Britain's car parts makers are rolling over the critics: Suppliers of car components are revved up for a global race after adopting Japanese methods and standards. David Bowen reports

THERE is a quotation behind John Neill's desk: 'We are going to win and the industrial West is going to lose. There is nothing you can do about it because the reasons for your failure are within yourself. Your bosses are doing the thinking while the workers wield the screwdriver: you are convinced deep down that this is the right way to run a business.'

The words are those of Masaharu Matsushita, head of the biggest electronics firm in the world, based in Tokyo. Mr Neill is chief executive of Unipart, a maker of car parts based in Oxford. He tells his workers that their job is to prove Mr Matsushita wrong - that the British can manufacture as well as anyone. But only if they copy the Japanese.

According to leaks, Michael Heseltine, President of the Board of Trade, has a report by his own department that is a crushing indictment of UK manufacturing.

Management and product development are weak, productivity is 25 per cent behind German and French levels, and it will be many years before Britain can catch up.

In one respect at least, the document is wrong: the productivity gap can be closed very rapidly, if the will is there. It is already narrowing fast in the motor industry. The long supply chains in the sector mean knowledge can be disseminated quickly.

Since one of the biggest contributors to Britain's trade deficit is the importing of car and motor components, a rapid expansion of home production will have a big impact on the economy.

There is nothing new in the idea of copying the Japanese, and there are few managers who are not familiar with the 'Japanese' concepts of total quality management or just-in-time delivery.

Less well known is that the influx of these techniques in the motor sector has turned suddenly from a trickle into a flood. 'We've only really seen action in the last two years,' said Dan Jones, motor industry professor and co-author of The Machine that Changed the World. He has just carried out a study of component makers that shows British quality and productivity are improving fast, despite still lagging badly behind the Japanese.

More surprisingly, he said that because UK companies had been more exposed to Japanese techniques, 'the French and Germans are several years behind us'. He said that German quality had been 'very overrated'. He believes the proud 'Herr Doctor Engineer' culture that has served the Germans so well in the past may stop them adapting as they now need to.

As Britain emerges from the recession, meanwhile, it will find it has a two-speed manufacturing sector: the companies that have successfully copied the Japanese, and those that have not. The skills, therefore, need to spread to the second group. Without the very direct pressure of top-class (Japanese) companies at the top of the buying chain, this will be difficult. But is it impossible? That depends on UK managers.

While Britain has more Japanese manufacturers than any other EC country, their direct impact has been modest. The Japan External Trade organisation said only 51,700 people worked for Japanese-owned factories in 1992. Most of these were in the consumer electronics sector; until last October, there was only one car maker, Nissan. Yet Nissan, and now Toyota and Honda, are becoming a driving force in British industry by forcing their suppliers to upgrade at a furious rate.

Oxford Automotive Components, Unipart's fuel tank company, has turned itself upside down. When its management bought the company from Rover Group in 1987, Mr Neill said OAC was 'in the third division'. 'We needed to create a major cultural shock,' added David Nicholas, the managing director.

Mr Neill, an incisive marketing man, considered the manufacturing operation could be as good as the marketing side, and decided the way to close the gap was to look to Japan.

He had contacts with Honda, through its Rover link, and also knew Honda's main fuel tank supplier, Yachiyo Kogyo. OAC arranged to send six shop-floor workers to a Yachiyo factory in Japan, where they would learn how to operate a 'cell', or mini-factory that made the fuel tanks. They were taught the basics of Japanese management: decisions should be made at the lowest possible levels; the machine operators should be responsible for their own quality; 'team members' who work in a cell should be able and willing to do each other's jobs. Everything Mr Matsushita said Westerners could not do.

The machines for the cell were then shipped back, fenced off from the rest of the factory, and the six set to work. Soon they were matching Japanese productivity.

At first they were ostracised. Then colleagues became intrigued, and OAC was able to ship in another cell. Now the factory is entirely cellular, a 120- yard mural lines the wall, and morale is tremendous. 'I never used to enjoy coming to work here, but I do now,' said Melvin Thornton, a team member with his first name displayed in bold capitals on the universal company jacket.

Ted Saxton, a former shop steward, also praised the new systems. 'The most exciting thing is that they teach people on the shop floor to think.' Unipart stopped recognising its unions in 1991, and there is little love lost between traditional unionists and supporters of Japanese systems. The TGWU has produced a video, Moving the goal posts, telling shop stewards how to counter teams, quality circles, flexible working and other Japanese-style systems.

Part of Mr Neill's recovery plan was to win orders from the Japanese car factories in Britain. OAC produced a part for a Honda Legend to see if it would impress the company. It did not: Honda's engineers came back with 15 pages of faults. But OAC's engineers persevered. 'On Christmas Day 1988, I got a phone call from the purchasing manager in Japan saying that we would be the supplier for the car Honda was building at Swindon,' said Mr Nicholas. 'I said we had not got there yet. He said: that's not the point, you have the right attitude.'

British companies have been learning that attitude is what the Japanese care about. Toyota, Honda and Nissan do not mind if the quality is not yet good enough, as long as they believe the management wants to get there.

At another Unipart factory, AES at Tipton in the Black Country, 35 workers are running up production, ready to start supplying Toyota with seven parts for its Derby-built Carina E from August. The factory is spotless and is laid out in cells. There are Japanese there, giving minutely detailed instructions on where machines should be sited. 'The attention to detail Toyota expect is absolutely phenomenal,' said Frank Burns, managing director of Premier Exhausts and AES. Even more phenomenal is that some of these helpers have flown in specially from Japan.

This factory shows how fast an old site can be turned into a world beater. Unipart was originally going to share it with another company, which operated in a traditional British clutter of dirt and elderly machinery. It then decided the two cultures would not mix and built a Berlin-style wall between them. Six months after moving in, Unipart's 'sector' is totally in the Japanese style, while across the wall the old ways continue.

Further west, in Worcestershire's Stourport-on-Severn, John Young produces more evidence of the Japanese effect. He is managing director of Acco Cable Controls, part of the FKI Group. His factory does not seem to have undergone a cultural revolution: the wooden roof has a protection order on it, and there is little modern machinery. Only the piles of Nissan boxes give the game away.

Acco's first attempts at producing the quality Nissan needed were not impressive. Then the Japanese explained how production systems should work. Acco adopted them, and in two years of producing clutch cables for the Bluebird, it had only one rejected. It is now supplying several different cables for the Sunderland factory.

When the company was selected for one of Nissan's 'supplier development initiatives', it discovered just how seriously the Japanese take their educational role. Teams from Nissan arrived to work cell by cell through the factory until the culture of 'kaizen', or continuous improvement, had been thoroughly absorbed.

As a result, many Acco workers now make suggestions without being prompted, and the team will implement them without even telling the management. Mr Young acknowledged that 40 to 50 per cent of the workforce, mostly older men, remain sceptical.

Nevertheless, Acco now has between 10 and 50 parts rejected for every million it supplies. Productivity has increased by 35 to 40 per cent, and the company's sales have risen from pounds 6.5m in 1989 to pounds 10m this year.

However well made their products, are these British companies not just workshops putting Japanese designs into production? At the moment, mostly. But the Japanese say they eventually want their suppliers to design for them. Honda has told Unipart that it expects the British firm to take over exhaust pipe and fuel tank design within six years.

For Japanese systems to spread throughout the industry, big suppliers must force them on their own suppliers - the so-called second tier. Acco has reduced the number of its suppliers and works much more closely with those that are left. Mr Young is already seeing improvements. 'Of 85 suppliers, 23 supplied throughout 1992 without a defect,' he said. 'That would have been impossible in the past.'

'Show-and-tell', said Mr Neill. 'That is what it's all about. We might just end up better than the Japanese.'

(Photographs omitted)