Rio de Japano

Forbes has an article by Tim Kelly about immigration in Japan. Despite being in some ways more xenophobic than the United States, economic pressures are forcing Japan to admit more migrants.

What does Japan, that most xenophobic of nations, do to staff its factories? At Toyota's home base, it brings in aliens

Inside Barracao Do Tio, a hastily erected roadside eatery, Hidetoshi Hishinuma, or Karioka, as he is known to his fellow Brazilians, puts down the deep-fried chicken dumpling he's eating, wipes oil from his fingers and lips with a paper napkin and picks up the cell phone buzzing on the table in front of him. It's someone looking for work, he shouts above the clatter of dominoes at the next table.

The menu is Brazilian and the chatter Portuguese, but Barracão Do Tio is far from the bustle of São Paulo or Rio de Janeiro. Outside is Toyota City, a former textile town in central Japan that renamed itself after the automotive colossus, which picked the Japanese community as its production base 70 years ago.

Karioka makes a living finding work for Latin American migrants. They call him, and he introduces them to agents who want to sell labor to plants making Toyota (nyse: TM - news - people )'s seat belts, oil pans and other auto components. "I probably find jobs for about 500 people a year," he brags.

General Motors (nyse: GM - news - people ), Ford and Chrysler fret about how to lighten payrolls. Japan's carmakers and their suppliers instead worry about filling them, so the companies are turning to immigrant labor despite the country's traditional wariness toward foreigners. A slump in U.S. car demand won't do much to ease Toyota's labor fears this year. In May Toyota forecast net profit to dip 27% to $12 billion in the year ending Mar. 31, 2009. Still, there will be only a 1.2% drop in Japanese vehicle production. Toyota is producing 28,000 more cars in its home country than it did two years ago.

In Toyota City, where one-third of the 1,400 employers are auto-related, the demand for labor has brought a diversity unknown in most Japanese cities. Foreign-born residents, half of them Brazilian, already account for 3.9% of the 420,000 population. By the standards of the U.S., where 12% of people are born outside the country, that's small, but only 1.6% of Japan is foreign-born.

At Tokai Rika, a maker of seat belt clips, Brazilians account for a fifth of the workers. Aisin Seiki, a Toyota affiliate that fabricates transmissions and brakes, has about the same ratio. Toyota itself keeps its factories mostly Japanese. The city is of course hugely important for Toyota. Slightly more than 10% of the 9 million cars it sold worldwide last year, including the Prius, Corolla and Camry, are built at one of its three main plants in the town.

Though Toyota executives declined to talk about the labor woes in their home city, other auto officials are more forthcoming. "There are not enough workers, especially in Aiichi Prefecture," where Toyota City is, says Osamu Suzuki, chief executive of rival Suzuki Motor. The shortage is severe enough that it might even force automakers to shift production to other regions in Japan where the problem isn't as acute, he adds. That would be a mammoth task. Suppliers would have to follow because Toyota's on-time production model works best when partsmakers are within a two-hour drive.

The demand for labor has created tension between business and government. "We want more tourists," says Kunio Hatoyama, Japan's justice minister in charge of immigration. "We don't want a rise in foreigners living here." Japan's main business group, the Keidanren, of which Toyota is a leading member, thinks that's foolhardy and is lobbying for more immigrant workers. It's a mirror image of Bill Gates' complaints about the shortage of H-1B visas for engineers coming to the U.S.

Says Suzuki, "We have to begin accepting foreigners as equals in Japan, look at them as coming to help. If we don't, we're in trouble."

Japanese factory workers are as wary as the anti-immigrant TV commentator Lou Dobbs. The Japan Council of Metalworkers' Unions, an umbrella group that represents labor unions with more than 2 million members, many employed at auto plants, is demanding that the government tighten regulations on employing workers with trainee visas. It wants a 5% limit on foreign trainees at companies, more checks to ferret out offenders and stiffer fines on factory owners who break the rules.

"Before resorting to foreigners we want employers to tap older workers and women," argues Kan Matsuzaki, an official at the group. To protect wage levels his organization also wants foreign workers to be paid on par with their Japanese counterparts. Foreign workers typically earn $12 an hour. The country's average wage is more than $20.

Much of the importing and recruiting of foreigners is wrapped in the flag of altruism. The South Americans are allowed to settle because they are the descendants of Japanese that migrated across the Pacific a century ago. That definition, though, is loosely applied, points out Masako Izukawa, a Toyota City official in charge of helping the city's foreign-born population fit in. People who can claim one Japanese great-grandparent qualify for a visa, so there is very little about them that's Japanese, she notes. Another immigrant group, the Chinese (the biggest source of foreign-born labor in Japan), are passed off as trainees, shipped to Japan for three years to hone engineering skills that they can take home. Together the two groups add up to half a million bodies.

"It's officially not presented as a way to fill the gaps in the labor market, it's humanitarian," explains Akio Nakayama, head of the Tokyo mission of the International Organization for Migration, a United Nations agency charged with protecting migrants and combating human trafficking.

Companies also play a shadow game, using agents and go-betweens like Karioka to avoid having to officially hire immigrants. The agents, rather than the companies, are responsible for checking visas and providing health insurance. According to Karioka and Toyota City's Izukawa, they don't always do so. Some agents, reveals Karioka, are even glad to take workers without visas because they can pay them 30% less than documented workers. ("Our policy is to request that our suppliers comply with all laws" is all Toyota spokesman Paul Nolasco will say.)

Whatever way these companies get their workers, Japan's head-in-the-sand approach to immigration is about to be overwhelmed. In two decades Japan's 127 million population will drop by 10 million as the country ages. The nation expects to lose 650,000 people of working age a year on average, about 1% of its workforce. When Japan eventually gets around to asking for help, there may be few places to get it. China is facing its own demographic shift as its one-child policy accelerates the nation's graying.

Karioka, a resident in Japan for 18 years but not a citizen, plans to stick around. In Brazil he owned a store that sold animal feed and veterinary supplies. He closed it down and shipped off to Japan after an armed robbery. Picking up his mobile phone, he leaves Barracão Do Tio and walks across the road to the car he recently bought with the money he makes feeding workers to the city's factories. It's a Prius hybrid built at one of the nearby auto plants. "After all," he beams, "this is Toyota."