United Parcel Service is the market leader in the U.S., and globally with 340,000 employees. Yamato Express, the mother “black cat” (kuro neko) carrying the baby black cat in her mouth, is just as familiar to the Japanese, as are UPS brown trucks, and brown uniformed drivers a part of the American home and business scene. Yamato in Japan has over a 40% market share, is strong, healthy and growing. It is also one business sector that has been robust even during the “lost decade” of the 1990’s. Its consolidated net profit is at an all time high. Yamato has over 84,000 employees in Japan.
We have had these two very successful and proud companies working together in Japan in a 700 employee joint venture started in 1990. Both companies have almost a century of tradition, and are proud of their business models and methods.
After nearly ten years, UPS decided it wanted to focus more on the express/overnight international business. As of April 1, 2000, the 700 staff joint venture was broken into three separate companies — express, air freight and brokerage. Yamato wanted to continue to have a large share of express, so UPS has 51% to Yamato’s 49%. Air freight is the reverse of that, and brokerage became a 50-50% joint venture.
The idea would be that UPS would largely control and run the express/overnight business. Virtually all the employees of the joint venture before the break-up were seconded or on loan from Yamato. Yamato is a strong firm, popular with school graduates and has been growing about 9% per year and one of the most aggressive firms hiring in the labor market.
I am very proud that in spite of all that, express was able to get about 80% of the seconded/loaned staff from Yamato to cut-off their employment relationship with Yamato. They agreed to “tenseki,” or switch their formal employer over to our UPS managed and controlled UPS Yamato Express Co., Ltd. as of January 1, 2001. Without pay increases we were able to get the top performers we wanted to make the express company their future.
I joined UPS in 1977 right after college. After a litany of job at UPS in the USA, I worked in London, and helped set up UPS international network in Europe, and formed the joint venture with the Russian partner in 1989. UPS is organized by the Teamsters, and I also learned a lot from working in that environment. Since I arrived in Japan three years ago, I faced more interesting cultural and business practices. Although the role of the union is very significant at Yamato, UPS wants to work directly with our staff at the Express company, without third party representation in between. We feel we can manage better that way.
At Yamato the union is an integral part of the management process and the way things get alone. I am sure our cultural and different thinking in these and many areas will continue to keep us all challenged and busy. As of January 1, 2001, we will have the express company off and running with about 200 staff.
How did Tom Nevins fit into all of this, and how did he and TMT help us? I knew Tom based on reputation and from his ads and books. I called him and we first met at his office on May 14, 1999.
Right off the bat he was making more sense of those human resource, employee rights, changing work rules, and salary systems, union matters, selective staffing decisions — all the non-commercial, non business related issues that the UPS side needed the most assistance with.
We contracted with Tom to help guide us and help implement the kind of personnel and pay policies we wanted. This also included reassuring us that what we hoped to do and wanted to do was doable. Mr. Nevins has done it so many times before, in situations very similar to ours.
Tom was accessible and helpful to myself, and our international executives and staff outside Japan. But perhaps even more impressive and reassuring is the role he played with our UPS side Japanese people. More impressive again was how he gained rapport, and the respect, trust and friendship of the many Yamato side executives and staff.
Mr. Nevins did not always just do UPS side’s bidding. When Yamato side had a better idea, and was right on certain issues Tom played honest broker and influenced and changed UPS side’s thinking. Depending on the issue, however, that did not prevent him from also stating UPS’s case more forcefully than we could or wanted to do on our own.
Tom says, “you got me down to the MacDonald’s rate,” with the fixed project fee, and those many all day session’s over a period of months. Tom would do simultaneous interpreting some days, all day without a substitute interpreter, or without the breaks and rests that interpreters seem to need. Working as the interpreter is not what he usually does. We really appreciated it. We understood each other a lot better, and he brought us together, often with humor and good cheer.
There were many areas of conflicting views and expectations. For example, nearly a full day was used up in a stand-off over which side, Yamato or UPS would first present the Rules of Employment (ROE) draft they had respectively prepared. Our UPS side had prepared a new one for the new express J.V. even before meeting with TMT. (One of TMT’s first jobs was to review it.) Yamato also spent hundreds of man hours on their new ROE draft.
Luckily we had the third alternative, the objective third party, tried and true option — the TMT draft. It worked well. We basically got Yamato to realize that if UPS could throw away their hundreds of hours of work for the TMT version, why couldn’t/shouldn’t Yamato do the same? It finally worked. However, things didn’t get settled as quickly as most projects Tom gets involved in. Gradually, we came to reach an understanding. The Express draft we settled on was basically the draft from TMT with some adjustments.
The UPS tried and trued approaches to compensation are being implemented as well as new retirement and benefit packages. All this is especially impressive when we consider that up until this successful restructuring of these companies, everyone wore the Yamato uniform, followed the same Yamato ROE, and their pay practices. All ROE, and personnel systems had only been in the Japanese language. UPS had never gotten involved or tried to understand H.R. issues or policies. Most employees at the J.V. had assumed they would some day, or any day, go back to Yamato, the company that was loaning the staff to the joint venture.
I’m sure from Yamato’s point of view, it was not easy to understand why UPS suddenly wanted to get so involved even in the human resource side of the business, after 10 years of leaving it in Yamato’s hands.
It was not easy to come this far in the last year and a half. It took a lot of patience and hard work from both the UPS, Yamato side, and among all the employees in the 700 person joint venture.
Tom Nevins minimizes his role in the process. He says that on this one, so much work was done by so many other people, unlike many of his quick turnkey changes. However, his knowledge and experience were extremely helpful to all of us. I think he showed that the experience and success he has helped bring to so many other leading firms, also was transferable to our situation.
I really think we got this one right. I’m looking forward to the fruits of our efforts at all three new joint ventures. This is especially true of the new UPS Yamato Express Co., Ltd., that will be even better integrated with our global UPS operations.
James R. Owens
Representative and Managing Director
UPS Yamato Express Co., Ltd.