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Japan Table of Contents


Basic Manufactures

Japan's major export industries includes automobiles, consumer electronics, computers, semiconductors, and iron and steel (see Major International Industries , ch. 5). Additionally, key industries in Japan's economy are mining, nonferrous metals, petrochemicals, pharmaceuticals, bioindustry, shipbuilding, aerospace, textiles, and processed foods.

As the coal-mining industry declined, so did the general importance of domestic mining in the whole economy. Only 0.2 percent of the labor force was engaged in mining operations in 1988, and the value added from mining was about 0.3 percent of the total for all mining and manufacturing. Domestic production contributed most to the supply of such nonmetals as silica sand, pyrophyllite clay, dolomite, and limestone. Domestic mines were contributing declining shares of the requirements for the metals zinc, copper, and gold. Almost all of the ores used in the nation's sophisticated processing industries are imported.

The nonferrous metals industry fared very well in the late 1980s, as domestic demand for these metals reached record levels. Japan's consumption of the main nonferrous metals, such as copper, lead, zinc, and aluminum, was the second highest in the noncommunist world after the United States. In 1989 sales of copper products exceeded 1.5 million tons for the first time. Production of electric wire and cable, which accounted for 70 percent of Japan's copper demand, and brass mills, which used the other 30 percent, experienced sharp growth, as did the demand for aluminum.

The petrochemical industry experienced moderate growth in the late 1980s because of steady economic expansion. The highest growth came in the production of plastics, polystyrene, and polypropylene. Prices for petrochemicals remained high because of increased demand in the newly developing economies of Asia, but the construction of factory complexes to make ethylene-based products in the Republic of Korea (South Korea) and Thailand by 1990 was expected to increase supplies and reduce prices. In the long term, the Japanese petrochemical industry is likely to face intensifying competition as a result of the integration of domestic and international markets and the efforts made by other Asian countries to catch up with Japan.

The pharmaceutical industry and bioindustry experienced strong growth in the late 1980s. Pharmaceuticals production grew an estimated 8 percent in 1989 because of increased expenditures by Japan's rapidly aging population. Leading producers actively developed new drugs, such as those for degenerative and geriatric diseases, and also internationaled operations. Pharmaceutical companies were establishing tripolar networks connecting Japan, the United States, and Western Europe to coordinate product development. They also increased merger and acquisition activity overseas. Biotechnology research and development was progressing steadily, including the launching of marine biotechnology projects, with full-scale commercialization expected to take place in the 1990s. Biotechnology research covered a wide variety of fields: agriculture, animal husbandry, pharmaceuticals, chemicals, food processing, and fermentation. Human hormones and proteins for pharmaceutical products were sought through genetic recombination using bacteria.

Biotechnology also is used to enhance bacterial enzyme properties to further improve amino-acid fermentation technology, a field in which Japan is the world leader. The government cautions Japanese producers, however, against overoptimism regarding biotechnology and bioindustry. The research race both in Japan and abroad intensified in the 1980s, leading to patent disputes and forcing some companies to abandon research. Also, researchers began to realize that such drug development continually showed new complexities, requiring more technical breakthroughs than first imagined. Yet despite these problems, research and development, especially in leading companies, was still expected to be successful and to end in product commercialization in the mid-term.

Japan dominated world shipbuilding in the late 1980s, filling more than half of all orders worldwide. Its closest competitors were South Korea and Spain, with 9 percent and 5.2 percent of the market, respectively. Japan's shipyards replaced their West European competitors as world leaders in production through advanced design, fast delivery, and low production costs. The Japanese shipbuilding industry was hit by a lengthy recession from the late 1970s through most of the 1980s, which resulted in a drastic cutback in the use of facilities and in the work force, but there was a sharp revival in 1989. The industry was helped by a sudden rise in demand from other countries that needed to replace their aging fleets and from a sudden decline in the South Korean shipping industry. In 1988 Japanese shipbuilding firms received orders for 4.8 million gross tons of ships, but this figure grew to 7.1 million gross tons in 1989.

The aerospace industry received a major boost in 1969 with the establishment of the National Space Development Agency, which was charged with the development of satellites and launch vehicles (see Telecommunications , this ch.). Japan's aircraft industry was only one-twentieth the size of that of the United States and one-twelfth that of Western Europe, and its technological level lagged as well. However, in the late 1980s Japan began to participate in new international aircraft development projects as its technical capabilities developed. The Asuka fanjet-powered short takeoff and landing (STOL) aircraft made a successful test flight in 1985. In 1988 Japan signed an accord with the United States to cooperate in building Japan's next-generation fighter aircraft, the FSX (see The Defense Industry , ch. 8).

The textile industry showed a strong revival in the late 1980s because of increased domestic demand from the construction, automobile, housing, and civil engineering industries for various synthetic fibers. The clothing industry also fared well in the late 1980s, thanks to the expansion of consumer demand, especially in the area of women's apparel. Production of high value-added fashionable clothes became the mainstay of this industry.

The production value of the food industry ranked third among manufacturing industries after electric and transport machinery. It produced a great variety of products, ranging from traditional Japanese items, such as soybean paste (miso) and soy sauce, to beer and meat. The industry as a whole experienced mild growth in the 1980s, primarily from the development of such new products as "dry beer" and precooked food, which was increasingly used because of the tendency of family members to dine separately, the trend toward smaller families, and convenience. A common feature of all sectors of the food industry was their internationalization. As domestic raw materials lost their price competitiveness following the liberalization of imports, food makers more often produced foodstuffs overseas, promoted tie-ups with overseas firms, and purchased overseas firms.

Data as of January 1994

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