publisher: RoutledgeInforma Ltd Registered in England and Wales Registered Number: 1072954 Registered office:Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK

Japan ForumPublication details, including instructions for authors and subscriptioninformation:http://www.tandfonline.com/loi/rjfo20

Convergence theory and the developmentof the British and Japanese steelindustries, 1960–1988James Foreman‐Peck a & Hasegawa Harukiyo b

a Professor of Economic History , University of Hullb Teaches at Kyoto Seika DaigakuPublished online: 18 Apr 2007.

To cite this article: James Foreman‐Peck & Hasegawa Harukiyo (1989) Convergence theory and thedevelopment of the British and Japanese steel industries, 1960–1988, Japan Forum, 1:1, 29-41, DOI:10.1080/09555808908721346

To link to this article: http://dx.doi.org/10.1080/09555808908721346

PLEASE SCROLL DOWN FOR ARTICLE

Taylor & Francis makes every effort to ensure the accuracy of all the information (the“Content”) contained in the publications on our platform. However, Taylor & Francis, ouragents, and our licensors make no representations or warranties whatsoever as to theaccuracy, completeness, or suitability for any purpose of the Content. Any opinions and viewsexpressed in this publication are the opinions and views of the authors, and are not the viewsof or endorsed by Taylor & Francis. The accuracy of the Content should not be relied uponand should be independently verified with primary sources of information. Taylor and Francisshall not be liable for any losses, actions, claims, proceedings, demands, costs, expenses,damages, and other liabilities whatsoever or howsoever caused arising directly or indirectly inconnection with, in relation to or arising out of the use of the Content.

This article may be used for research, teaching, and private study purposes. Any substantialor systematic reproduction, redistribution, reselling, loan, sub-licensing, systematic supply, ordistribution in any form to anyone is expressly forbidden. Terms & Conditions of access anduse can be found at http://www.tandfonline.com/page/terms-and-conditions

GOVERNMENT AND INDUSTRY

Convergence theory and the developmentof the British and Japanese steel

industries, 1960-1988

JAMES FOREMAN-PECKHASEGAWA HARUKIYO

For the purposes of this paper, convergence 'theory' is the hypothesis, conjecture orassertion that, regardless of the initial institutional structure of an economy, theprogress of industrialisation will make different systems of industrial relations andorganisation converge.1 Modern technology uniquely determines social arrange-ments. In the present study we compare the organisation of the British and Japanesesteel industries in order to examine the scope and limits of the convergenceproposition.2

Considering only a pair of industries is a more feasible task than comparing entiresocieties and one that permits a detailed examination of the channels by whichtechnology influences organisation. The steel industries are particularly appropriatefor such a comparison because they are dominated by the giant corporations thathave been central to so many discussions of convergence. Identifying convergencetendencies is facilitated by the choice of Japan and Britain because these countrieshave such different cultural and historical backgrounds that the initial differences ininstitutions are about as great as could be found in any other comparison. Japan hada century-long tradition of seeking out and absorbing Western technology andinstitutions, the most extreme example of which were the changes which followedthe Meiji Restoration of 1868. Yet the term Restoration is crucial, for only suchinnovations were imported as were deemed necessary for Japanese survival in themodern world. In 1896 the Japanese government started the Yawata Iron and SteelWorks as part of this policy.

Our concern in the present paper begins when the wheel had turned full circle; whenthe Japanese iron and steel industry had drawn ahead of the British, and the Britishsteel industry sent three delegations to Japan with a view to examining how theBritish industry should be reshaped in the light of Japanese experience.3 Given thevery rapid growth in Japanese demand in the post-war years until 1973, theJapanese industry was able to adopt the most modern equipment. By contrast theBritish industry was not only constrained by a less buoyant market but by politicaldisputes over state or private ownership which held back investment. TheJapan Forum, Vol. 1, No. 1, April 1989 © BAJS 1989

• 3

Dow

nloa

ded

by [

Tuf

ts U

nive

rsity

] at

14:

28 1

2 N

ovem

ber

2014

30 Government and Industry - 3

convergence hypothesis therefore predicts a change of British institutions towardsthe Japanese type at some time when the BSC began to close the gap in productivitythat opened up during the 1960s. In the tendency to appoint top management fromwithin the firm, in the wage-bargaining and labour relations structure and in theelimination of occupational categories, the British industry converged to theJapanese model from the beginning of the 1980s.4

Other changes, the reverse of those predicted by the convergence hypothesis,moved the institutions of the Japanese industry closer to those of the British. InJapan declining demand and rising labour costs towards the end of our periodtransformed the economic environment into one more comparable to what theBritish had faced throughout. Shokunoshikaku Seido (Job and CapacityQualification System) was therefore introduced in 1970 and plants increasinglyspecialised in particular products. We also find examples of non-convergencedespite the adoption of similar technology; at the present, the role of the foremanand the extent of centralisation of the corporate organisation remain distinct in thetwo countries. It is unlikely that Japan will adopt the institution of employeedirectors.5

We conclude that technology, together with competitive pressure, is ultimatelyquite a good predictor of institutional change over the quarter-century of ourindustry study. More fundamental were the causes of the adoption of thattechnology, demand and cost conditions. Cultural influences seem to have beensurprisingly resilient in maintaining some institutional differences, although that isnot to deny that, given long enough, they may be eroded.

The Industry and the TechnologyAccording to the flow of materials, the iron and steel plant may be divided intoiron-making, steel-making and rolling processes. Blast furnaces are at the centre ofthe first process, open hearth furnaces, or LD converters, and continuous castingequipment are central to steel-making and the strip mill is the principal process inrolling. Technical developments have increased the scale and speed of operation ofthese processes. Larger blast furnaces were allowed by the replacement of the openhearth furnace with the LD converter. Equally, adoption of LD convertersencouraged the use of continuous casters. The LD converter was developed inAustria in 1952 and introduced to Japan in 1957 by the Yawata Steel Corporation.In 1960 there was one LD Converter in the UK. Shortage of scrap iron, cheaper oilrelative to coal and greater availability of industrial oxygen enhanced theattractiveness of the LD converter over the Open Hearth furnace.

Continuous casting replaces ingot making, soaking and the blooming and slabbingprocesses. In the UK it was developed as the BISRA process. There were twoBritish continuous casters in operation in 1960. The Japanese introduced the Swiss(Concast) version in 1955, but only after 1970 did diffusion proceed rapidly.Hot strip mills were developed in the United States. Over the period 1955-1968their maximum rolling speed in Japan doubled and computer control wasintroduced. In the first half of the 1960s the number of both hot and cold strip millsincreased in the British industry, but by 1980 there were still only six hot, buttwenty five cold, mills. Computerisation in the Japanese industry began in 1959 andallowed the development of integrated automated works with much higher labourproductivity than before. Process control accounted for one-third of the computerhours used in 1978.6 Because of the rapid growth in demand for Japanese iron and

Dow

nloa

ded

by [

Tuf

ts U

nive

rsity

] at

14:

28 1

2 N

ovem

ber

2014

Foreman-Peck & Hasegawa: British & Japanese Steel Industries 31

steel, Japanese corporations were able to construct plant on a number of green fieldsites. In marked contrast, the British steel industry was obliged to adjust existingestablishments. The British industry had 85 blast furnaces in 1960, ultimatelyproducing about 25 million tons of crude steel. The Japanese manufactured22 million tons with 34 blast furnaces. By 1985,54 blast furnaces were employed tomake the 104 million tons of Japanese crude steel while the British used 11 furnacesfor 16 million tons. At the beginning of our period the average size of furnace inJapan was greater than in Britain with the implication that on that account Japanesecosts were lower. At the end of the period the gap had narrowed but the Japanesewere still ahead (Tables 1 and 2).

Japanese iron and steel employment rose from 305,000 in 1960 to 475,000 in themid-1970s, falling to 353,000 by 1985, but 1985 steel output was marginally higherthan in the mid-1970s.7 British iron and steel employment by 1985 fell to onequarter of the 1960 level.The timing of investment in the two industries was also markedly different. Beforerenationalisation in 1967 British firms were reluctant to undertake large-scaleinvestment because of doubts about compensation. After nationalisation some yearspassed before the fourteen corporations were integrated into one enterprise. It wastherefore 1973 before the Ten Year Development Strategy was formulated. Thenbecause of the state of industrial relations in the British Steel Corporation and theBeswick Review, there were further delays in the implementation of the Strategy.8

By the time a large-scale programme of modernisation was at last under way, theworld demand for steel was declining.

Japanese investment was concentrated in the 1960s when the rapid growth of thedomestic shipbuilding, construction, motor, machinery and petro-chemicalindustries boosted steel demand. Declining American competitiveness helpedexpand export demand for Japanese steel and Japanese government policy,identifying the industry as a key to successful heavy industrialisation, supportedrather than hindered the pull of market forces. Japanese management scoured theworld for the most advantageous technologies, importing processes even from theUSSR. The channelling of investment funds from banks to their sponsored iron andsteel companies ensured that sufficient funds were available for the great investmentboom of the 1960s. Finally, enterprise-based industrial relations, established after1950, appeared to provide a harmonious working environment that encouragedinvestment.In sum, the two industries were of approximately similar sizes and technologicallevels in 1960, although the Japanese had more recent vintages of plant because ofmore rapid growth in preceding years and because of the embodiment of technologyin investment. The great divergence between the industries came in the 1960s whenthe Japanese leaped ahead and the British first stagnated and then declined. TheBritish industry became very much a follower, which, as it attempted to catch up inthe later 1970s and 1980s, would imitate the best practice technology andorganisation of the far larger Japanese industry. These years then present an idealopportunity to assess the explanatory power of the convergence hypothesis for theiron and steel industry.

We attempt this assessment by matching as far as possible similar best practiceplants in the two countries. In view of the lack of green field site plants in the Britishindustry and their predominance in Japan, matching is no simple operation.Scunthorpe, one of the largest modernised works in the British Steel Corporation is

Dow

nloa

ded

by [

Tuf

ts U

nive

rsity

] at

14:

28 1

2 N

ovem

ber

2014

32 Government and Industry - 3

compared with Yawata, a large, long-established plant of the Nippon SteelCorporation, the Kure works of the Nisshin Steel Company and Kimitsu, a largemodern green field works. Kure was only included for the blast furnace comparisonbecause the comparable Yawata blast furnace was not operating at the time of thisstudy. Plant layout and location, equipment and automation are similar inScunthorpe and Yawata. Blast furnaces in the two works are smaller than those inKimitsu, and unlike Kimitsu, the two plants make only a partial use of processcomputers. Scunthorpe has three large LD converters whereas, because theinvestment was undertaken earlier, Yawata's are smaller. The scope of productiondiffers between plants in a slightly unexpected way. Yawata, with a long historybehind it, produced a considerable variety of products in relatively small volumes.Kimitsu engages in mass production and Scunthorpe specialise in products such asplates and sections. Under the 1987 rationalisation plan the Yawata anomaly will beeliminated. Yawata will specialise in stainless steel and will operate only one blastfurnace and will supply billets and slabs to the Muroran and the Kamaishi workswhich will no longer manufacture iron and steel but will specialise in rolling.

Labour and Industrial RelationsDespite the difficulty of finding equipment used under the same circumstances inthe two countries, it is possible to identify a basic similarity in the application oftechnology and the size of the labour force employed. Labour productivity inKimitsu (311 tonnes per man) was about double that of Yawata (166.8 tonnes perman) when they were producing similar volumes of crude steel in 1976/7.Subcontracting was higher at the newer works (64.1 per cent compared with 44.4per cent) and the average size of the sub-contract firm was larger. By the beginningof the 1980s, Scunthorpe's labour productivity was only slightly less than Kimitsu's(about 250 compared with 256 tonnes of steel output per man) despite an outputalmost half of Kimitsu's. Yawata's labour productivity appeared to be 25 per centless than Scunthorpe's but tonnes of steel is not a correct output measure; valueadded would be more suitable if it could be converted into internationallycomparable units. There is also some question as to whether there is a similarcoverage of labour employed in the two plants.

The general pattern at the level of the blast furnace team shows that although theKure team is less hierarchical than that of Scunthorpe (Table 3 shows the gradedifferences between the furnaces), Kure needed more workers on a similar size andage blast furnace. Closer inspection shows that this different labour ratio was in factdue to the employment of slightly different technology. The Kure blast furnace hadtwo hot metal drains whereas Scunthorpe had only one.

Compared with Kure, the length of service at Scunthorpe is short, except for thekeeper, and the ages of the workers are high. Scunthorpe clearly has a high labourturnover in contrast to Kure and elsewhere in the Japanese Steel industry whereHonko workers are recruited as soon as they have completed their high schooleducation or within one or two years and then employed for life. Length of service isconsidered more important than age itself as a criterion for promotion, as indicatedby the reverse age seniority between the foreman and the group leader in Table 3.The blast furnace at Scunthorpe was recognised as one of the most unpleasant jobsin the plant and therefore workers would accept employment there only as a firststep towards a better post in the works.

Japanese Honko workers typically have stayed on at school for two years after British

Dow

nloa

ded

by [

Tuf

ts U

nive

rsity

] at

14:

28 1

2 N

ovem

ber

2014

Foreman-Peck & Hasegawa: British & Japanese Steel Industries 33

workers have left. They are then subject to in-enterprise education and trainingprogrammes which are virtually absent in British Steel Corporation (BSC). NipponSteel Corporation education programmes are intended both to enhance theefficiency with which individuals undertake their jobs and to ensure that individualsoccupy the jobs in which they will be most productive. The extent of in-houseeducation received depends upon the principle 'unto him that hath shall be given':the longer the period in full-time formal education, the longer the companyeducation programme. Male high school graduates have longer programmes thanfemale and head office employees have a shorter programme than those in steelworks. Since employees are expected to stay with the company all their workinglives, the expense of education is regarded as an investment in the company's humancapital. In 1962 the Japanese Iron and Steel Federation published a report whichdescribed the educational principles and system of each member company.9 TheYawata Steel Corporation described its educational goals as developing 'thetemperament and ability of employees needed for business, helping them torecognise the importance of the mission given to the company and helping them toco-operate with fellow workers, so as to achieve the goals of the business efficiently'.By the beginning of the 1970s, employee education for clerical, technical andmanagerial personnel had become a part of Noryokushugi Kami [LabourManagement based upon Ability and Faculty] of the Yawata Corporation.Although it is difficult to measure how effective and substantial this educationalscheme was, since all the programmes were budgeted and almost 80 per cent of themwere carried out, management must have believed that the programmes wereeffective in creating good industrial relations. British Steel has had nothingsignificantly resembling such programmes.10 Yawata began them in 1910, facedwith a shortage of the necessary skilled labour and a rapidly expanding demand foriron and steel. During the 1960s these conditions were repeated. The BSC and itspredecessor companies throughout the twentieth century could draw on a long-established pool of skilled workers and did not have to cope with a very rapid andsustained pace of expansion.

Unlike their British counterparts, the Japanese workers are paid monthly and theirpayment is less linked to the job than to their length of service in the fashion ofEuropean civil and armed services. The British steelworker is paid for the job almostregardless of his age and length of service. Table 3 shows the First Helper in the Hobwork team, a man of 45 years with 17 years of service received the same wage as thesecond Helper who was seven years younger with eight years less service. Such anarrangement would be unthinkable in Japan. The contrast between thepsychological and social effects of the British 'commodification' of labour on the onehand and the Japanese respect for social position, loyalty and social obligation on theother, might be expected to be considerable.

Declining demand for Japanese steel inevitably has put life-time employment andseniority principles under pressure in the 1980s. The Union demanded that only theminimum necessary reduction in the work force be made and that alternativeemployment opportunities be created for those who had to leave the company,either permanently or temporarily. Such workers have been given jobs insubcontract companies, affiliated companies, steel-consuming companies andcompanies newly established by the iron and steel corporations. In 1986 the NipponSteel Corporation 'dispatched' 785 employees who went mainly to the motorcompanies, including Toyota, Daihatsu, Mitsubishi and Suzuki. Thirty twocompanies with 2,053 new jobs were created by the NSC between 1980 and 1987.''

Dow

nloa

ded

by [

Tuf

ts U

nive

rsity

] at

14:

28 1

2 N

ovem

ber

2014

34 Government and Industry - 3

A distinctively Japanese response to declining demand has been to encourageforemen over 55 to relinquish their posts, reverting to the rank of ordinary worker soas to give younger employees the opportunity to become foremen. The foreman whogives up his position continues to receive the same salary for six months before hisforeman's allowance is cut off. A second change, which also reduces the financialburden of the seniority wage system, is much more a convergence to the Britishmodel. The salary structure is being altered to include an increased proportion ofelements determined by evaluation of job and task fulfilment capacity, whilereducing the seniority based component. Shokundshikaku Seido was developed inthe 1970s.12 It was particularly concerned with providing incentives for theincreasing proportion of white collar workers. The 1987 proposals are merely anextension, intended to reduce the percentage of the basic rate (seniority-based wage)from 50 to 40 per cent, increasing the job rate of 35 per cent and the job capacity rateto 25 per cent. The salary of employees over 45 will be held back, while those over 50will suffer a substantial reduction.

The functional distribution of the work force at the different steel plants offers anindication of the extent to which institutional arrangements are similar when similartechnology is adopted. Scunthorpe has a higher proportion of managerial employeesbecause BSC is much less centralised than Nippon Steel, partly for historicalreasons. A larger proportion of technical and clerical staff appear at Scunthorpepartly because many more of these jobs are subcontracted in Yawata and Kimitsu,and partly because a number of these workers are engaged in quality control which isdealt with by blue collar workers in Japan. The proportion of process operatives inScunthorpe is similar to the Honko of the Kimitsu works. Yawata has a higherproportion because of the greater variety of products and because union power inthe long-established works prevented an increase in the number of subcontractworkers.13

Subject to this last exception, technological conditions apparently give rise tosimilar employment patterns in the two countries. The trend over time is alsosimilar when modernisation proceeds at the same pace. In both cases there has beenan absolute and a relative decline in process workers. The difference in Japan is thatthe subcontract workers were sacrificed for the Honko. Managerial employmentincreased proportionately in both industries, but the more centralised Japanese,using advanced information technology, remained ahead. The rising proportion ofwhite collar workers has had an effect on trade union attitudes and organisation inthe NSC and a similar effect may be felt in the BSC.

Subcontracting within the works has been a much remarked upon characteristic ofthe Japanese system of production and it is one that has been extensively practised atKimitsu and Yawata. Convergence to the Japanese model is suggested byScunthorpe's adoption of subcontracting in 1980. By 1983 7.3 per cent ofemployment was sub-contracted in similar areas to those in Kimitsu and Yawata.This marks a radical break with the traditional horizontal trade union framework ofthe United Kingdom and a move to Japanese-style enterprise organisation. Havinglabelled Japanese organisation 'Japanese', it is as well to note that much labourorganisation was an American implant after the Second World War. The importantpoint is that the evidence suggests enterprise-based organisation leads to higherproductivity and that the less advanced industry recognised that this was so. Manualworkers at Scunthorpe are still divided horizontally into three categories based uponoccupational groups, in contrast to the division into Honko (manual workers of the

Dow

nloa

ded

by [

Tuf

ts U

nive

rsity

] at

14:

28 1

2 N

ovem

ber

2014

Foreman-Peck & Hasegawa: British & Japanese Steel Industries 35

Nippon Steel Corporation) and Shitaukeko (sub-contract workers) in Yawata andKimitsu. However, the policy of eliminating job and occupational demarcation,creating the universal steel worker instead, promises to be successful, unlike theearlier attempt at Port Talbot in the 1960s.14 British trade unions have beenaccepting such flexibility in sub-contracting as well, although they are unhappyabout its use for maintenance 'peak lopping'.

The BSC is aiming to move to one union on the Japanese model. The Iron and SteelTrades Confederation as well as management favour this objective. At present payreviews are conducted with four groups, which represents a rationalisation of anearlier structure. Only since 1983 have the GMBATU and TGWU negotiatedtogether in a National Joint Council, as one of the four parties. Consultation is nowundertaken at the national, works and departmental levels with the TUC SteelCommittee and SIMA. Traditional process grade wage structures established uponseniority-based promotion by trade union regulation is being challenged bymanagement. Departmental and trade union demarcations are being rejected andgroup working is being introduced. As we will see in the following section, thisrepresents another form of convergence of Britain to Japan.

ManagementWhereas in the Nippon Steel Corporation, board-level and top executive functionsare in the hands of the same people, at the British Steel Corporation they have beenand continue to be separated. The Management Policy Council in the NSC playsthe most important role in the top management function. This consists of twelvepersons including ten 'Directors and Executive Vice-Presidents'. Of these ten, fiveare responsible for the four large plants, and five are concerned with areas such asbusiness planning, accounting, technology and labour.15 Under the ManagementPolicy Council is a group of managing directors. Eight are responsible for generalmanagement functions and six deal with line matters. A third layer of ordinarydirectors, similarly divided, reports to the second group. Each of these directors willhave spent their careers, spanning thirty, forty or even fifty years, working their wayup the corporate hierarchy. Their experience and attitudes are therefore likely todiffer from the Board members of the British Steel Corporation. These Boardmembers, full- and part-time, are appointed by the Minister after consultation withthe Chairman of the Corporation, who himself is appointed by the Minister. Somedirectors of functions such as finance or personnel are full-time Board members, butuntil recently those with line responsibilities typically are not. Except for thosefull-time Board members who are simultaneously directors of functions, the Boardis appointed from outside the Corporation.

With the appointment of Mr. R. Scholey as Chairman in 1986, there is someevidence of BSC converging to the Japanese model. In the second tier of topmanagement there is also evidence of convergence. Almost all of this second tier waspromoted from within the Corporation. While there has been no change in thenumber of functional managing directors, line managers have increased. In 1982,two of the eight top management members responsible for the line were Chairmanof Operating Groups, whose status is higher than that of the directors. In addition,one of the two Chairmen was concurrently a full-time Board member.

In comparison with Yawata, Scunthorpe had a similar number of managerialemployees above middle management, despite the larger output and employment ofYawata. Scunthorpe had an extra layer (director, blue card and red card) compared

Dow

nloa

ded

by [

Tuf

ts U

nive

rsity

] at

14:

28 1

2 N

ovem

ber

2014

36 Government and Industry - 3

with Yawata (department manager and section chief), but Yawata had a greaterspecialisation among departments, which included environmental control anddistribution management as well as such conventional functions as finance andproduction control.16 In the direct departments, line functions such as iron-making,steel-making and plate and bar steel were given a higher status in Yawata than inScunthorpe. The persistent differences between the two plant managementstructures is attributable to the greater flexibility of the Japanese system.Individuals are regarded primarily as company employees rather than operators ofparticular functions. Rules regarding the delegation of authority and reporting tosuperiors are much looser and less individualistic than in the British SteelCorporation. Instead regular meetings of departmental managers facilitate theexchange of ideas and opinions. Within this structure it is possible for the head andtwo deputy heads of the works to control and represent a large number ofdepartmental managers who, in turn, can delegate their substantial responsibilitiesto the section chiefs. Paradoxically employees in the Nippon Steel Corporation aremore finely graded by salary and seniority and are more status conscious than in theBSC.

A major and persistent difference between the two organisations is the role of theforeman. The Japanese foreman is older (on average 42 compared with 30-35 in theBSC) with much longer service (24 as against 5) and better paid relative to otherworkers (one third more than ordinary workers of the same age, whereas the BSCforeman receives less than the keeper). Because the BSC foreman is seen as justanother minor post, selection is not particularly stringent. Vacancies for establishedpositions are normally advertised in the works newspaper unless they arise as aresult of a reorganisation. In that case selection is made from existing foremen,usually with some union involvement. Alternatively, at Scunthorpe appointmentcan be through the Supervisory Training Scheme. Applications for places on theScheme are invited in the works newspaper. The Japanese route is through therecommendation of a group leader, with the qualifications of a long record of goodwork, strong leadership abilities and a rapport with fellow workers. The candidate isthen subject to long education and training sessions and interviews to assess hissuitability. In the BSC such training only takes place after appointment as foremanand is for a relatively short period. Graduate trainees are encouraged to apply forvacancies as part of their training, especially in production areas. In Japan, however,only blue collar workers provide candidates for foremen posts.

The Japanese foreman has an important labour management function which hisBritish counterpart lacks.17 He also has a wider span of control (19 workers onaverage in 1980 as against 15 in the BSC in 1979) but he is supported by groupleaders. The respect for age and sensiority embodied in the Confucian values ofJapanese society reinforce the authority of the Japanese foreman. The Britishforeman's authority is based upon power and he has little of that. He is notconsidered a member of the work team. Workers have their shop steward who is,and who can negotiate with management considerably senior to first-linesupervisors and foremen. No management institution better exemplifies theconsequences of British industrial history and the concomittant social stratificationand unionisation than the position of the foreman and the union representatives.Promotion prospects are overwhelmingly determined by the union rule book ratherthan by the unilateral decision of management and therefore there is little possibilitythat the foreman's authority can be bolstered by influence over promotion. Theambiguous position of BSC foreman is reflected in their tendency to become

Dow

nloa

ded

by [

Tuf

ts U

nive

rsity

] at

14:

28 1

2 N

ovem

ber

2014

Foreman-Peck & Hasegawa: British & Japanese Steel Industries 37

members either of the ISTC or of SIMA. By contrast, NSC foreman are not unionmembers. Japan's relatively short industrial history, her cultural heritage of loyaltyand the traumas associated with the Second World War and the reconstruction havenot created the same opportunities for dividing authority as in Britain.18 The 1987Tubemaster Teams and Multi-skilled Craftsmen Agreement at the Corby TubeWorks can be interpreted as both a revision of the British foreman's role and anundermining of the unions' power over management decisions both of which are aconvergence to the Japanese model. Under the agreement there are only two gradesof employees, a team leader and team members. Each team is to be responsible andaccountable for all aspects of its production, including quality, cost, yield andoutput volume. Each team member will undertake any production or maintenancetask. The ISTC staff supervisory occupations will be discontinued and the jobholder will revert to manual grade conditions and the Manual Grade WageStructure. If such agreements become more widespread and effective then perhapsfor Britain this will be the most important instance of convergence.

ConclusionSince the Meiji Restoration, Japanese economic development has been based uponthe selective transplantation of Western institutions and technology. If Westernproduction methods were to be employed effectively, or at all, at least some Westernorganisation had to be adopted; Japan must converge to the pattern of the moreadvanced nations. These institutions have been absorbed so effectively that theyhave come to be seen by the outside world as distinctively Japanese. By the end ofthe 1970s the wheel had turned the full circle. The rest of the world was looking toJapanese institutions and technology to see what was worth copying because theperformance of Japanese industry demonstrated their superiority. The Japanesepost-war miracle had boosted investment embodying the most advancedtechnologies to unprecedented levels and Japanese corporate organisation had beenadjusted to facilitate this process.

When in the late 1970s the British steel industry finally undertook the large-scaleinvestment in modernisation that should have begun fifteen or more years earlier itbecame clear that institutional change was long overdue if the benefits of thatinvestment were to be obtained and the industry was to have a future. In theselection of top management, in the introduction of team work, in the role of theforeman, in union organisation, the British industry has begun converging to thepattern which the genius of the Japanese has found to promote industrial efficiency.

NotesThis paper is based on Dr. Hasegawa's doctoral research and on a joint presentation to the EAJS Conference atDurham in September 1988. The authors have benefited from comments by R. P. Dore, C. G. Hanson andothers.

1. C. Kerr, The Future of Industrial Societies -- Convergence or Continuing Diversity? Harvard U.P., 1983provides a useful survey and classification of convergence theories.

2. A. Cockerill, The Steel Industry -- International Comparisons of Industrial Structure and Performance,Cambridge, U.P., 1974, provides comparative statistical material for the first half of our period. A morerecent source is NEDO, Steel -- The World Market and the U.K. Steel Industry, London, 1986.H. Abromeit, British Steel -- An Industry between the State and the Private Sector, Berg, 1986, details thepolitical and institutional experience of the British Steel Corporation since its inception.

3. Two major reports were published by these missions: 1) The Iron and Steel Industry of Japan. SpecialReport No. 85, 1963; 2) BSC/TUCSICC, Japan. Report of a Joint Visit, 1975.

4. Such evidence supports the thesis of convergence relating to the 'late-development' effect: see R. P.Dore, British Factory -- Japanese Factory. London, Allen & Unwin, 1973.

Dow

nloa

ded

by [

Tuf

ts U

nive

rsity

] at

14:

28 1

2 N

ovem

ber

2014

38 Government and Industry - 3

5. The employee participation on the Board at Head Office as non-executive members began in August1978. But prior to this the Corporation had promoted employee participation in management at the levelof the establishment since nationalisation in 1967 as part of industrial democracy. First Report from theSelect Committee on Nationalised Industries, Session 1977/78, British Steel Corporation, Vol. 11,Minutes of Evidence, 1977, p.11.

6. The Japan Iron & Steel Federation, Statistical Yearbook, 1978, p.224.7. The number of employees in the Japanese iron and steel industry does not include sub-contract workers,

who account for 50.6 per cent on average of the total workforce of the five large-scale corporations.8. A. Silberston, 'Steel in A Mixed Economy', in L. Roll, ed., The Mixed Economy, London, Macmillan

Press, 1982, p.102.

9. Japan Iron & Steel Federation, Iron and Steel Corporations' Education Systems and Rules, 1962, p.3.10. In the 1970s various training programmes were introduced both by the Iron & Steel Industry Training

Board and by BSC, but they were limited to training itself. They were nqt used as part of personnelmanagement as they were in Japanese corporations.

11. Japanese Federation of Iron & Steel Workers' Unions, Report from Central Committee, No. 102, 1987.12. K. Ishida, ed., Gendai Nippon no Tekkô Kigyô Rôdô [Labour in the Iron & Steel Enterprises in

Contemporary Japan]. Minerva Shobô, 1981, pp.211-221.

13. It is interesting to note this manifestation of the 'Olson Effect' even in Japan. See M. Olson, The Rise andDecline of Nations. Yale U.P., 1982.

14. Dore, op. cit., p.345.15. Yûkashôken Hôkokusho [Financial Statements], Nippon Steel Corporation, March 1978.

16. Nippon Steel Corporation (Yawata Works), Yawata Seitetsusho 80-nen shi [The 80-Year History of theYawata Iron Works], 1980, p.15.

17. The breakdown of the job content of foremen is: labour management 16.4 per cent, education andtraining 12.6 per cent, jishûkanri katsudô [self-management activity] 10.4 per cent, work management30.9 per cent, safety management 13.1 per cent, cost control 10.3 per cent, and others 7.5 per cent. JapanIron and Steel Federation, Tekkô no I.E. [I.E. for Iron & Steel], Vol. 11, No. 3, 1973, p.38.

18. On loyalty in Japanese culture, see M. Morishima, Why Has Japan 'Succeeded'? Cambridge U.P., 1982.

Dow

nloa

ded

by [

Tuf

ts U

nive

rsity

] at

14:

28 1

2 N

ovem

ber

2014

Table 1: Outline of Plant and Equipment Modernisation b y the British Ironand Steel Industr y

Investment Crude Steel SteelmakingExpenditure Output Capacity(£ million) (1,000 (million

tonnes tonnes)

Units of Equipment Number ofemployees

Blast Steel Continuous Not Strip Cold Strip (Iron andFurnace Furnace Caster Mill Mill Steelin Use (L.D.) [General])

(thousand)

1960

1965

1970

1975

1980

1985

606

763

459

1,210

2,967

1,515

24,695

27,421

28,291

20,098

11,277

15,722

25.8

32.0

33.4

27.0

28.4

n.a.

85 (188.4)

66(267.1)

56 (316.0)

35 (346.6)

9 (665.5)

11 (950.8)

743 (33.2)

[ 1]

739 (37.1){15]

361 (78.3)[18]

262 (76.7)[20]

112(100.7){16]

53 (296.6)[14]

2

n.a.

11

23*

28

25

3

6

6

6

6

n.a.

11

19

20

25

25

n.a.

326.1

305.0

281.5

240.0

154.2

84.0

Notes:1. Investment Expenditure indicates the total amount in the preceding five years.2. Crude Steel Output indicates the output of the year shown.

Crude Steel Capacity and Units of Equipment indicate the capacity and the number of units at the end of each year.3. ( ) output per furnace in 1,000 tonnes [ ] the number of L.D. converters.4. * the number of continuous casters in 1974.

Sources:1. UK Iron and Steel Statistics Bureau, Annual Statistics, 1960, 67, 70, 75, 78, 80, 85.2. C.S.O., Annual Abstract of Statistics, 1968, 71.3. The Iron and Steel Board, Annual Report, 1960, pp.28, 30.4. The Iron and Steel Board, Development in the Iron and Steel Industry (Special Report, 1964), p.26.5. Fourth Report from the Industry and Trade Committee (Session 1980-81, Volume 11, Effects of BSC's Corporate Plan), p.229.6. The Japan Iron and Steel Federation, Tekko Tokei Yoran (Statistics of Iron and Steel Industry) 1961, 66, 76, 80.7. The Japan Iron and Steel Federation, Tekko Kaiho (Report from the Iron and Steel World) September 1975.8. Iron and Steel Institute of Japan, Nishiyama Kinengijitsu Koza No. 40, 41 (Nishiyama Memorial Lecture), 1976, p.7.

II

1to

III-

Os

U)

Dow

nloa

ded

by [

Tuf

ts U

nive

rsity

] at

14:

28 1

2 N

ovem

ber

2014

Table 2: Outline of Plant and Equipment Modernisation by the Japanese Iron and Steel Industry

Rationalisation Period Investment Crude Steel Crude SteelExpenditure1 Output2 Capacity11

(100 million (million (millionYen) M.T.) M.T.)

Units of Equipment

Blast Basic On. Hot Strip Cold Strip ContinuousFurnace Furnace Mill Mill Casters

Number ofEmployees

Revival Period1946-50

First RationalisationPeriod 1951-55

Second RationalisationPeriod 1956-60

Third RationalisationPeriod0' 1961-65

Third RationalisationPeriod(2) 1966-70

Present Period(1)

1971-75

Present Period'2'1976-80

Present Period'3'1981-85

137

1,282

6,255

10,138

22,426

40,258

40,383

41,337

4.83

9.40

22.13

41.16

93.32

102.31

101.61

103.75

14.17

11.27

27.33

53.25

114.63

152.01

158.72

152.36

37

33

34

49

64

69

65

54

6

7

13

45

83

98

94

85

1

3

7

13

19

23

n.a.

n.a.

2

7

26

48

64

71

n.a.

n.a.

5

40

122

141

154

212,195

304,778

345,665

381,819

474,818

303,317

353,355

Notes:1. Investment Expenditure indicates the total amount of investment used in each rationalisation period based on the statistics made public by the Ministry ofInternational Trade and Industry.2. Crude Steel Output indicates the output of the last year of each period.3. Crude Steel Capacity and Units of Equipment indicate the capacity and the number of units as of December of the last year of each period, except for the RevivalPeriod, which is as of December 1949.Sources:1. The Japan Iron and Steel Federation, Sengo Tekkoshi, 1959, pp.698-9.2. The Ministry of International Trade and Industry, Middle Term Prospect of Private Investment for Equipment, 1973, pp.78-9.3. Economic Council Board, Keizai Yoran, 1977, p.156.4. The Japan Iron and Steel Federation, Statistical Yearbook of Steel, 1961, pp.65, 70, 71, 77, 86.5. The Iron and Steel Institute, Tekkd Seizoho (Vol. 1), 1972, p.696.6. The Ministry of International Trade and Industry, Plan of Investment for Plan Equipment by Major Industries, 1978, pp.78-9.7. The Japan Iron and Steel Federation, Nippon no Tekkogyo, 1979, pp.20-3.

g)Hi-S

1saaa*S 1

g"**>Q

i

Dow

nloa

ded

by [

Tuf

ts U

nive

rsity

] at

14:

28 1

2 N

ovem

ber

2014

Table 3: Comparison of the Workforce Composition of Blast Furnace Work Team at the Kure Works (1983)and the Scunthorpe Works (1984)

Position (Japan)Job (UK)

ForemanGroup LeaderSenior GradeOrdinary AWorkers B

CD

Group LeaderSenior GradeOrdinary AWorkers B

C

ForemanKeeper

1st Helper

2nd Helper

3rd Helper

4th Helper

Stoveminder

Crane Driver

Charging Attendant

Average Age

42464338

443930

30-3545-55(52)

18-55(45)

18-55(38)

18-55(38)

18-55(34)

18-55(38)

18-55(34)

18-55(38)

Average Lengthof Service

24241814

222110

5 (Min.)10 (Min.)

(24)0-10(17)0-10

(9)0-10

(9)0-10

(V)

0-10(9)

0-10(7)

0-10(9)

School Career

High SchoolHigh SchoolHigh SchoolHigh School

High SchoolHigh SchoolHigh School

variousSecondary

Secondary

Secondary

Secondary

Secondary

Secondary

Secondary

Secondary

Salary (Japan)Wage (UK)

373,611 yen323,611278,011253,826

319,859309,194219,341

152.00 (£/week)167.38

149.75

149.75

143.34

143.34

149.75

132.14

154.56

1as-Peck <

<$§3TO

1to

§-'

*&*R

Op

1§•

4--

Notes:1. The age to finish at high school in Japan is 18 years old and secondary school in the UK is 16 years old.

2. ( ) in the Scunthorpe Works shows the actual figures for 1981.

Sources:1. Compiled from data provided by the Kure Works of Nisshin Steel Co. Ltd.2. Compiled from data provided by the Scunthorpe Works of the BSC.

Dow

nloa

ded

by [

Tuf

ts U

nive

rsity

] at

14:

28 1

2 N

ovem

ber

2014