Japan Press Weekly

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2024 March 13 - 19 [ECONOMY]

Nissan bullied subcontractors by reducing its payments by more than 3 billion yen

Akahata editorial (excerpts)

It was recently revealed that Nissan Motor Co. illegally reduced its payments to many subcontractors by more than three billion yen in total between January 2021 and April 2023.

Nissan on March 7 received a notification from the Fair Trade Commission for the company’s violation of the Subcontract Act. Nissan said it already returned the amount due to the subcontractors, but this is not a solution to the problem.

Nissan, as a means of cost savings, has long coerced its subcontractors to accept underpayments. It is easy to imagine that the subcontractors accepted the reduction for fear that Nissan would terminate its business relationship with them. This is nothing but subcontractor bullying, taking advantage of Nissan’s superior position.

While Nissan makes huge profits thanks to the depreciation of the yen, many subcontractors are unable to pass on the cost increases, due to the rise in raw material and labor costs, to their product prices. According to the Small and Medium Enterprise Agency, subcontractors that cannot raise the prices of their products account for 54.3% of the total.

Automobile manufacturing requires a huge number of materials, parts, and components. Under a multi-layered pyramidal structure which is comprised of groups of subcontractors with automakers like Nissan on the top, it is almost impossible for subcontractors to ask for a review or to accuse automakers of unfair trade practices.

The Act on the Promotion of Subcontracting Small and Medium-sized Enterprises stipulates that unit prices shall be set through “consultation” between the large company and the subcontractor so that the unit price can include a “reasonable profit margin” for the subcontractor which can in turn help the subcontractor improve its working conditions.

To make this law effective is the responsibility of government.