Bob Eckert

Sony was anxious to avoid heavy industrialized areas in favor of the more rural setting Rancho Bernardo offers.

If it weren’t for the foreign flag waving next to the American one and the few brightly colored abacuses ornamenting several executive desks, you might not even know that the Sony plant in Rancho Bernardo belongs to the Japanese.

Yet the Sony plant is Japanese-owned. As such, it’s part of a billion-dollar flood of Japanese investment into the U.S. Most of that investment has come within the past few years, with the bulk of it pouring into the West Coast. According to many involved in the buying spree, San Diego soon is likely to move into the forefront of Japanese investment areas.

To date, Japanese money on the West Coast has taken a variety of forms. Investments include everything from manufacturing and distribution centers to recreation facilities, to hotels and apartment complexes to Washington timberland and even race horses.

In San Diego, the most prominently displayed Japanese investments are probably the two downtown banks, Sumitomo Bank and the Bank of Tokyo of California. Besides the banks, Japanese also are gobbling up real estate in San Diego county, and the county already boasts an impressive list of industrial concerns.

The Rancho Bernardo Sony plant leads that list. The plant, which opened just two years ago this July, covers 300,000 square feet of land and includes a color TV assembly plant and a picture tube manufacturing plant. According to assistant plant manager Masayoshi (Mike) Morimoto, Sony took a long look at the entire coast before settling on San Diego.

“We wanted to be on the west coast because it is closest to Japan. But then we did a survey of everything from Seattle down to San Diego before picking this location,” he said.

Morimoto claims that a good part of Sony’s choice of San Diego had to do with the company’s view of its employees.

“We don’t see the people in our plant as factory workers. We try to see them as human beings." In line with this, Sony was anxious to avoid heavy industrialized areas in favor of the more rural setting Rancho Bernardo now offers, Morimoto says.

Kyocera International has occupied its modest-looking Kearny Mesa plant for the past three years. Owned by the Kyoto Ceramic Company of Japan, Kyocera manufactures electronic subcomponents and now employs around 200 people. Kyoto took over the plant from a U.S. electronics manufacturer, and according to Plant Manager Ken Miller, a combination of business, economic, and sociopolitical considerations prompted Kyoto's move to the U.S.

Other Japanese-owned San Diego companies include Napp systems in San Marcos, and the Tamura Company in Sorrento Valley. Napp, which manufactures photo-polymer printing plates, is jointly owned by Nippon Paint of Japan and an American company. Tamura’s Sorrento Valley office is now just a sales and marketing office for the digital clocks which the Japanese company produces. However, Tamura is expected to expand to a larger operation here in the future.

Cabot. Cabot and Forbes, the large developer of industrial parks, now is developing a 340,000-acre industrial park in Carlsbad as part of a joint venture with the Mitsui company. CC&F and Mitsui are working on a similar park in Seattle, but the Carlsbad undertaking is much larger, according to Charles Ekstrom, San Diego regional manager for CC&F. The park won’t be completed for seven years, but Ekstrom says he expects it will bring more Japanese concerns into the area.

For all this activity, Japanese investment in the San Diego area may just be beginning, according to Ross Spalding. Spalding is the area development manager for San Diego Gas and Electric and has been actively interested in Japanese investment for some time now. He explained SDG&E’s interest in Japanese investors.

“My total purpose is to create a healthy economic climate in San Diego... to work to reduce some of the unemployment here. It behooves us (SDG&E) to encourage business,” he said. .

One of the greatest potential sources of new San Diego businesses is Japan, Spalding says. After the Sony plant opening, Spalding began working on ways to contact other Japanese businesses.

He contacted the Sumitomo Bank for advice. As a result, Sumitomo set up meetings with individual businesses in Japan. In February of this year, Spalding, along with a member of the San Diego Economic Development Corporation, made a ten-day trip to Japan, financed by SDG&E. Spalding enthusiastically described the trip’s results.

"We contacted over ninety companies in those ten days over there. The results were pretty much what we had expected. They knew nothing about San Diego. They didn’t even know where it is. But they were extremely interested in what we had to tell them about it."

Since the trip, fourteen Japanese companies have sent representatives to look at San Diego as a possible investment location, according to Spalding.

Of these, “we know we have three or four who we feel will be locating here," Spalding says.

Spalding claims San Diego has a unique set of assets to offer potential Japanese investors.

“The big thing in San Diego, besides the climate, is the labor supply available here. We have high unemployment, but an excellent labor supply of unskilled, semi-skilled and technical workers,” he said.

Mas Okhubo, branch director of the Sumitomo Bank downtown, argues that San Diego has much to offer Japanese investors over the Los Angeles area. He cites the labor force, the climate, the lower cost of living and the availability of cheaper and better industrial- parks as being comparative advantages which San Diego holds over L.A.

"Los Angeles has become very crowded and land costs are high. Many Japanese companies have already moved out of Los Angeles to Irvine,” Okhubo said. He predicts many others will flock to San Diego.

Among Japanese firms already here, the "Japanese-ness” of the businesses varies. At the Sony plant, the rising sun flutters over the main entrance and somber pictures of top executives of Sony of Japan decorate the lobby walls. However, most of the employees are obviously American-looking, and in fact around 98 per cent of the employees are American; only a few top executives are Japanese.

Morimoto notes the heavy degree of American ownership of the company. While the Sony Corporation of America is owned entirely by Sony of Japan, Sony of Japan is a public company, listed on the New York Stock Exchange. Morimoto estimates that Americans hold approximately 50 per cent of these shares.

Sitting in his unpretentious office. Morimoto downplayed differences between Japanese and American business practices.

“Business is business wherever you go. And as far as the workers go, I see no differences between Japanese and American labor productivity. Really people are the same, if you treat them right and treat them fairly," he said.

Morimoto concedes that some cultural differences exist between Japanese and American workers: American workers prefer to have their responsibilities more clearly delineated and also have a higher turnover rate than their Japanese counterparts. However, Sony's response has been to adapt to any cultural differences rather than to import Japanese practices, according to Morimoto.

The exact opposite is the case at the Kyocera plant in Kearny Mesa. Ken Miller, an American, has managed the plant for the past 15 months. Miller subscribes to the view that Japanese and American management philosophies differ markedly. Furthermore. Miller says that Kazuo Inamori, the Japanese president of Kyoto Ceramics, has persistently attempted to infuse his Japanese management philosophy into the San Diego plant, since Kyoto acquired it three years ago.

Miller points to an article on the Kyocera plant which appeared in a Japanese business magazine about a year ago. The magazine describes how Inamori, upon first viewing the San Diego plant decided that it then had “no soul.” In an effort to "turn the soulless ’mechanical’ plant into a living one," Inamori instituted his own distinctly Japanese style of management, according to the article.

Miller described this management philosophy. “Basically it stresses an almost family-like atmosphere. It's really a form of paternalism.”

One of the many Japanese-style practices which the plant has instituted is a plant-wide meeting every day. At this meeting, announcements are made, discussions are held, individuals receive rewards for their work, and so on. The more usual practice at this plant with regard to bonuses, however, is to distribute them equally to all workers. Miller says.

"The Japanese very definitely believe in egalitarianism." he said.

Kyocera explicitly is trying to impart the Japanese philosophy to its employees, the majority of whom are Americans. The company has translated a booklet on the company philosophy and now is distributing it to all its workers.

Miller expresses some qualifications on the importation of the Japanese management style.

“In theory we subscribe to the principles of a Japanese company. In practice we have to be somewhat more pragmatic. We still have to adhere to American law and American customs. So we're striving for a synthesis."

While the degree of Japanese cultural influence upon their local investments may vary, the reception to the investments seems to uniformly positive. Most observers and managers credit the lack of resentment towards the Japanese to the companies' efforts to work with the local community.

"As far as I can tell, they’ve been very welcome.” Spalding of SDG&E said. "They're employing our people. They're buying their component parts here in the United States. If they had imported large numbers of Japanese workers, then I think there might have been some animosity. But they're not."

He added. “The way I look at it, and the way I think most San Diegans are looking at it is that half a cake's definitely better than none."