Tainted Milk Sours Regard for Vaunted Japanese Management

TOKYO — Japan has been rocked in recent years by horror stories of corporate mismanagement. But the case of the Snow Brand Milk Products Co., 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 this week that it will shut down all 21 factories nationwide for weeklong inspections after more than 14,000 people in western Japan fell ill after consuming Snow products. An 84-year-old woman died.

A criminal negligence probe is underway, and nauseating reports of unsanitary practices are appearing almost daily in the 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 might 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 wobbling.”

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 recession of the 1990s has forced downsizing and cost-cutting that have 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% of Japan’s milk and 44% of its cheese; it racked 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 began 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 might be tainted, including four brands of milk, yogurt and fruit drinks and coffee milk. At the Osaka plant that produced the products, authorities found equipment that had not been cleaned for three weeks and was filled with bacteria.

Snow officials have come under fire for a tardy and inarticulate response. The Nikkei newspaper called the incident “Japan’s worst example of poor corporate crisis management.”

Last week, Snow President Tetsuro Ishikawa said he and three other executives will resign in September to take responsibility. Three days later, Ishikawa, 66, checked into a hospital, reportedly suffering from high blood pressure.

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 tank. “Everybody did it, so I did not feel guilty,” he 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 said.

*

Researcher Hisako Ueno in The Times’ Tokyo Bureau contributed to this report.