JIN-467 -- Schindler Japan: Going Up?

Wed May 28 09:24:24 JST 2008

J at pan Inc Newsletter
The 'JIN' J at pan Inc Newsletter
A weekly opinion piece on social, economic and political trends
in Japan.
Issue No. 467 Wednesday May 28, 2008, Tokyo

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Schindler Japan: Going Up?

Global elevator and escalator manufacturing giant, Schindler
came to Japan in the late 1980s, entering the market via the
acquisition of Nippon Elevator Industry Co Ltd. Its business
here expanded and by the millennium, the company had made real
inroads into the market - launching the Japan market specific
Schindler 300J in 1997 and winning the elevator system contract
for the Millennium Tower in 2000.

And then, in 2006, disaster stuck. A 16-year-old boy was killed
in an elevator installed by Schindler. The company was slammed
in the Japanese press and could face legal repercussions. The
facts of the accident are contested but there is arguably a
strong case to be made in Schindler's favor. For one, they had
lost the maintenance contract on the lift in question, prior to
the accident, to a cheaper service provider. However, despite
ambiguity over the facts and culpability, there is no doubt that
the handling of the crisis was a PR catastrophe. Gerhard
Schlosser, who took over as Representative Director in
early 2007, told us: 'There was definitely a problem with risk
management at the time and we have learned a number of lessons.
The number one problem was that we did not offer proper
condolences to the bereaved family after the accident.'

This key point also became a main focus for the media. In other
markets, an outright apology could be seen as an admission of
guilt - in Japan, it is not only expected, but the wording and
nature of that apology is extremely important. According to
Schlosser, this blunder backed the company into a corner from
which they couldn't escape - it would come up again and again in
reports that sought to portray Schindler as negligent,
cruel-hearted and evil. The facts of the actual accident seemed
to become less relevant than the reaction to the tragedy.

In terms of business, the fallout was very damaging. Staff left,
sales froze and a police investigation got underway. To compound
matters the organization went into panic mode, flying out people
from headquarters in Switzerland to manage the situation which,
in doing so, sidelined the local management. For Schlosser, this
was another serious problem, 'employees were getting the
information from the media and not from the company. There was
a lack of internal communication that was very damaging.'

Since then many of the personnel have changed and the company
has had to be creative in terms of its recruitment strategy.
With 18,000 units operating in Japan, the company's work here
is too large to warrant going home - even without any major new
contracts it is obliged to deliver maintenance and deliver on
existing projects. Schlosser has had to find candidates who are
aware of Schindler's good international reputation and look for
individuals who have had less traditional educational histories
than those demanded by major Japanese corporations. He has also
worked hard to instill a sense of pride among employees and,
leading by example, he and the management team wear the company
logo embroidered on their shirts.

Looking to the future, despite the accident, there have been
some interesting developments. Schindler installed a number of
escalators on the Toei Oedo subway line and worked on projects
in Tokyo Midtown. Most recently, the company installed all
escalators on all 13 stations of the Nippori-tenori Liner, a
new transport system that opened in March this year. Until the
official inquiry is over however, the company is remaining quiet
in terms of its approach to media, neither rebutting nor
responding to statements while continuing to hold its head up
high on the job. In particular, Schlosser hopes that more and
more Japanese will come to learn of the company's achievements
abroad particularly as it works on major projects in the region,
such as the International Commerce Center in Hong Kong that will
be completed in 2010. Ultimately, Schlosser sees that the
company does have a future in Japan and the lessons it has
learned will be pivotal in building it.

Peter Harris
Editor-in-Chief

DON'T MISS the extended version of this article in the next
J at pan Inc magazine, July, 2008. www.japaninc.com

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