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2011 December 21 - 2012 January 5 TOP3 [ECONOMY]

‘Profit before safety’ management promoted by JAL chair Inamori (Part 1)

Since Inamori Kazuo, the chairman emeritus of the Kyocera Corporation, became the head of Japan Airlines, his extraordinary “management philosophy”, called “JAL Frontier”, has been promoted in the company. It is the same management strategy as “Kyocera Frontier” that pushes workers into an endless pursuit of profits with emphasis on the profit-comes-first principle and “do-or-die” spirit. This is described by media as a form of “dangerous management led by the ‘Inamori sect’.”

Internal reserves count most

Aviation is a public transportation system that must put the first priority on safety. The Aviation Law, therefore, requires airline companies to recognize carriage safety as the most important condition they have to maintain and to make constant efforts to improve it.

While having such an important public mission, JAL is now forced to operate in accordance with Inamori’s “management philosophy” that there can be no safety without profits.

What he calls “philosophy” is just a simple principle that sales must be maximized and costs must be minimized. Inamori said in his book that he has believed that a tireless effort to increase sales as much as possible and to decrease costs as much as possible will bear fruit in increased profits (“How to make a profitable company”). In Kyocera, after reaching sales of 1 trillion yen, workers are forced to make further efforts under the slogan of achieving 3 trillion yen in sales.

This “management philosophy” is now being promoted at JAL. For instance, a trustee overseeing the carrier’s rehabilitation said in his lecture to employees, “You should set as a target exceeding the 1 trillion yen in internal reserves amassed at Kyocera. Talk about safety only after establishing a sound financial basis.” This is based on Inamori’s idea that “internal reserves are of primary importance” (“Undaunted challenge for future”).

Pursuit of maximization of profits and minimization of costs will bring about exploitative and oppressive working conditions for employees.

For example, a list on fuel savings by flight numbers and by months is posted in the JAL office. This pushed a captain to say to his cabin crew before a departure, “There is a typhoon on our course today. To detour around it would cost an extra 200,000 yen in fuel. To save the cost, we will jump into the typhoon, not avoid it. I must warn you that the aircraft will experience heavy turbulence.”

Disaster is welcome

Safety is not even a secondary concern. The content of Inamori’s lectures is distressing. The year following the Great Hanshin-Awaji Earthquake, which took a toll of over 6,000 lives, he lectured to business administrators in Kobe, saying, “I want to say that any disaster is welcome. It is because the situation could have been worse to make up for your bad karma, and that you are lucky that your damage is small. In my opinion, the major disaster could have been to settle all accounts of the past.”

In the 1985 JAL clash at Mt. Osutaka, 520 lives were lost. After the accident, the captains’ union was established with the vow of securing absolute safety. Because of workers’ earnest efforts to pursue safe aviation, JAL has not had any fatal accidents since the Osutaka one.

However, Inamori denounces these efforts, saying, “Since the Osutaka accident, an atmosphere has emerged in which all business resources should be concentrated on securing safety because passengers’ safety is our mission and making profits is unorthodox. This thinking is upside down.” (Nikkei Business, May 11, 2011 issue)

(To be continued)