OSAKA -- Even as currency headwinds threaten earnings at Japanese exporters, motor maker Nidec expects a record-high net profit this fiscal year thanks partly, and perhaps counterintuitively, to a less hard-driving work ethic.
"Who needs managers who say they can't make a profit because of a strong yen?" a characteristically outspoken Chairman and President Shigenobu Nagamori told reporters Monday.
Consolidated sales for April to September slid 4% on the year, Nidec reported. But group net profit rose 7% to 50.1 billion yen ($480 million), beating the company's forecast by 2 billion yen. Nidec upgraded its profit projection for the full year ending March 2017 by the same amount, to 100 billion yen. It could have gone further if not for the fact that it revised its exchange rate assumption for remaining fiscal half from 105 yen to the dollar to 100 yen.
But Nagamori spent much of Monday's press event explaining how Nidec is earning more by working shorter hours. "There are no more moretsu working for us," he said, using a buzzword once applied with admiration to corporate Japan's most die-hard workaholics.
Punching out overtime
For a year, the company has urged employees to leave work on time. They cannot stay past their regular hours without obtaining permission from a supervisor that morning, and overtime is not approved for unnecessary tasks.
Overtime was slashed 30% without affecting productivity. "Even if there is still work to be done, they tell us to go home when it's past time to punch out," a young research and development staffer said. "That has made us think hard about how to work more efficiently."
Nidec has also shortened meetings starting this fiscal year and given an order to reduce presentation materials, cutting the time needed to prepare them.
Reducing overtime saved about 1 billion yen in costs during the April-September half. Part of this will be redirected to bonuses, training and elsewhere. "Having employees leave work on time and study languages does far more to raise our competitive advantage," Nagamori said.
"We aim to have zero overtime by 2020," he said.
Nagamori founded Nidec in 1973 as a four-man operation in a prefabricated shed. The company long struggled to recruit employees. "Back when we couldn't attract talented employees, we had to rely on hard work," Nagamori said. The founder himself would work 16-hour days throughout the year, taking only the morning of New Year's Day off.
Since then, Nidec has expanded its business through acquisitions into a global group. "Now we take in highly skilled employees," Nagamori said. "Zero overtime is par for the course in Western countries. Times have changed."
Changing how employees work drives them to change how they think. Even procurement reform can be seen in this context. Nidec's cost of sales fell 5% for the April-September half, while selling, general and administrative expenses shrank 17%. This is thanks partly to a shift away from long working hours.
Nidec logs annual sales of more than 1 trillion yen and is shooting for double that figure in 2020. Its ability to balance rapid growth with workplace reforms could serve as a model for Japanese industry.