What are the effects of the globalization of Japanese firms on the domestic labor market, particularly on the employment structure and human resources management (HRM) practices of affected companies, focusing on the Japanese motor vehicle industry?

This paper attempts to determine the logical outcome or the implications of the increasing trend in cross-border activities of Japanese auto-makers on the structure and HRM practices of concerned companies.  Labor flexibility measures are being adopted by firms to enable their labor component to cope with the demands of the industry’s globalized operations.

It also outlines the Japanese motor vehicle industry’s structure in terms of trends in domestic and overseas output and demand, foreign direct investment outflows, and employment.  At the same time, it highlights the emerging employment issues attendant to the globalization of the Japanese motor vehicle industry.

To realize its objectives, the study cites three cases of key players in the Japanese automation industry – a major auto-maker, a primary parts supplier, and a second-tier parts maker.  The study notes that all these players adopted similar strategies in cutting the fat, so to speak, in their respective mainstream operations.  They restored to labor flexibility, as well as a flexible wage system, to cope with the fluctuating demands for their products.

Consequently, these players managed to prevent or even minimized retrenching or laying off their respective personnel by reassigning redundant workers to other departments such as sales, which often entails physical relocation.  Larger and more institutionalized firm, like Honda, managed to institute a system where employees, who found themselves doing nothing, opted to leave the company by availing of the company-sponsored “re-skilling training” to allow them to freely pursue their careers in other companies, supplemented by an attractive financial support package.