Oral-History:Shoichi Saba

About Shoichi Saba

Shoichi Saba is an electrical engineer who began his career as an engineer at Toshiba and eventually became president and chief executive. He received a bachelors' degree in electrical engineering at the University of Tokyo in 1941, and wrote his thesis on the behavior of the arc generated by switching. He served in the Japanese Army Air Force during the war, teaching cadets about wireless communication. After the war he worked at Toshiba, beginning in the high voltage laboratory and then moving to the Toshiba Headquarters' electric power engineering department where he worked on a variety of power systems projects. In 1970 he was director and general manager of the heavy apparatus division, and worked his way up to Toshiba's president/chief executive position.

The interview begins with his early interests and his education at the University of Tokyo, with some discussion of the electrical engineering curriculum at the university. Saba discusses his brief career at Toshiba before the war, and discusses his wartime teaching for the Army Air Corps, mentioning the access he had to American books and magazines. He discusses his work at Toshiba on various power systems projects. He downplays his rate of promotion at Toshiba, focusing rather on his flexibility and his ability to enjoy the various job assignments he encountered. He discusses Toshiba's European, North American, and Japanese competitors in power systems products and discusses the issues involved in Toshiba's exporting of power systems products. He analyzes Toshiba's success in terms of management and investment, stressing the Japanese tendency to invest in companies' futures (i.e. in R&D and in facilities) rather than focusing on stockholders' profits. He discusses several important decisions he made as chief executive, including the decision to invest in semiconductors and the decision to withdraw from mainframe computer manufacturing; he also discusses the changing patterns of Toshiba's R&D investments, noting their growing emphasis on electric products. He describes Toshiba's internationalization efforts, noting Toshiba's early emphasis on exporting and their more recent push towards overseas production and R&D. The interview concludes with a discussion of cultural and economic differences involved in doing business with Japanese, American, and European companies.

About the Interview

SHOICHI SABA: An Interview Conducted by William Aspray, Center for the History of Electrical Engineering, 26 May 1994

Interview # 213 for the Center for the History of Electrical Engineering, The Institute of Electrical and Electronics Engineers, Inc.

Copyright Statement

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Request for permission to quote for publication should be addressed to the IEEE History Center Oral History Program, 39 Union Street, New Brunswick, NJ 08901-8538 USA. It should include identification of the specific passages to be quoted, anticipated use of the passages, and identification of the user.

It is recommended that this oral history be cited as follows:

Shoichi Saba, an oral history conducted in 1994 by William Aspray, IEEE History Center, New Brunswick, NJ, USA.

Interview

Interview: Shoichi Saba

Interviewer: William Aspray

Date: 26 May 1994

Place: Tokyo, Headquarters of Toshiba

Family Background and Childhood

Aspray:

I had hoped today we could first go chronologically through your career and then ask some more general questions if there is time at the end. Could you please tell me when and where you were born, and what your parents did?

Saba:

I was born in Tokyo and grew up here. I was educated in Tokyo, and I now work in Tokyo. I have been in Tokyo all my life.

Aspray:

I see.

Saba:

Only except for one year, between 1956 and 1957, and I was stationed in Schenectady, New York as a young engineer from Toshiba, representing Toshiba to General Electric in Schenectady. At that time Toshiba Corporation had a very wide-range licensing agreement with General Electric, and naturally there were many inquiries from our design department, whenever they received a document or drawings. Toshiba needed a liaison engineer to receive a response from GE, or sometimes needed to have him inspect the shop floors, and so forth. Except for that one year I have been all my life in Tokyo. I was born in 1919 as a son of a Presbyterian minister, and my grandfather, the father of my mother, was a minister too. Incidentally, he received a D.D., Doctor of Divinity, from Rutgers University.

Aspray:

Oh!

Saba:

It is interesting that when he received that degree from Rutgers University, there was another person in the area. He was Thomas Alva Edison. That was very interesting.

Aspray:

Were you interested in science and engineering kinds of things as a boy? Did you have hobbies that were in this line?

Saba:

No, I did not have a special interest in science and engineering. However, I certainly had an interest in constructing models, the toys called, at that time, Mechano.

Aspray:

Yes.

Saba:

It consisted of a perforated board and perforated plate and small nuts, and I did like to make things from that. I liked to devise using such component materials. Sometimes I had an interest in very primitive chemical experiments.

Aspray:

I see. Were you a good student, when you were a child?

Saba:

I think so. I studied very hard. I also played hard.

Aspray:

Yes. Did you show a particular aptitude in mathematics or sciences?

Saba:

Yes. I think I was good in mathematics, arithmetic and so on.

Aspray:

What did you want to be when you grew up?

Saba:

In my junior high school at the age of thirteen to fifteen, I benefited by having very good science teachers. They made us interested in observation of nature. Also in senior high school we had very good teachers to discuss what science is about, what value science has, and so forth. By and by, I came to have an interest in science. In my school days, in high school, I belonged to the meteorology club and often made meteorological observations.

University of Tokyo

Aspray:

How did you choose to go to the University of Tokyo and choose electrical engineering as your course of study?

Saba:

Fortunately almost all the graduates of my high school entered Tokyo University, maybe ninety percent. What made me select electrical engineering to study at the university was that for me electricity was a very strange thing, and I could not understand what electricity was, for instance, why friction could generate electricity. Also I could not understand why the electromagnetic wave can propagate. There were so many things I could not understand concerning electricity. In other kinds of engineering, such as mechanical engineering, we can see the mechanical structures, but we cannot see electricity. There is no substance. That gave me an interest in electricity. Even now, I cannot understand it! There are many things that I cannot understand.

Aspray:

What was the course of study like? What was the emphasis?

Saba:

I graduated from the university in the end of 1941, just before the war. There were no semiconductors, of course. In our whole education in electrical engineering at Tokyo University, there was no electronics engineering like we have today at that time. We had lectures on alternating current theories, circuit theories, telegraph and telephone communication, some high frequency engineering, mostly on vacuum tubes, high voltage engineering, electric power transmission, and so on. Compared with the present education in electrical engineering, the field of electronics was rather smaller than other parts like fundamentals of electricity, magnetism, current circuit theories, other power industries, and the field of power engineering.

Aspray:

Were there particular members of the faculty who had a strong influence on your career?

Saba:

When you say faculty, do you mean in the electrical engineering department?

Aspray:

Not necessarily.

Saba:

I also had some interest in industrial economics, and also I had an interest in — not in the faculty, but I had an interest in English as a foreign language. Of course, especially we looked up to the faculty of engineering which was the most influential faculty on the student. The lectures started early, as early as eight o'clock in the morning every day, and sometimes we had lectures as late as four o'clock until six o'clock in the afternoon. We had experiment courses in the afternoon. All of the professors in electrical engineering were so diligent, such hard workers. So we could not find the time to sneak out of the lectures.

Aspray:

How did you do in college?

Saba:

I did rather well. I would not say superior, but I did well.

Aspray:

When you graduated in 1941, how did the coming war affect your career decisions?

Saba:

In 1941, I was an undergraduate of the university, which was the last year in the undergraduate course. At that time we had the program to do apprentice work in the summer vacation. It was a mandatory program, and all of the students had to find some apprentice job in a factory or laboratory. In July and August 1941, I worked in the government's Electrotechnical Laboratory. What I did was observe the ionosphere by utilizing the electromagnetic wave pulse. It was called “Vertical incident method.” If you send a pulse to the ionosphere and receive a reflected wave, you can measure the height of the ionosphere. That was what I did during my summer vacation. In the summer of 1941 there was a solar eclipse across China and Taiwan, so the Japanese government sent groups to those areas to observe the behavior of the ionosphere under the eclipse. I was sent to Taipei by the ministry of education, under which there was the “Electromagnetic wave physics laboratory.” I was employed as a temporary member of that laboratory though I was still a student. Students could not go abroad at that time because of the tension in the pacific regime.

During my stay in Taipei, all of a sudden, our school year was shortened because of the war, although we didn't have the slightest idea that the war will come about. I was called back by my professor by a letter stating that, "Your school year is going to be shortened. You will be graduated at the end of December, instead of March." So I hastened back to Tokyo after making eclipse observations, on September 21st. We were obligated to submit a thesis for graduation, and my theme was concerning the behavior of the arc generated by switching. With the electromagnetic contact switch, there is a very interesting behavior of the arc when the contact separates under a magnetic field. The magnetic field will drive the arc and make interruptions.

Aspray:

Yes.

Saba:

At the very initial stage the arc doesn't move instantaneously, it makes a little stagnancy. That is very interesting, and I made an experiment on that phenomenon and wrote a paper.

Aspray:

I see.

Beginnings at Toshiba

Saba:

Then, I was recommended by my professor to Toshiba after graduation.

Aspray:

Why Toshiba? Do you know?

Saba:

No. I intended to work in a heavy apparatus manufacturer, in design or development. At that time the number of students in engineering was small compared with today, and also the war had just started, so the government decided which and how many engineers to allocate to the corporations. As far as I remember, Toshiba was entitled to employ electrical engineers from Tokyo University, and I was recommended by my professor to Toshiba.

Aspray:

Were you happy about that?

Saba:

Yes, of course. There were some service people who were very intimate friends of my father, and I knew them. Also my uncle, who died just a few years after I was born, was an engineer of the company.

Aspray:

What were your first assignments at Toshiba?

Saba:

I was assigned to the high voltage laboratory. At that time, Toshiba consisted of two branch companies. One was the Mazda branch, which covered home appliances and communications, manufacturing incandescent lamps and so forth. The other one was called the Shibara branch. It majored in heavy apparatus; like power generators, motors, transformers, rectifiers, and so on. The high voltage laboratory to which I was assigned was of the Shibaura branch.

War and the Army Air Force

Aspray:

Was the work in that laboratory shaped by the war effort in any extent? Did the war cause the research and development program in that laboratory to be changed?

Saba:

Of course the war made the work in the laboratory very difficult, but I was only one month in the high voltage research lab after graduation, because I was called to army service in February. I joined the company in January 8th, and was called to the army on February 1st, so I was in the laboratory only twenty days.

Aspray:

I see.

Saba:

However, I was very interested in high voltage labs at that time. There was one of the highest voltage impulse generators at that time in Japan. It was still under construction, and it was really just for me to participate in the construction. During the war, I was serving as an engineering officer in army air force academy to educate cadets on wireless communication.

Aspray:

I see.

Saba:

However, wireless engineering was a little unfamiliar to me, because I intended to study in high voltage work. So I studied very hard. I studied vacuum tube theories, transmitters, and receiving circuits, etc. For three years I made a very hard study of wireless communication. I wrote a textbook for cadets because there were no good textbooks. That gave me a very good experience and also a very good opportunity to study wireless engineering, vacuum tubes, and various other things. It was very useful after the war for me. In this school, there was a well-equipped library, not only military books, but also educational material. There were many books in English literature, and other foreign languages. So I spent a lot of time reading them. That gave me a good opportunity to study foreign languages. So this wartime experience was very fruitful for me in my later life.

Aspray:

You continued to do this until the end of the war?

Saba:

Oh, yes. The air force academy was located near Tokyo, so I never left Tokyo, even during wartime, fortunately.

Aspray:

I see.

Postwar Hardship & Creativity at Toshiba

Saba:

After the war, I returned to Toshiba. The company had been bombed, and there was much damage in the factory. After the war we could not find what we could do, what we could manufacture. Nobody knew the way. What we did in the high voltage laboratory, the first time after the war, was to make salt from seawater because our laboratory was located just inside the seawall. Seawater was just outside the laboratory, and there was electricity available to us in the laboratory. So we put the seawater in wood containers and put carbon electrodes in it. And bravely enough we connected 3300V AC directly to these electrodes. After a day, we could get a considerable amount of salt from the seawaters. We supplied the salt to the factory managers. Maybe they distributed it to the employees, or exchanged it for something else. At that time Japanese industry had completely collapsed and there was not much demand for electricity. There was a surplus of electricity supply for a little while; when we reflect that was a very strange thing.

Aspray:

Yes.

Saba:

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For maybe several months after the war, there was nothing to do other than that. So I read books. There were many English paperbacks released from the U.S. army stationed in Japan, and I bought such used books. The paperbacks for the U.S. army were not like today's paperbacks. They had long horizontal bindings.

Anyway, it was a very interesting period. Sometime after that I found, in a shack on the roof of the laboratory, many vacuum tubes left by the Japanese Navy. The Navy had conducted some experiments on Radar using these tubes, during wartime. They left various kinds of vacuum tubes there. In the meantime, there was a library in Tokyo open to the public operated by the US Army. There were so many American books and magazines available for people. Naturally there were engineering magazines, such as Electrical Engineering and IRE Proceedings. A few days every week I commuted to this library and studied books and magazines. As there was no such opportunity to see those periodicals during the war, they all were fresh and attractive to my eyes.

There was a beautiful magazine titled Modern Plastics. Plastics was quite a new material, and when I read that magazine, I found there were some people in the U.S. utilizing high frequency to manufacture plastic. It was called "pre-heating of the tablet," for plastic molding. That is an application of dielectric heating, utilizing a high frequency field. It was so interesting for me, I wondered whether we could use the vacuum tubes in our own laboratory. Then I applied my knowledge about wireless engineering, which I had studied during wartime. Then, I constructed the oscillator with the remaining vacuum tubes and started experiments on the dielectric heating. Probably that was the original work on the microwave oven we have today.

I made many experiments on high frequency heating, for drying plywood, the clay for ceramics, some food, and so on. Parts and components for the experiment were obtained from shops that handled such materials released from the US Army. We also had to construct our own laboratory rooms and do the carpentry work ourselves. That high frequency application, the dielectric heating, continued for one or two years.

Then our original work in high voltage restarted. The program that we had at that time in the power industry was how to keep our power system stable, how to minimize interruptions. The lightning arrestor was a very important component in power transmission in connection. How to protect transmission lines from lightning was important. Another important task was how to recover the transmission as quick as possible after the occurrence of a fault. One thing needed was to find the fault point of the transmission line at the instant of the fault. When the circuit breaker was opened by line fault, we wanted to detect where that lightning fault happened, because in almost all cases there was some damage of insulators that would make reclosure impossible. To keep the electricity supply continuous, we needed to find that fault.

Then I found one paper in the Electrical Engineering (Transactions of the American Institute of Electrical Engineers) written by engineers of BPA (Bonneville Power Administration) called "Transmission Line Fault Locators." The idea was to send a high voltage pulse to the transmission line and receive the reflection from the fault point. By measuring the time between sending and receiving, we could know the distance. Then it came to my brain that the technology I needed was exactly what I made as an undergraduate to measure the ionosphere, the same technology. So I constructed a pulse generator-receiver set for experiment. The essential thing to success was that the measurement should be finished within a very short time, within only a hertz between open and reclose switching time. That was an inter-disciplinary work in high voltage and high frequency technology. Later, it became a commercial product of Toshiba.

Aspray:

Was it widely applied?

Saba:

Yes, and I believe that it was sold by Toshiba to some other countries too. Of course, it became much more modernized with modern technologies later.

Engineering Dept. & Power Engineering

Aspray:

Did you continue to work in that laboratory?

Saba:

No. Fortunately or unfortunately, I was moved. I was ordered to move from the laboratory to the “engineering department” in the company’s headquarters. The “engineering department” in Toshiba was a very unique organization at that time. It was a combination of application engineers, system engineers, and sales engineers. The engineering department of Toshiba was something like a go-between for clients and company’s designing department on the laboratory. It is to translate client demand into company’s technology and to discuss with designing engineers in order to manufacture the product in line with client’s specification. We also have to make presentations on our technology to the clients. It was very interesting for me. I belonged to the electric power-engineering department.

Then I was sent to General Electric, in 1956-1957, and I found the application of computers in utility industries was just starting. Of course it was a very primitive application. My particular interest at that time was power system control. Around 1955, we started automatic frequency control of a power station. In Japan the power industry needed a very high quality supply of electricity, which meant a very stable frequency, and voltage to supply. That needed several engineering technologies: automatic frequency control, automatic voltage control, reactive power control, and so on. What interested me also at that time was economical power allocation.

Aspray:

Dispatch?

Saba:

Dispatching. EDC: economical dispatching control. We used analog circuits to have this economical dispatching. In the United States economical dispatching was mostly for some thermal power stations because you don't have many hydropower stations, and economical allocation in hydropower stations is very difficult compared with thermal power stations. A few years later we made our own economical dispatching control equipment for power systems, including hydropower stations, together with thermal stations. In the course of time there were development of computers. There were two kinds of computers. One was the business computer, the other the process computers. General Electric was manufacturing those two kinds at that time. I studied the process computer they made, and we introduced that technology from General Electric. We applied the process computer in power dispatching. Those were the kinds of things I did in my young days as an engineer.

Aspray:

What happened next in your career?

Saba:

I was assigned as a manager of the power engineering department, then promoted to chief engineer, and then promoted to division manager.

Aspray:

How did you like being a manager?

Saba:

I found interest in whatever I did.

Aspray:

You found something challenging and interesting.

Saba:

Yes. Always.

Aspray:

Do you want to talk about some of the chief problems you confronted as a manager? What do you think were your chief contributions?

Saba:

As a general manager of the power engineering department I made a little organizational change and also strengthened the power system engineering side. Before that, power engineering was focused on the power generating plant and the sub-station equipment. I strengthened the power system engineering, the system control, and system protection.

Heavy Apparatus Division and Intl. Trade

Aspray:

Yes. You were director and general manager of the heavy apparatus division as of 1970. What were the business issues of that division?

Saba:

To me, they were to foster the competitiveness of our technologies, our products, in the international market. Around the 1960s, as I mentioned power engineering was mostly based on licensed technologies from the United States or European countries. We needed to export our power equipment to other countries because there was a great demand. The first experience in exporting our product was transformers to India, seven thousand KVA transformers. That was my first experience. Having very few export experiences, it was very difficult to explore the overseas market, especially in high tech products.

Aspray:

Was it the political environment?

Saba:

No, no.

Aspray:

Or the technical issues?

Saba:

Not technical issues, but commercial technique. For instance, reading and writing specifications was difficult for us, even though we had a superb product. It was a very difficult and important task how to convey information to the foreign client.

We had to make our product comply with other countries' standards. India insists on British standards, BSI. The United States was sticking to the ANSI (ASA) standards, and so forth. So we had to study the foreign countries' standards, we had to make our designs to comply with them.

Aspray:

It seems that there were some well established competitors in both Europe and the United States.

Saba:

Of course, there were so many. General Electric, and Westinghouse, and Allis Chalmers, were so strong in the United States. In Europe there were Brown Boveri, Siemens, British Thomson-Houston, English Electric, and so forth. So many.

Aspray:

Did you have a particular business strategy for trying to compete with these companies?

Saba:

We didn't have a particular strategy, we just had to compete with them.

Aspray:

I see. You just go one at a time after each piece of business.

Saba:

Right. We started with substation equipment like transformers, then we went to hydro-electric power plants, water-wheel turbines and generators, and control equipment. Then we moved to thermal power station equipment. We also exported railway equipment, rolling stocks.

Aspray:

Did you have much success in Europe and North America?

Saba:

No. It was almost impossible at that time to penetrate European countries. They had very strong walls to protect their market. Of all the Western countries by and by we have succeeded in exporting our transformers and generators to Australia, Canada, and some to the United States; also, Asian countries. But the European continent is almost impossible to penetrate.

Aspray:

Was the bulk of your business still in Japan, however?

Saba:

Of course, yes.

Aspray:

Did you have Japanese competitors?

Saba:

Oh, certainly, yes. In the power industry we had strong competition from Hitachi, Mitsubishi Electric, Mitsubishi Heavy Industries.

Toshiba Presidency and Semiconductors

Aspray:

At some point, I guess 1980, you moved into a position where you were not only responsible for the heavy side of things, but also for a wider range of activities. How did you handle that?

Saba:

I didn't have any difficulty studying or understanding computers because I used to use computers for power control, system control. The computer was very familiar to me, and home appliances were not so difficult to understand.

Aspray:

But certainly they are very different businesses to succeed at, and they are both highly competitive, aren't they?

Saba:

Of course, the sales of home appliances are quite different from power equipment, but I didn't personally sell the home appliances. I studied and understood the mechanism of retailing and distributing of the home appliances. I had a talk with the retailers and distributors.

Aspray:

What was the hardest thing about doing that work?

Saba:

I am a very flexible man. I could understand, adapt to any position.

Aspray:

What were the chief challenges of the job?

Saba:

The challenges? Let's see — during my days as president of the company, one of the most challenging things and the most difficult to decide was the investment in semiconductors. That was a very difficult decision I made. At that time Toshiba memory chips and Toshiba semiconductors were behind other competitors', and some newspaper reported that Toshiba would withdraw from the semiconductor business. It seemed like a challenge to me, and I made a decision to invest, to recruit engineers in semiconductors, and it was successful. After that Toshiba reached the number one on number two positions in the semiconductor business.

Aspray:

What were the factors that led you to make that decision? What was your thinking there?

Saba:

I think it was due to my past experience in communications, computers, and vacuum tubes. I didn't have any experience in semiconductors, but I had experience in vacuum tube applications and system engineering computers, and I certainly had a very strong conviction for the future.

Aspray:

Was your semiconductor business an end product, something that you were selling to outsiders?

Saba:

Oh, yes, it was.

Aspray:

Or was it used for vertical integration?

Saba:

We sold it to other companies and also we used it internally. I had a very solid belief in the future of semiconductors because even at that time I believed it to be in the future a key factor to success in communications and computer usage.

Aspray:

That's a tremendous capital expense.

Saba:

Also, at the time we withdrew from mainframe computers. That also helped me to decide to make a huge investment in semiconductors.

Aspray:

What was the reason behind your decision to withdraw from the computer market?

Saba:

The mainframe computer industry is a very money-absorbing business.

Aspray:

Not many people made much money in it.

Saba:

No. It is also a throat-cutting market. We needed a large amount investment in it, and it could not be turned around in a short time.

Aspray:

As you moved from president to the chief executive position, what were the differences in duties? How were the responsibilities divided?

Saba:

Our president is our chief executive, always.

Aspray:

The same person?

Saba:

Always the same person.

Aspray:

What about the chairman's position?

Saba:

The chairman is the position after the president, and is rather active in outside work, representing the company.

Aspray:

The president runs the day-to-day business in Toshiba?

Saba:

That's right.

Aspray:

Did you prefer the job of president, or did you prefer the job of chairman?

Saba:

I have no preference.

Aspray:

No preference. I see. You're just a man who finds fulfillment in every position you have.

Saba:

Even at the present time my life is very interesting, although it is quite busy.

Toshiba's Success

Aspray:

If we are trying to understand Toshiba's success over the last thirty years, what factors would you point to?

Saba:

One factor was, all of us thought that it was important to invest in R&D for the growth. Also, looking back some thirty years, we find all the presidents had an interest in manufacturing. In other words, many of them tried to enhance the productivity in the workshops. The most outstanding president during that time was Mr. Doko, who made a sort of revolution in the company. He revolutionized our corporate culture. He improved company-wide productivity and quality.

Aspray:

Companies such as Westinghouse have fallen onto pretty hard times over the last few years, yet Toshiba has done very well. Can you draw some comparisons between the two companies? They were in similar kinds of business.

Saba:

I cannot compare us to Westinghouse. I can with General Electric. They were very successful.

Aspray:

Yes.

Saba:

Their success resulted from the realignment of the company under Jack Welch. He divested the lower profit business. As you know, he liked to stick only to the business that was number one or number two in the market. Before his time, General Electric Company used to be manufacturing every kind of electrical product, but nowadays they are not a "General" Electric Company.

Aspray:

They're a "Specific" Electric Company.

Saba:

"Restricted" Electric Company. Once I said to Jack Welch, "Your company is now General Equity Company, not General Electric!"

Aspray:

And how would you compare that with Toshiba?

Saba:

We still concentrate on electric products. We are not good in the financing business.

Aspray:

But you did get out of some industries. You got out of mainframe computers. Did you get out of other businesses?

Saba:

Not as many as General Electric did. But of course, from time to time we change the focus of our business. For instance, at the present time we are investing sixty, seventy percent of our R&D in the electronics field. Also the proportion of sales changes from time to time. For instance, in the 1950s and 1960s, home appliances shared fifty percent or more among total sales, but today the home appliances business is only twenty-five percent. And, today, electronics information equipment communications is fifty percent. More and more we are focusing our strategy on our electronics field, and our consumer products are increasingly manufactured outside Japan. Power industries will continue to be significant business for us because Japan needs more energy to develop its economy. To improve environmental issues caused by power generation we need more technologies, more innovations in the energy field.

Internationalization & Overseas Production

Aspray:

Could you explain Toshiba's philosophy about internationalization and how that has changed over time?

Saba:

In the 1960s and 1970s, internationalization was mostly in export. After 1975 we started overseas production in Asia, Europe, and in the United States. Apart from the factors like labor costs, the philosophy of our overseas production is to produce a product as close as we can to its market. Then we also started R&D in the United States and in the United Kingdom.

Aspray:

Are there certain things that you keep centralized?

Saba:

Of course, yes. I think we should keep our central research works in Japan, although we have some research works outside of Japan. We need a homeland to develop our technologies.

Aspray:

What about management in other countries?

Saba:

As far as we can, we are trying to promote local people to managing position general managers. Initially, we sent many of our engineers, on staffs to oversee manufacturing sites, but after a while we reduced the number of our own people.

Aspray:

Is it part of the learning process for your central staff here to be assigned overseas at some point?

Saba:

Yes. And vice versa — we also have the local people study or train in Japan, and they're sent back.

Organization of R&D

Aspray:

Can you tell me about the organization of R&D in the company? What is your strategy for developing? What's the process of moving things through R&D?

Saba:

I think it is not different from when I was president in the early 1980s. Even since the early stage we have had a corporate-level research laboratory that serves the whole company. It concentrates rather on basic research works or common technologies of the company. In addition to that we have works laboratories that I started when I was president. Nowadays we have a works laboratory almost in each division. They are about ten at the present. We also have other corporate-level laboratories such as environmental technology laboratories and production engineering laboratories to serve all the company.

Aspray:

Do researchers move with projects as things go through the development stages?

Saba:

Yes. On many occasions the research engineers who work with a specific project in the research laboratory wills move to operating division when the project is complete.

Aspray:

What is the mechanism for bringing customers into the development loop?

Saba:

Our corporate research laboratory exhibits its activities at least once a year for the people in our operating division. Not only engineers but also sales people are invited. The research laboratory also holds meetings to discuss their lab or achieved results with operating division.

Aspray:

Can you talk about some of the cultural, political, or economic differences of doing business in Japan, and the United States, and Europe?

Saba:

In western countries, voices of stockholders are big and the management is always concerned about their voices and movements. Japanese countries put importance on their employees as well as stockholders. In western companies, the culture of the employee is adversarial rather than partnership relations as is the Japanese company.

International Comparisons: Regulation

Aspray:

Is there a difference in the regulatory structures in the different countries that is remarkable in some way?

Saba:

Although there might be some exceptions in Japanese companies, the loyalty of the employees is probably higher than in western companies. When it comes to the government regulation, we had more deregulation. There have been many complicated regulations to protect vested interests of specific industrial segments.

Aspray:

Much is made these days of the differences between sources of funds for company investment and length of return on investment in Japan and the United States. Do you want to comment on that?

Saba:

The investors benefit more in the United States than in Japan. We invest in R&D, much in manufacturing facilities for the future. That is an issue of how to allocate profits. In the United States, to allocate the profit the investors come first, but so far in this country they do not. We allocate that profit to the future growth of the companies and the wellbeing of the employees and investors, so it is different.

Aspray:

You say "so far." Do you see it changing?

Saba:

It will change slowly, but I don't like to change it completely.

Aspray:

I see. Thank you very much.