Modern Japanese industrial competitiveness, precision machining and measurement technology
Associate Professor Kenichi Murakami
Commerce, Chuo University
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Japan has been thought to be a manufacturing superpower and an export superpower since the high-growth period. However, the number of employees in the manufacturing sector was 25% of all employees in 1970, 19% in 2000 and was reduced to 16% in 2015. This percentage is higher than that of the US (10%) and the UK (10%), but lower than that of Germany (19%) and China (30%). The manufacturing section is 19% of GDP in Japan, 12% in the US, 10% in the UK, 12% in France, 22% in Germany and 30% in China. This GDP percentage is higher than the share of employees in the manufacturing sector mentioned above by 3 percentage points in Japan as well as Germany, which reflects the high added value in the manufacturing industry.
Regarding the Japanese manufacturing industry, the current reduced international competitiveness and deindustrialization are issues.
Japan recorded a trade deficit from 2011 to 2015, which was the first time in about thirty years. Examining the sectors, the deficit in the mineral fuel trade was 16.2 trillion yen in 2010 and this increased to 26.2 trillion yen in 2014 given the worldwide increases in resource prices and the depreciation of the yen, which was a direct factor. Yet, the export industry cannot earn trade surpluses as before. The trade surplus in electrical machinery and appliances was 6.8 trillion yen in 2007, 4.0 trillion yen in 2010 and decreased to 0.5 trillion yen in 2014. The trade surpluses in transportation equipment and general equipment went from 18.9 trillion yen and 10.1 trillion yen in 2007 to 14.1 trillion yen and 8.5 trillion yen in 2010, and further to 14.4 trillion yen and 7.4 trillion yen in 2014.
The Japanese export trade that depended on growth in the 2000s was confronted by a worldwide recession symbolized by the bankruptcy of the Lehman Brothers in 2008. In addition, the Great East Japan Earthquake tore supply chains and accelerated the double tracking and overseas transfer of supply chains. Given these factors, exports did not grow even when the yen continued to weaken in the 2010s, especially from the end of 2012. Taking the 2010 level as a base of 100, the export volume index by industry remained low in 2017 at 89.60 for metal, 85.20 for electrical machinery and 94.55 for transportation machinery.
In the electrical machinery industry, the trade deficit in communication equipment such as smartphones rapidly expanded in the 2010s in addition to the trade deficit in PCs , which has been a trade deficit since the 2000s, office appliances and audiovisual equipment, especially flat-panel televisions. The trade surplus in electronic parts is rapidly decreasing. The domestic electrical machinery industry cannot achieve a trade surplus in the mass production field of products and electronic parts centering on consumption goods.
In the automobile industry, Japanese manufacturers have expanded overseas production since the 1990s; today, the domestic production volume of each manufacturer is less than 30 percent of the world production. Overseas production and part exports from Japan increased in parallel until the 2000s, but the volume of part exports started to decrease while overseas production expanded in the 2010s. The current automobile industry proceeds with overseas localization including parts production and the international expansion of supply chains, interfering with domestic production and exports.
If the export volume index in 2010 is used as a base of 100, some export items increased in 2017: 184.62 for batteries, 116.47 for machining tools, 121.00 for tools/machine tools, 107.16 for metal working machines, 106.47 for transportation machines and 106.14 for bearings. Machines and parts for production that require precision machining are the main items. The measurement technology that underpins monozukuri (manufacturing) with high precision is important for supporting the international competitiveness of Japanese industry for today and the future.
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