The secret of Japanese manufacturing firms that has allowed them to produce high-quality products and to be competitive on the world market is seen by Sakai as something of an illusion. He says that Japan's huge businesses are not what they appear to be. They do not develop all of their own product line, and they also do not manufacture it. They are really more like trading companies than manufacturers in that they coordinate a complex design and manufacturing process involving thousands of smaller companies. This operation is complex, perhaps unnecessarily so. An electronics firm might produce in-house a refrigerator or microwave oven because such a product is ideally suited to mass production in a large, automated factory. On the other hand, companies that must continually redesign to gain public acceptance for new products would have to retool a production line to accomplish this task. Some of the manufacturers today employ the n

west flexible manufacturing systems (FMS) to allow for more freedom in production, but still the retooling process is one many companies want to eliminate. To this end, they farm out much of this business to subcontractors, and these companies in turn are faced with redesigning and producing a product three or four times a year and may subcontract the design or manufacture of a dozen key components to still smaller companies.

These methods have worked well in the Japanese system, though they do create problems for outsiders. It is difficult to compete with this system when our own method of subcontracting is so different. For one thing, we cannot pass off costs to the subcontractors as can the large Japanese firms. Thi