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2011 Vol.1
The Future of Japan’s Manufacturing


A sense of crisis about Japanese manufacturing started to be felt in the latter half of the 1990s when Japan’s economic position began to deteriorate, and it has peaked in recent years as China, Korea, Taiwan, and emerging countries have shown spectacular economic performance. Gaining a competitive advantage through traditional manufacturing practice (the integration of parts through individually fine-tuning them) has become difficult, and companies have lost strength relative to vibrant foreign competitors. Under such conditions Japan’s manufacturing industry is struggling and is searching for new ways to succeed.
In terms of manufacturing processes, there are three challenges which Japan’s manufacturing industry must face: (1) shifting operations abroad, (2) simultaneously realizing rapid development, reduced cost, and maintained quality, and (3) responding to a shortage of production workers. We conducted an interview survey of Japanese manufacturers on the current status of manufacturing and its future. Based on the survey results, we can summarize the various efforts being made to tackle these challenges with three key terms: automated production, front loading, and supply chain management (SCM). Our findings also show that, in an attempt to gain market share in emerging countries, companies move not only production sites but also part of design and development activities to those countries where products are consumed, and that this occurs more often when products have a wider use or simple structure.
The tendency for production to shift abroad cannot be stopped. What would be the importance of keeping manufacturing activities in Japan in spite of this tendency? The prosperity that Japan’s manufacturing industry experienced was a result of responding to the tough demands of Japanese users (consumers as well as final product manufacturers). It is extremely difficult to survive in today’s Japanese markets. However, if companies continue to stay there and strive to overcome difficult hurdles, it may lead to technological innovations which would enable companies to achieve high productivity levels despite high operational costs or gain development capabilities through which companies can keenly sense and promptly respond to users’ demand for high quality and their changing needs. Such technological innovations would help Japan’s manufacturing industry regain competitive advantages over foreign competitors.