Subject: [cwj 59] Japanese company's tainted milk spotlights corporate issues
From: Corporate Watch in Japanese <>
Date: Sun, 16 Jul 2000 20:32:10 -0700
Seq: 59

Sunday, July 16, 2000

Japanese company's tainted milk spotlights corporate issues 

by Sonni Efron 
Los Angeles Times 

TOKYO - Japan has been rocked in recent years by horror stories of
corporate mismanagement, but the case of the Snow Brand Milk
Products, whose alleged sanitation lapses are suspected of causing
the country's worst food-poisoning outbreak since World War II, has
stunned the nation. 

The company announced last week that it will shut down all 21
factories nationwide for weeklong inspections after one person died
and more than 14,000 people in western Japan fell ill after consuming
Snow products. 

A criminal negligence probe is under way, and reports of unsanitary
practices appear almost daily in Japanese media. Analysts wonder
whether the company, Japan's No. 1 dairy, can recover. 

Authorities say they suspect that 10 Snow factories recycled milk
products that had been returned unsold from stores - including milk
past its expiration date that may have been mixed with fresh milk,
re-pasteurized and resold. 

The tainted milk case, coming less than a year after workers mixing
uranium by hand in buckets set off a chain reaction at a nuclear fuel
plant in northeastern Japan, has raised fresh questions about what has
gone wrong with Japan's once-vaunted management. 

"It used to be that Japanese companies did everything meticulously,"
said Harumi Ichiki, managing director at the Sumitomo-Life Research
Institute. "Even the lowest-level workers did things properly, by the
book, even when no one was watching and there was no direct
reward. This was the Japanese national ethos. Now it seems we're

Japan had a number of consumer crises in the 1970s and developed
what were lauded as the world's best quality controls in the 1980s.
But the 1990s recession has forced downsizing that has led some
plants to cut corners, said attorney Michiko Kamiyama, who
specializes in product safety. 

"The lessons of the 1970s have been lost in the crush for profits,"
Kamiyama said. 

Less than a month ago, Snow was supplying 19 percent of Japan's
milk and 44 percent of its cheese, racking up $12.2 billion in sales last
fiscal year. By Friday, Snow's stock had lost nearly half its value. 

Snow's woes began June 26, when four children who had drunk its
low-fat milk started vomiting and developed diarrhea. The number of
victims swelled, and on June 29, Snow's management announced a
recall of its low-fat milk. 

But the scale of the contamination - and the damage to Snow's
pristine image - kept growing. Authorities now say nine different
Snow products may be tainted. 

At the Osaka plant that produced the products, authorities found
equipment that had not been cleaned for three weeks and was filled
with congealed milk and toxin-producing bacteria. 

Snow officials have come under fire. Japan's leading financial daily,
the Nikkei newspaper, called the incident "Japan's worst example of
poor corporate crisis management." 

Snow President Tetsuro Ishikawa, 66, has said he and three other
executives will resign in September to take responsibility. 

Meanwhile, bombshells keep exploding. The Yomiuri newspaper
quoted a former part-time truck driver as saying that drivers routinely
collected unsold Snow products from stores - including packages that
were expired, swollen or half-empty - and poured them into an
unrefrigerated tank for reprocessing. 

The worker, whose name wasn't published, said he was told not to
sample the drinks but did anyway - then dumped his leftovers into the

"Everybody did it, so I did not feel guilty," the worker said. "All the
workers believed that even if the expired milk tasted strange, it would
be all right since it would be sterilized." 

An anonymous letter sent to the Mainichi newspaper claimed that the
Osaka factory's poor hygiene stemmed from an all-too-familiar
Japanese complaint: endless overtime. 

"Workers became exhausted and began cutting corners, and that is
why this sloppy hygiene occurred," the letter stated. 

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Corporate Watch in Japanese
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