The huge Zama assembly plant no longer churns out cars for Nissan Motor Co. Nowadays, the once-deserted factory bustles with shoppers, not workers. They are flocking to a California-style building bordered by palm trees, the site of Carest, a Nissan-owned used-car lot.
Inside the auto mall, yellow and orange banners hang from the ceilings. Visitors search aisles filled with parts and accessories. Some visit a food stand, while others inspect a display of new Nissan models or test-drive vehicles on an 800-meter road course. It is an odd new life for an obsolete assembly plant, but it is popular with consumers. More than 425,000 people have visited the store since it opened in December. Nissan is so happy with the results that it is considering similar large-scale auto malls at several dozen locations in Japan.
But Nissan's experiment highlights a new and unsettling problem for Japan's city planners: What does one do with an empty factory? For Nissan, the sale of plants is a new and unpleasant experience. When the company closed its Zama plant in 1995, the land never was sold and no workers were laid off.
But in the wake of Nissan's merger with Renault SA, things will be handled differently. Under pressure from Renault, Nissan plans to close five plants. The closures will reduce Nissan's annual capacity in Japan by 30 percent to 1.6 million vehicles. With Renault's help, Nissan has decreased its debt from ¥2.1 trillion, or $19.9 billion, to $12.3 billion. But it still is losing money. In fact, Nissan has lost money in six of the past seven years.
Nissan's French partner views the plants, land and machinery purely as assets. All of the plants will be sold and Nissan is talking to prospective buyers. The Nissan plant at Musashi-Murayama City will be among the first of the five to close next year. But one Nissan tradition will not change - no Japanese workers will be laid off.
'We need to make the best of closing the plants,' said Gerry Spahn, Nissan's manager of investor relations. 'The problem with our manufacturing is that we have too many buildings, brick and mortar. It's not that we have too many workers.'
Nissan has offered transfers or early retirements to more than 2,400 employees at Murayama. Nissan has expanded its early retirement program to include those as young as 30 years old. The employees will go to other Nissan sites such as the Oppama and the Tochigi plants. 'As a result, 99 percent of our employee situation has been resolved,' Spahn said. 'Our problem has always been overcapacity, not labor.'
That is small consolation to residents of Musashi-Murayama, who are fearful about their future. Workers will leave, and local businesses will suffer. To attract a buyer for Nissan's property, the city has promised to be flexible on zoning regulations. 'Right now, I'm standing on a cliff,' said a worried Takehisa Hiruma, director of financial planning for the city government.
Given the city's small population of 67,000, small-business owners fear economic stagnation. Kumada Toshihisa, a real estate agent in Musashi-Murayama who deals with many of the Nissan workers, said two-thirds of them will leave the city to find other work. 'Most of the workers who will move will have to sell their homes,' Kumada said. 'The problem is the market is very soft, so they will lose money. If they stay, they won't have a job, which could lead to bankruptcy.'
Another agent, Kyoko Suzuki, said many workers already have left and there is no one to replace them. Many landlords have a lot of empty space to rent. The schools will have fewer students, too. 'The city's income will definitely decrease for the city,' Suzuki said. She said it is sad, but she accepts it. Other residents also 'mourn the loss of their identity,' Hiruma added. 'Our city was known because of Nissan. A big part of our city was geared toward Nissan.'
Small business suffers
It could be worse. Despite the shutdown, the city does not expect big losses from taxes, Hiruma said. Nissan is losing money, so the city does not get any taxes from profits. The decrease in real estate taxes will be picked up by the buyer of the land. The city also is willing to ease zoning restrictions to suit prospective buyers. And Nissan has promised to take care of its subcontractors, who will work for the Oppama and Tochigi plants. The automaker has offered special loans to subcontractors, Hiruma said.
But small businesses that depend on Nissan employees for business face a bleak future. 'It's sad and we have been damaged a lot,' said Hikaru Oki, a young taxi driver. 'I won't have the clients from the plant who go to restaurants and drinking anymore. It's the service industries that will suffer. The supermarket and the small shops near the plant will go out of business We won't speak up about it because it's already a done deal. Everyone is pretty calm about it.'
Such an attitude reveals a big change in Japanese attitudes in the past few years. When Nissan announced the closing of its Zama plant in 1995, newspapers placed the news in big front-page headlines. For more than 30 years, Zama had been known as a 'Nissan town.' Located 80 kilometers west of Tokyo, Zama had suffered the first plant shutdown by a Japanese automaker since World War II. It was a painful process. Some called it 'a melancholy page in Japanese industrial history.' Others said Zama's sprawling auto assembly plant once was a point of pride and a symbol of Japan's postwar economic miracle. But now it only 'epitomized the woes of Japan, struggling to pull out of its worst postwar slump.'
Because Nissan has stuck to the Japanese tradition of not firing anyone, there were not too many who mourned the end of the car assembly operation.
Nissan's labor union and the Zama city government had demanded that Nissan not lay off any workers. Worried about its public image, Nissan complied. Former plant workers found jobs either in the more modern factories where Nissan is consolidating assembly or in component production around Tokyo. Five hundred employees who were unable to move got new jobs making dies and tools.
Nissan did not sell its Zama property. This forced the company to consider unconventional uses. Carest (the name is derived from 'car' plus the superlative 'est') is a massive car dealership that sits on the far end of the plant. Nissan sells new and used vehicles, parts, accessories and maintenance service. Nissan calls Carest a success. In the first six months of its operations, the lot has sold 2,500 used cars and 360 new cars.
'We are the first of its kind in Japan,' said Akira Takebayashi, director of the sales division. 'We have gone way beyond our expectations.'
Other areas of the former plant also are put to use. Behind Carest, Nissan holds car auctions in front of a beautiful new building. Next to that is Vantec Corp., Nissan's transport affiliate. In the big, gray buildings of Area 3, which once were used to assemble cars, tools are made. On the far side of the plant, Ford cars await inspection as they come off the ship into Japan.
Because of Nissan's efforts to use the former plant, Zama's shutdown was not nearly as traumatic as it could have been. 'The overall effect was minimal,' said Jun Yagi, a spokesman for Zama's city hall. 'At first, the closing surprised us, and our citizens were worried,' Yagi said. 'We didn't have enough information, and Nissan didn't disclose it to us. We then demanded they do, so we could calm down our citizens. The media printed the latest developments in the papers every day. We were worried because we thought our income would decrease with Nissan's closure. But from a tax viewpoint, we weren't affected that much.'
In fact, the city of Zama has shown its resilience. In the past 15 years, it has lost a rubber factory and a steel pipe plant. It also lost another important industrial company - a producer of refractory brick - at the same time the Zama plant closed down. After Zama closed, the city's largest employer was a Toshiba machine tool plant, followed by a Fanuc robot factory.
New businesses have grown to replace the old. The city shelters a growing population of small software businesses. Unemployment stays low partly because former factory workers found jobs in service industries. Today, more than half of the city's workers ride the trains to office jobs in central Tokyo. Zama's population has increased from 116,00 to 126,000, according to City Hall.
Sell or hold?
With the growth of the service sector - plus Nissan's thriving used-car lot - Zama is holding its own. But would Nissan be better off if it had sold the property? The automaker had good reason to hold onto Zama, notes Steven Usher, a senior analyst for Jardine Fleming Securities (Asia) Ltd. 'The Japanese economy was sluggish; the yen was too high; and the land prices were low at that time.' But was it a good move? 'I have mixed emotions about it,' Usher said. 'At the time, the sale of Zama would have been positive, but in retrospect, they would get a better price for it today.'
Usher suspects Nissan's decision not to sell Zama was cultural, not financial.
'Japanese management has historically been reluctant to surrender land holdings,' Usher said. 'There's a finality about parting with assets. (The sale of property) says to them that this is the end. No Nissan plants will ever be open here again.'
You can e-mail free-lance writer Catherine Makino at [email protected]