From sales companies to local plants in Australia, Britain and the US (1974)

What it cost to get inside the tariff wall

President Imazato Hiroki himself called the four-year-old Australian plant a factory the size of a matchbox. Three hundred thousand units a month, a 3.5% share, accumulated losses. Keep exporting and tariffs and import restrictions eat you; make locally and you cannot get the benefit of scale in a country with a twentieth of Japan’s market — the conditions NSK faced in the late 1960s left pain whichever way it turned. That it nonetheless carried through the judgement to go inside rather than complain about tariffs appears to owe to having watched the import-blocking moves in the United States at first hand.

The cost of this decision, meanwhile, was paid not in equipment but in years. In Australia six foremen were sent to Japan to build a core of skilled staff, yet all six directors remained Japanese, and localisation was left as an unfinished task. In Britain it took more than a decade from the start of the survey in 1971 to arrive at 2.7% staff turnover, a 27% reduction in defects and a recurring margin above 10%. The fact that a decade lies between the decision to build a plant and the point at which that plant earns its keep says something about why this company would later move toward acquiring Britain’s largest manufacturer outright.