Japan blowing new wind into U.K. green industries

Kyodo

Britain’s private and public sectors have been “revolutionized” thanks to practices picked up from Japan’s car manufacturers, but now there is a “new wave” of Japanese investment in green industries, experts say.

While British industry has embraced Toyota and Nissan’s “lean” production techniques, the country is now hoping to become a leader in green technology with help from the Japanese.

Observers note the last few years have seen a big increase in Japanese investment into eco-friendly industries. It follows the first wave of investments into the automobile and electronics sectors back in the 1980s and early 1990s.

Nissan has announced the new Nissan Leaf electric car will be built in its Sunderland factory in the northeast from 2013, and Toyota’s hybrid Auris will be manufactured in the English Midlands.

And continuing the green theme, Mitsubishi Power Systems Europe Ltd. is investing £100 million ($163 million) in a research and development facility in Scotland for a new generation of wind turbines.

Louis Turner, chief executive of the British-based Asia-Pacific Technology Network, said: “I think the mixing of Japanese cutting-edge technology in areas like electrical vehicles and wind turbine technologies, with Britain’s clear determination to develop a lead position in clean technologies, is potentially a second wave of positive impact from Japan on the British system. If the Nissan Leaf works, it is really going to flag Britain as the lead economy in this sort of area.”

Turner, who has just completed a study of Japanese investment, says this second wave has been facilitated with help from the previous Labour government, which had the goal of making Britain a world leader in the development of low-carbon vehicles.

For example, in 2009 the government persuaded Nissan to build a battery facility in northeast England, a move that subsequently ensured the company chose Britain as the location for manufacturing the Leaf.

Turner says Nissan was wooed principally by the government’s program of installing electric car charging points in northeast England to encourage takeup, as well as offering funding for training and test tracks for such vehicles.

Turner says Britain’s automotive sector, which was effectively “saved” by the Japanese in the late 1980s and has somewhat languished over the last few years, is now “steadily moving up the innovation stage” thanks to this development in hybrid and electric cars.

And Mitsubishi’s investment in wind turbines is further evidence that the nature of Japanese investment is changing, away from relatively low value-added jobs that came with the electronics firms in the 1980s.

The Scottish R&D project undertaken by Mitsubishi could lead to mass turbine manufacturing and follows public money to build an offshore test facility. The development is expected to create up to 200 jobs, according to the firm.

As well as the emphasis on green, there is an increasing trend for Japanese companies — like pharmaceutical firm Eisai Co., electronics companies Canon Inc., Panasonic Corp. and the Sony group — to invest in design and R&D facilities in Britain, Turner’s study has found.

This “second wave” of investment may prove to be as significant as the arrival of Japan’s car manufacturers.

Nissan and Toyota brought with them the concept of “lean production” that has become a widely used strategy in both the private and public sector, according to management guru Dan Jones, who advises firms on “lean.”

Indeed, both Jones and Turner believe the introduction of the lean method is probably the most important legacy of Japan’s 40-year history of investment in Britain and, along with deregulation, formed one of the key pillars of industrial policy.

The lean method, which tries to optimize the production flow by synchronizing different processes and removing wasteful bottlenecks, was first introduced to Britain by Nissan in 1987.

The practice then spread throughout industry with other manufacturers employing the principles.

“You could say the manufacturing companies which survived the huge cull, survived because they did ‘lean,’ ” Jones said.

Now everybody from supermarkets, banks, tax offices and even the National Health Service, use “lean.”

Jones said, “There’s no doubt that Japanese companies have played a role (in introducing ‘lean’ to Britain), but it was the Brits who learned from them that have had more of a role in disseminating it.”