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Mitsubishi's Morass


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MITSUBISHI'S MORASS

Fallout from its scandal may spread beyond the car unit

The 50 picketers at the Olympic Mitsubishi car dealership on Chicago's Northwest Side on May 18 would seem to be less than a fly on Mitsubishi's back. But mighty Mitsubishi, the world's largest industrial group, with more than $200 billion in sales, is feeling their weight. "The best thing to do to show our support was to just close the doors," says G. Lawrence Mitch, the dealership's general manager. He puts the cost at $10,000 to $20,000 in foregone profits but figures that beats being tarred with further bad publicity.

The fallout from sexual harassment allegations at Mitsubishi Motor Manufacturing of America Inc. threatens to take a bite out of car sales and cost the company millions of dollars in damages. And the effects could spread if the scandal engulfs the 40 companies that form the Mitsubishi group, ranging from Mitsubishi Electric, which makes VCRs, TVs, and cellular phones, to the Bank of California, Kirin Brewing, and Nikon. The units are legally independent, but they have extensive cross-shareholdings, preferred supplier relationships, and other links. Such a keiretsu is a source of strength, but it makes its members vulnerable when one gets in trouble.

UPPING THE ANTE. The National Organization for Women hopes to exploit that vulnerability by expanding a boycott of the car unit, whose Normal (Ill.) factory is the target of the harassment allegations. NOW has begun picketing other targets--notably Chrysler Corp. dealerships, because Chrysler also sells cars made at the Normal plant. "We're looking to up the ante," says NOW President Patricia Ireland. The organization also is considering boycotting other Mitsubishi entities, Ireland says, and is contacting women's groups in Japan about starting protests there.

The boycott, launched in early May by NOW and the Reverend Jesse Jackson, has had only limited effect. Indeed, Mitsubishi car and truck sales recovered in early May after a dismal four months in which they fell 13%, to 67,625 total, while industry sales rose 4%. Mitsubishi dealers, nonetheless, are worried. "What the dealers have told us is that they want us to do everything we can to resolve these issues," says Kevin Ormes, group vice-president for sales and marketing at Mitsubishi Motor Sales of America Inc.

With the backlash building, a number of Mitsubishi affiliates are agitating for Mitsubishi Motor to quash the controversy. "This kind of counterproductive issue should disappear quietly," says Tachi Kiuchi, chairman of Mitsubishi Electric America Inc. His comments echoed those of Minoru Makihara, president of Mitsubishi Corp., and others in the group outraged by the scandal.

Some insiders fear Mitsubishi Motor made matters worse by paying and busing 3,000 workers from its Normal plant to Chicago to protest outside the offices of the U.S. Equal Employment Opportunity Commission, which is pursuing a harassment case against Mitsubishi. The company started damage-control operations by hiring Lynn M. Martin, a former Labor Secretary in the Bush Administration, to conduct a review of its employment practices. Now, U.S. executives say it must be more than perfunctory. Worries James Brumm, general counsel for Mitsubishi International Corp., the U.S. arm of the trading house: "Lynn Martin must make sure the investigation and review works and problems are dealt with."

NO RESOLVE. Trouble is, the kind of public airing of the issues Brumm wants is anathema to Japanese executives. And behind-the-scenes negotiations aren't going well. Mitsubishi attorneys met with the EEOC on May 10. John C. Hendrickson, the commission's regional attorney in Chicago, recalls the 75-minute session as "cordial." But one knowledgeable source describes it as "a joke" and contends no major issues were discussed and no future meetings scheduled. Attorneys in the class action say they have not been contacted by Mitsubishi officials. "Despite all the talk, I have seen no indication that the people running the plant have seriously resolved to settle the case," says George F. Galland Jr., one of the lawyers handling the case. Jackson and Ireland say they did have a "conciliatory" meeting with MMMA on May 22, but their boycott continues.

To be sure, the protesters face an uphill battle in mobilizing consumer boycotts of such disparate brands as Mitsubishi cars and Kirin beer. But Mitsubishi--in all its forms--may be in for a long, hot summer as they try.By Peter Elstrom in Chicago and Steven V. Brull in New York, with bureau reportsReturn to top


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