Sunday, February 06, 2000
'Please come to Ohio'
Governor's plea resonates with Japanese hosts
BY JOHN J. BYCZKOWSKI
The Cincinnati Enquirer
OSAKA, Japan — Ohio Gov. Bob Taft stands in a hotel banquet room 22 stories above the Okawa River, overlooking the lights of the Osaka skyline. He is delivering a variation of his invest-in-Ohio speech for the 10th time in five days, this time to about 80 businessmen.
He delivers the speech tirelessly in his politician's tenor voice, very deliberately, syllable by syllable, so the interpreters can get every word.
The governor mentions his great-grandfather president, and his famous Senate grandfather and father. He notes that President Taft had passed through Japan a half-dozen times nearly a hundred years earlier. And he talks of how the president and his wife had engineered the original exchange of sakura and dogwood trees between Japan and the United States.
In a land where bonsai have been cared for for centuries, such talk of continuity is expected to resonate with the audience. In the Osaka banquet room, where beer flowed from tall brown bottles into small glasses, the businessmen “hmm'd” and “ahh'd” noisily when the governor talked of his family's history. At times the governor's delivery seems — to Americans, at least — stiff and halting, delivered as he hunches over slightly to speak into the low microphones.
Gov. Taft ends his speech, saying, “... So, if you are not doing business in Ohio, zehi Ohio ni kite kudasai.” Please come to Ohio.
The lines to meet the governor were long, and he took time with every single person. He collected decks of business cards as if they were Pokemon characters.
Most of the Ohio trade mission to Japan — 55 people from 31 businesses and organizations — heads home today. Along with business cards and gifts — an ornate samurai mask, a white wind sock in the shape of a carp, and boxes — the governor brings back an amorphous optimism that somehow he made an impression here.
“The way I look at it, the mission's about over but the work is just beginning,” he said Saturday.
“You're plowing the field, you're cultivating, you're planting the seeds, and now you have to care for, you've got to weed, you've got to water. You've got to follow up. And we will be following up with letters, we'll be following up when these companies visit the United States.”
The Cincinnati delegation came here with the names of three companies with which they wanted to talk business — and left with five more.
Columbus landed one small sales office from an auto-parts maker. Findlay says it is working on four expansions of Japanese companies that might come within two years.
The governor also met with a company interested in locating a facility in the poorer Appalachian pockets of southern Ohio.
In a larger sense, the mission came to Japan to build relationships, and get a sense of where the recession-wracked economy here is headed. The most-asked questions: Can the dozens of Japanese companies with Ohio operations afford to expand? If they can, will they do it in Ohio?
“To me, it was important that we try to determine (whether) there (are) opportunities during Bob's first term, the next three or four years, to really make some significant inroads with the Japanese,” said Lee Johnson, the state's director of development. “Is the Japanese economy going to recover very fast? ... The business people will tell you confidentially, they don't think so.”
The country endured its worst recession since World War II from late 1997 to early 1999. The economy shrank 3 percent in 1998, and finally began to grow in the spring and summer of last year. U.S. embassy observers said the economy is expected to grow through the first six months of 2000, but should turn down again in the fall.
But it isn't simply a matter of the Japanese economy turning a corner. It needs wholesale change. Japan has the most rapidly aging population in the industrial world. Combine that with low inflation, low interest rates and uncertainty about the health-care system.
The aging in Japan are saving furiously to pay for uncertain retirements, so consumer spending is stagnating, inhibiting economic growth. The aging of the population also raises questions about where future workers will come from.
In addition, nearly everyone agrees Japan needs to deregulate its industries — financial services, energy, telecommunications, housing and construction, medical services, agriculture — to allow them to grow unfettered and to allow investment of badly needed foreign capital.
But in Japan, government bureaucrats are forced to retire at age 55, after which they spend the rest of their working years employed by the companies they used to regulate. Deregulation would obviously destroy that system, so the people charged with deregulating the system have no incentive to do so.
But change is coming, like it or not.
Five years ago, the top three brokerages in Japan were Japanese. One crashed and burned in the recession, and now two of the top three are American.
An embassy official said Japanese companies with U.S. operations are healthier than those without, and American companies in Japan are doing better than their counterparts.
Why? Better management practices, based more on merit and less on simple seniority, better technology, more powerful on the retail level, and more willing to employ well-educated women.
So, for American companies, “It's the best of markets, it's the worst of markets,” as goes the mantra of one embassy official here.
The Ohio trade mission focused on winning Japanese investment, and the response was a mixed bag. There was a huge emphasis on auto companies and auto-parts suppliers, what with Honda Motor Co. already employing 13,000 in the state; Toyota Motor Corp. with dozens of suppliers in Ohio; DaimlerChrysler exporting Jeeps from Toledo to Japan, and General Motors and Isuzu set to open their diesel-engine joint venture this summer in Dayton.
Japanese companies “probably have less yen to invest than they'd like, so they have to put it where they get the best return,” said Lee Springer, director of international development for Toledo's Regional Growth Partnership.
“And that's not here (in Japan) and it's not the rest of Asia.” The investment pie may be smaller, he said, but the United States — with the strongest economy in the world — might get a larger share.
But the length and might of the current economic expansion is making Japanese companies nervous.
“Throughout, you got the sense they all want to know what we thought about the American economy and how it looks,” Gov. Taft said. “It's an opportunity for us, really, because (the United States) is where their markets are expanding. One company told us 80 percent of their profits are from the U.S.
“They want to know if it's going to keep growing,” he said, and he told them “that I was optimistic about it.”
To convince them to invest in Ohio, the governor had his appeal down pat. Japan and Ohio already have a strong relationship, he said: Japan is Ohio's biggest foreign investor, with 300 companies and $11 billion invested. It is second in the nation in the number of workers employed by Japanese owned firms, with more than 60,000 employed.
Why should they come to Ohio?
The governor's stump speech pushed cultural ties: The state has seven Japanese “Saturday schools” and Japanese programs in 160 high schools. There are three Japan-America societies across the state.
On the business side, he highlighted next year's deregulation of electricity sales, the state's investment in worker training, the technology-based Edison Centers to assist small companies and the professional infrastructure of lawyers, accountants, architects and engineers who are experienced in working with Japanese companies.
Actions speak louder, however, and the governor's gift of 50 dogwoods to Japan last week earned Ohio nationwide publicity. The gift echoed the actions of Mr. Taft's great-grandfather, President Taft, of nearly a century ago. Two of Japan's national newspapers published photos and three TV networks ran film of the governor shoveling dirt on the dogwoods.
Hiroyuki Yoshino, president of Honda Motor Co., met privately with the governor last week and characterized Gov. Taft as “very intelligent, very cooperative, a passion for education.”
Regardless, Honda last year decided to put a new plant in Alabama. Mr. Yoshino said Honda didn't want the new plant to be within 50 or 60 miles of another auto plant, so it wouldn't have to compete for workers.
And such competition is getting stiff.
“That's always the first question we get: What is your unemployment rate?” said Neil Hensley, director of international marketing for the Greater Cincinnati Chamber of Commerce. “It comes down to what kinds of workers they need” and the wage ranges for those occupations.
Gov. Taft has been pushing for a factory to locate in the high unemployment areas of southern Ohio. Mr. Johnson suggested some Japanese companies might prefer to locate there, in part because labor unions aren't strong in Appalachia.
Given the concentration of auto facilities already in Ohio, it's unlikely the state will land another Honda, said Stephen Lake, president of the Dayton Regional Development Alliance. “But there are some fairly big companies out there,” he said. That's evidenced by the
GM-Isuzu joint venture, which will employ 500 when it opens in July, landing in suburban Moraine.
Although the mission carried people from every region of the state, it was no big group hug in the Far East. Cincinnati, Dayton, Columbus and Toledo are competing for the same auto-alley companies.
Fujitec in Lebanon may be a “Cincinnati” company, and Honda may be a “Columbus” company, but if they're expanding, they're fair game for any city in Ohio — or elsewhere.
“We were visiting with one of our companies,” said Sally Jackson of the Greater Columbus Chamber of Commerce. “The president came out and apologized for being late because the people from Cincinnati were in the next room.”
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