1. Trend of the Machine Industry in Japan

1. Trend of the Machine Industry in Japan
1.1. Trend of the production, shipment, etc. of the machine industry(1) Trend of the machine industry in the past five years

The production index of the machine industry (excluding steel vessels and railway vehicles) in2009 showed a considerable decrease of 30.3% from the previous year. Behind this was the fact thatthe production of all the types of machine industries, including transportation machines, generalmachines and electronic parts and devices, decreased. The shipment index also showed a marked
decline of -29.4% because just as in the case of production index, all the machine industries,
including the transportation machine industry, suffered a substantial fall in shipment. The inventoryindex fell greatly, too, from +7.1% in the previous year to -21.4% in 2009. On the other hand, theinventory ratio rose sharply.
The trend of the production, shipment and inventory indexes and inventory ratio of the machineindustry (excluding steel vessels and railway vehicles) on a year-on-year basis from 2005 to 2009 is
as shown in Figure 1.1. As evident from this figure, the production index and shipment index turned
into negative in 2008, and this downward trend accelerated in 2009. The inventory index had been ina positive phase until 2008 but suddenly dropped into a negative figure in 2009.
On the other hand, the inventory ratio started to enter an increasing trend in 2008, and thistendency further increased in 2009, recording 34.6% or a rise of 24.6 percentage points. In short, theproduction, shipment and inventory indexes in 2009 all showed a record decrease on an
unprecedented level. This fact can be regarded as the result truly indicating the fact that the impactof the Lehman shock, which had begun to be felt gradually in late 2008, abruptly attacked themachine industry in Japan furiously in 2009, having serious effects on all sectors of the industry,including those of general and transportation machines.

11. Trend of the Machine Industry in Japan

Fig. 1.1

Trend of the industrial indexes of the entire machine industry(year-on-year basis)

40
30
20
Production
Production

10

Shipment
Shipment
0
2005

2006

2007

2008

2009

Inventory
Inventory-10
Inventoryratio
ratio
Inventory

-20
-30
-40

Source:Based on the Ministry of Economy, Trade and Industry, “Annual Report of Machinery Statistics.”

The trend of the machine industry indexes by business category is as shown in Figure 1.2. As
this figure indicates, a greater declining tendency than in 2008 is observed in 2009 in all of theindustrial indexes regardless of business category. More specifically, the decrease rate was -39.9%
for general machines, -34.6% for transportation machines, -27.7% for precision machines, only one
sector having a positive figure in 2008, -21.4% for electric machines, -20.8% for electronic parts anddevices and -19.2% for information and communication machines.

21. Trend of the Machine Industry in Japan

Fig. 1.2

Trend of the production index of the machine industry by business category(year-on-year basis)

30
20
GeneralGeneral machines
machines
10
Electricmachines
machines
Electric

0
2005

2006

2007

2008

2009

-10

Informationand
andInformation
communication machines
machines
communication

Electronic
Electronic parts
parts and devices
devices-20

Transportation machines
machines
Transportation-30

Precisionmachines
machines
Precision-40-50

Source:Same as that for Fig. 1.1.

Figures 1.3 and 1.4 show the trend of the production and shipment indexes of the machineindustry (excluding steel vessels and railway vehicles) as a whole and by business category
supposing that the figure for 2005 were 100. First, the production index of the entire machineindustry in 2009 fell by 33 percentage points to 75.9% as compared with the level in 2008, which
was 108.9%. While a downward trend like this was remarkable in all the categories of the machineindustry, general machines (60.3%) and transportation machines (73.0%) experienced an especiallygrave situation: only 60-70% on a 2005 basis. As almost all categories of machine manufacturers had
a considerable decrease from the 2005 level, only electronic parts and devices barely achieved afigure equivalent to the 2005 level.
Behind this was, as already pointed out for Figure 1.2, the rapid downturn of the U.S. market
and the global financial crisis caused by the Lehman shock led to a sudden decrease in the
production of transportation machines in Japan, whose ratio of export to the U.S. had risen in thepast several years. It is supposed that then this forced Japanese manufacturers of general machines
and other types of machines highly dependent on transportation machines to review and reduce theircapital investment plans, thus speeding up the pace of production cuts in these machines.

31. Trend of the Machine Industry in Japan

Fig. 1.3

Trend of the production index of the machine industry (2005=100)
135

Production index(2005=100)

130
125
120
115
110
105
100
95
90
85
80
75
70
65
60
55

Source:

2005

2006

2007

2008

2009

Machine industry(excluding steel vessels
and railway vehicles)

100

108.5

113.5

108.9

75.9

General machines

100

106.4

109.2

100.4

60.3

Electric machines

100

104.5

103.2

100.4

78.9

Information andcommunication machines

100

106.4

108.4

103.2

83.4

Electronic parts anddevices

100

117.8

131

126.3

100

Transportation machines(excluding steel vessels
and railway vehicles)

100

107.6

113.5

111.6

73

Precision machines

100

108.1

114.9

117.6

84.6

Same as that for Fig. 1.1.

The shipment index of the entire machine industry (Fig. 1.4) in 2009 was 77.7%, a substantial
fall as for the production index. By business category, general machines suffered the largest fall to
60.6%, registering a record decrease of 60% of the 2005 level, while transportation machines also
had a considerable drop to 74.4%, indicating that the rapid production cut of general andtransportation machines resulted in the decline in the shipment index of the entire machine industry.
The index of precision machines, which had kept a favorable figure until 2008, fell to 87.5%, too.
On the other hand, electronic parts and devices managed to stay on the 2005 level with 96.8%,
although their performance was not as good as in the production index. Behind this can be pointed
out the fact that demand for these products in China, their main destination, did not drop very
sharply even after the Lehman shock.

41. Trend of the Machine Industry in Japan

Fig. 1.4

Trend of the shipment index of the machine industry (2005=100)
135

Shipment index(2005=100)

130
125
120
115
110
105
100
95
90
85
80
75
70
65
60
55

Source:

2005

2006

2007

2008

2009

Machine industry(excluding steel vessels
and railway vehicles)

100

108.4

114.1

110.1

77.7

General machines

100

106.6

109.9

100.1

60.6

Electric machines

100

104.7

104.2

102.5

82.3

Information andcommunication machines

100

105.3

110.2

109.6

93.8

Electronic parts anddevices

100

116.4

129.9

122.6

96.8

Transportation machines(excluding steel vessels
and railway vehicles)

100

108.4

114.7

113.4

74.4

Precision machines

100

104.8

110.8

117.6

87.5

Same as that for Fig. 1.1.

(2) Trend of the general machine industry

As shown in Figure 1.5, the production index of the general machine industry (boilers andmotors, civil engineering and construction machines, chemical machines, life-related industrial
machines, semiconductors and flat-panel devices, wind-powered and hydraulic machines and oilpressure equipment, conveying and carrying machines, industrial robots, farm machines, metalmachine tools, metal working machines, textile machines, freezers and applied products, dies,machinery tools, other general machines and general machine parts) in 2009 decreased for thesecond consecutive year, recording a substantial fall of 39.9% year on year. As one reason for this, it
can be mentioned that while chemical machines showed an increase, general machine parts, civilengineering and construction machines, metal machine tools and some others were reduced. The
shipment index also suffered a substantial fall of -39.5% as compared with the previous year. As afactor contributing to this, the fact can be pointed out that the shipment of civil engineering and5

1. Trend of the Machine Industry in Japan

construction machines, general machine parts, wind-powered and hydraulic machines and oilpressure equipment and some others decreased. The inventory index declined steeply by 25.0% year
on year, showing a drop first in six years. The factor behind this is the fact that, while the inventoryof farm machines, etc. increased, that of civil engineering and construction machines, boilers andmotors, metal machine tools etc. dropped.

Fig. 1.5

Trend of the industrial indexes of the general machine industry(year-on-year basis)

100
80
60
Production
Production

40

Shipment
Shipment

20

Inventory
Inventory

0

Inventory ratio
Inventory
ratio

2005

2006

2007

2008

2009

-20
-40
-60

Source:Same as that for Fig. 1.1.

Figure 1.6 shows the trend of the production indexes of the general machine industry by businesscategory. As evident from this figure, the business category recording a positive figure was chemicalmachines only, while all of the other general machine industries suffered a sharp decline and a very
negative growth. Civil engineering and construction machines (-67.4% year on year), metal machine tools(-63.7%) and industrial robots (-58.1%) were the business categories showing the most remarkable
downward trend, but other business categories all registered a considerably negative figure. As the main
factors behind the fall in civil engineering and construction machines, the fact can be pointed out that the
production of shovel-equipped excavators both for lease and rental purposes in Japan and for export toEurope, the U.S. and Middle East decreased two years straight to -70.2% year on year in 2009, that theoutput of construction cranes for the Japanese market dropped first in seven years to -51.9% and that the
production of bulldozers for the Japanese market as well as for Europe, the U.S., etc. decreased by 76.9%.
The decline in the figure of metal machine tools can be explained mainly by the fact that the output ofmachining centers for automobile-related industries in Japan and for the U.S. and European markets fell,
reducing the index to -62.1% year on year and that the production of numerical control lathes forJapanese automobile-related industries and for export to the U.S. and Europe decreased for the second
consecutive year in 2009, lowering the index to -69.9% year on year.

61. Trend of the Machine Industry in Japan

Fig. 1.6

Trend of the production indexes of the general machine industry
by business category (year-on-year basis)

40

BoilersandmotorsBoilersandmotors

Civil engineering and construction
Civil engineering and construction
machinesmachines

20

Chemicalmachines
Chemicalmachines
Life-relatedindustrial
machines
Life-relatedindustrial
machines

Semiconductors and flat-panel
Semiconductors and flat-panel devices
devices

0
2005

2006

2007

2008

2009

Wind-powered and hydraulicWind-powered and hydraulic machines
machines
andequipment
oil pressure equipment
andoil pressure
Conveying
andandcarrying
machines
Conveying
carrying
machines
Industrial
robotsIndustrial
robots-20

Farmmachines
Farmmachines
Metalmachinetools
Metalmachinetools
Metal
working
machines
Metal
working
machines-40

Textilemachines
Textilemachines
Freezers
andandappliedproducts
Freezers
appliedproducts
Dies
Dies

-60

Machinerytools
Machinery
tools
Other
generalmachines
Other
generalmachines
Generalmachineparts
Generalmachineparts-80

Source:Same as that for Fig. 1.1.

(3) Trend of the electric machine industry

As Figure 1.7 shows, the production index of the electric machine industry (rotary electricmachines, stationary electric machines, switching devices and equipment, consumer electricmachines, wiring/lighting appliances, electronic application devices, batteries and other electricmachines) fell for three successive years in 2009, declining by 21.4% year on year. Behind this was
the great effect of the fact that, as described later, although the output of solar cell modules,

71. Trend of the Machine Industry in Japangeneral-purpose turbine generators, etc. grew, that of electric measuring instruments, servomotors,
small-sized motors, etc. decreased. The shipment index also dropped sharply by 19.7% year on year
at the same time as the production index. By contrast, the inventory index considerably rose in 2009at a higher rate than in 2008, recording 14.1%, and the inventory ratio also showed a larger upward
trend with 7.9% over the previous year.

Fig. 1.7

Trend of the industrial indexes of the electric machine industry(year-on-year basis)

20
15
10
5

Production
Production
Shipment
Shipment

0
2005

2006

2007

2008

-5

2009

Inventory
Inventory
Inventory
Inventory ratio

-10
-15
-20
-25

Source:Same as that for Fig. 1.1.

The trend of the production index of the electric machine industry by business category is asshown in Figure 1.8. As seen in this figure, all of the business categories except other electricmachines turned into a negative growth. The business categories that experienced an especially rapid
decline were rotary electric machines (-39.5% year on year), electric measuring instruments(-33.2%), wiring/lighting appliances (-23.6%), switching devices and equipment (-22.8%) andstationary electric machines (-21.3%), all registering a -20%-mark fall. The reasons for this include
the fact that for rotary electric machines, the output of general-purpose turbine generators increased
but that of servomotors for the Japanese, European, U.S. and Chinese markets dropped and that the
production of small-sized motors and non-standard three-phase induction motors for Japanese
automakers declined, too.
The factors behind the fall in relation to switching devices and equipment are considered to be,among others, a decreased production of monitor and control equipment for Japanese, European, U.S.
and Chinese electric power and railway companies and a lower output of electromagnetic relays forthe second consecutive year.
The production of electric measuring instruments decreased for two years running in 2009 due
to a fall in their output for mobile communication industries in Japan. The output of semiconductors

81. Trend of the Machine Industry in Japanand IC measuring instruments also suffered a drop for the third successive year as a result of a
production cut in semiconductors, IC testers, etc. for Japanese, Taiwanese and South Korean
semiconductor producers, and the production of industrial measuring and control instruments
declined for two consecutive years.
For other electric machines, the only business category that managed to stay on a positive level,
the reason is the fact that while the production of backlight devices for liquid crystal panels
decreased, that of solar cell modules grew.

More specifically, it can be pointed out that the output

of solar cell modules for houses increased due to the effect of the subsidy programs launched by thenational and local governments.

Fig. 1.8

Trend of the production index of the electric machine industry
by business category (year-on-year basis)

30
RotaryRotaryelectric
electric machines
machines
20

Stationary
Stationaryelectric
electric machines
machines

10

Switching
Switchingdevices
devicesandand equipment
equipment
Consumerelectric
electric machines
machines
Consumer

0
2005

2006

2007

2008

2009
Wiring/lighting appliances
appliances
Wiring/lighting-10

Electronicapplication
application devices
Electronic-20

Electricmeasuring
measuring instruments
instruments
Electric-30
Batteries
Batteries-40
Otherelectric
electric machines
machines
Other-50
Source:Same as that for Fig. 1.1.

(4) Trend of the information and communication machine industry

Figure 1.9 shows the industrial indexes of the information and communication machineindustry (communication machines, consumer electronic machines, electric computers and otherinformation and communication machines). As evident from this figure, the production index had
turned negative in 2008 and had a larger downward trend in 2009, lowering to -19.2%. The shipment
index declined, too, for two years running, registering a steep fall of 14.4% year on year. On theother hand, the inventory index abruptly became negative in 2009 to -20% from a positive figure of
35% in 2008 over the previous year, while the inventory ratio experienced a sharp decline of 15.9%
as compared with 27% in 2008. The reasons behind this include the reduced production of cellular
phones, digital cameras, video cameras, etc. despite a growth in the output of liquid crystal TV sets, etc.
for the production index and the shipment index, and the production cut of car navigation systems andnotebook and desk-top personal computers for the inventory index and the inventory ratio.

91. Trend of the Machine Industry in Japan

Fig. 1.9 Trend of the industrial indexes of the information andcommunication machine industry (year-on-year basis)
40
30
20

Production
Production

10

Shipment
Shipment
Inventory
Inventory

0
2005

2006

2007

2008

2009

Inventoryratio
ratio
Inventory

-10
-20
-30

Source:Same as that for Fig. 1.1.

The trend of the production index of the information and communication machine industry bybusiness category is as shown in Figure 1.10. As this figure indicates, the production index in 2009
was negative and had a considerable drop for all the business categories of this industry: -27.3% forcommunication machines, -17.8% for electronic computers, -12.5% for consumer electronic
machines, which had stayed on a positive level until 2008, and -27.8% for other information andcommunication machines. The factors behind this in relation to communication machines include thefact that although the production of fixed communication appliances rose, that of cellular phones fell
for the third consecutive year because of a slower growth in replacement demand in Japan, that theoutput of digital transmission equipment suffered a drop for the first time in two years due to asmaller demand from telecommunication businesses in Japan and U.S. users and that a diminisheddemand from mobile communication businesses caused a decrease in the production of basecommunication equipment for three years straight.
The reasons for this industry’s poor performance concerning electronic computers are
considered to be a drop in the output of notebook personal computers for the third successive year
resulting from a declining demand in Japan and for export to the West, a smaller production of
external memory devices for two years running due to a smaller demand from financial institutionsin Japan and for export to the U.S., and a falling demand for export to the Western markets thatcaused the output of input/output devices to continue falling.
For consumer electronic machines, the production of digital cameras decreased first in four
years because of dwindling demand in Japan and for export to Western countries, and so did that ofvideo cameras for two years running for a similar reason. The output of car audio systems dropped
for nine years straight after the amendment in 2005 due to reduced production for automakers in

10

1. Trend of the Machine Industry in Japan

Japan. By contrast, the production of liquid crystal TV sets enjoyed a growth for ten consecutive
years because demand was generated partly affected by the introduction of the “eco-point” system.
As to other information and communication machines, the output of terminal devices decreased
for two years running and that of industrial TV sets suffered a decline for the third consecutive year
due to a fall in their production for financial institutions in Japan. The production of projectors also
dropped as a result of a diminished output for export to the West for four successive years.

Fig. 1.10 Trend of the production index of the information andcommunication machine industry by business category (year-on-year basis)
20
15
10
5

Communication
Communication machines

0
2005

2006

2007

2008

2009

-5

Consumer electronic
electronic machines
Consumermachines
Electronic computers
computers
Electronic
Other information
information and
Other
and
communication machinescommunication

-10
-15
-20
-25
-30
Source:Same as that for Fig. 1.1.

(5) Trend of the electronic parts and device industry

Figure 1.11 shows the industrial indexes of the electronic parts and device industry (electronicparts, semiconductor devices, integrated circuits and semiconductor parts). As seen in this figure, theproduction index in 2009 decreased substantially by 20.8%. Similarly, the shipment index registereda considerable fall of 21.0% from 2008, too. The inventory index suddenly turned negative from+46.3% in 2008, registering -27.5%. By contrast, the inventory ratio recorded +23.2%, although thisfigure was lower than that for 2008. What can be pointed out as the factors contributing to thisinclude, for the production of electronic parts and devices in 2009, a decrease in the production oflogic boards, active-type liquid crystal elements (medium- and small-sized), active-type liquid
crystal elements (large-sized), etc. despite a growth in the output of memories. The shipment index
fell for two years straight as a result of, among others, a reduced shipment for the Japanese market in
all of the business categories, i.e., integrated circuits, electronic parts, semiconductor devices andsemiconductor parts, and a smaller shipment for export of all of these products. The inventory ratio
had a decline first in four years affected by a decrease in all of the product types, i.e., integrated
circuits, electronic parts and semiconductor devices.

111. Trend of the Machine Industry in Japan

Fig. 1.11

Trend of the industrial indexes of the electronic parts and device industry(year-on-year basis)

50
40
30
20

Production
Production

10

Shipment
Shipment

0

Inventory
Inventory
2005

2006

2007

2008

2009

-10

Inventory
Inventory ratio
ratio

-20
-30
-40

Source:Same as that for Fig. 1.1.

The trend of the production index of the electronic parts and device industry by businesscategory is as shown in Figure 1.12. As evident from this figure, the production index in 2009 fell
for all of the business categories. The declining trend was especially marked in semiconductor parts,
semiconductor devices and integrated circuits: -27.3% year on year for semiconductor parts, -25.8%
for semiconductor devices and -21.8% for integrated circuits. The reasons for this trend of
production for electronic parts include: a fall in the output of active-type liquid crystal elements(medium- and small-sized) first in two years due to a smaller production of products for gamemachines for export to China and that of products for cellular phones for the Japanese market andexport to South Korea; a decrease in the production of active-type liquid crystal elements(large-sized) first in eight years as a result of a reduced output for the domestic and export markets;and a drop in the production of electronic circuit boards for two successive years because of adecline in the output of products for cellular phones for the Japanese market and those for personal
computers for markets in Japan, China and the U.S.
For integrated circuits, the reduced production of cellular phones and digital cameras for theJapanese and Chinese markets led to a substantial fall of the output of logic boards, and the smaller
output of products for onboard purposes for the Japanese market and export to Europe and that ofproducts for cellular phones for the domestic market caused the production of microcomputers to
drop. Moreover, the production of linear semiconductor integrated circuits fell for the second
successive year due to a decrease in the output of products for personal computers for the Japanese,
Chinese and Taiwanese markets and a decline in the production of products for household electric
appliances for the domestic market. By contrast, the output of memories increased for the first timein two years because of increased production for the market in Japan.

12

1. Trend of the Machine Industry in Japan

As to semiconductor devices, the production of transistors suffered a substantial decrease as aresult of a fall in the output for household electric appliances and cellular phones for the Japanesemarket and that for plasma panels for export to China, while a smaller output for DVD players forthe markets in Japan and China resulted in a big drop in the production of laser diodes. In addition,
because of a fall in the output of products for household electric appliances and onboard purposes for
the Chinese and Japanese markets, the production of rectifier cells decreased for three years straight.

Fig. 1.12

Trend of the production index of the electronic parts and device industry
by business category (year-on-year basis)

30

20Electronic parts
Electronic
parts

10

0
2005

2006

2007

2008

-10

2009

Semiconductor devices
Semiconductor
devices
Integrated circuits
Integrated
circuits
Semiconductor parts
Semiconductor
parts

-20

-30

Source:Same as that for Fig. 1.1.

(6) Trend of the transportation machine industry

Figure 1.13 shows the industrial indexes of the transportation machine industry (passenger cars,
buses, trucks, automotive parts, two-wheeled vehicles and industrial vehicles). As this figure
indicates, the production index of the transportation machine industry in 2009 was -34.6% year on
year, a decrease for the second successive year. Behind this is the fact that while the production ofrailway vehicles grew, that of passenger cars, automotive parts and trucks decreased. The quarterly
trend was as follows: in the first quarter of January to March 2009, all of the product types, including
passenger cars, automotive parts and trucks, experienced a lower output, registering -37.4% year on
year and a fall for the fourth consecutive quarter; in the second quarter of April to June, theproduction index rose to 16.8% year on year as a result of a higher production of passenger cars,
automotive parts and railway vehicles despite a diminished output of trucks, two-wheeled vehicles
and industrial vehicles; in the third quarter of July to September, the production index was 14.4%
year on year because the output of passenger cars, automotive parts and trucks increased althoughthat of railway vehicles and two-wheeled vehicles suffered a fall; finally in the fourth quarter ofOctober to December, the index stood at 10.9% year on year due to a bigger production of passenger
cars, automotive parts and tricks in spite of a diminished output of two-wheeled vehicles. As

13

1. Trend of the Machine Industry in Japandescribed above, while the production index fell greatly on a year on year basis, the figures by
quarter seem to suggest that some signs of recovery began to appear in passenger cars, automotive
parts and trucks. However, it cannot be denied that the Lehman shock has done considerable damage
to this industry. The shipment index also declines considerably to -34.4% year on year. The reason
for this is, as in the case of the production index, the fact that the shipment of passenger cars,
automotive parts and trucks fell. Moreover, the inventory index suffered a sharp decline of 31.0%
year on year because of a similar reason. On the other hand, the inventory ratio rose first in two
years, recording 6.9% year on year.

Fig. 1.13

Trend of the industrial indexes of the transportation machine industry(year-on-year basis)

50
40
30
20

Production
Production

10

Shipment
Shipment
Inventory
Inventory

0
2005

2006

2007

2008

-10

2009

Inventory ratio
ratio
Inventory

-20
-30
-40

Source:Same as that for Fig. 1.1.

The trend of the production index of the transportation machine industry by business category
is as shown in Figure 1.14. As seen in this figure, the trend in 2009 for the production of passenger
cars is characterized by a fall of 34.4% year on year, a decrease for two consecutive years, affected
greatly by the substantial drop in the first half, although there were some good effects of the“eco-point” system, where the purchaser of energy-saving products were given the points that they
could exchange with a variety of products, and the subsidy program for the buyer of eco-friendly
cars. By the type of cars, ordinary passenger cars registered smaller production for two years runningwith -39.9% year on year, affected by a lower output not only for the Japanese market but also forexport to the U.S., Europe and the Middle East. Small-sized passenger cars suffered smaller
production first in two years, standing at -21.3% year on year, because the production for export toEurope, the U.S. and the Middle East dwindled although that for the domestic market went up a little.
Light passenger cars experienced a lower output for the third successive year with -11.8% despitesome good effects of new cars.
The shipment index fell for two years straight, registering -34.1%, as a result of smaller

141. Trend of the Machine Industry in Japanproduction of all types of passenger cars, i.e., ordinary, small-sized and light ones. The inventoryindex also had a fall for the third consecutive year, recording -30.5% year on year, due to adiminished output of all passenger car types as in the case of the shipment index. Truck production
decreased for six years running with -42.3% year on year. By the type of trucks, ordinary trucks
suffered a diminished output (down 48.4% year on year) first in three years because both production
for the domestic market and for export to the Middle East, Europe and the ASEAN dropped, while
the output of small-sized trucks decreased for six successive years, too, with -35.1% due to lower
production for the Japanese, Middle East and ASEAN markets. In addition, light trucks registeredsmaller shipment for four successive years with -10.3% year on year. The shipment of trucks fell forthe first time in two years, standing at -41.7% year on year as a result of a decline in the shipment of
all types of trucks. For the same reason, the inventory of trucks reduced for the fourth consecutive
year with -21.3% as compared with the level at the end of 2008. The production of automotive parts
went down for two years straight with -29.8% year on year because the output both for the domestic
market and for export to the U.S., Europe and the ASEAN fell. By product type, the output ofdriving transmission/steering devices and parts, chassis/vehicle body parts and engine parts went
down. Two-wheeled vehicles registered smaller production for three consecutive years with -48.4%
year on year as a result of a lower output not only for the Japanese market but also for the U.S.,
European and ASEAN markets.

Fig. 1.14

Trend of the production index of the transportation machine industry(year-on-year basis)

30
20
10

Passenger
Passengercars
cars

0
-10

2005

2006

2007

2008

2009

Buses
Buses
TrucksTrucks-20
Automotiveparts
parts
Automotive-30
Two-wheeledvehicles
vehiclesTwo-wheeled-40
Industrialvehicles
vehiclesIndustrial

-50
-60
-70

Source:Same as that for Fig. 1.1.

(7) Trend of the precision machine industry

Figure 1.15 shows the industrial indexes of the precision machine industry (measuring
instruments, optical machines and parts, and timepieces). As evident from this figure, the production
index of the precision machine industry in 2009 had a considerable decline, registering -28.1% year15

1. Trend of the Machine Industry in Japanon year. Similarly, the shipment index showed a fall first in six years, with -25.6% year on year, a
record decline. The inventory index fell by 9.7% year on year, although the size of the decline wassmaller than that in 2008. By contrast, the inventory ratio rose greatly, an increase first in two years,
standing at 49.5% year on year.
What can be pointed out as the factors behind this situation includes, in connection withproduction, the impact of lower output of precision measuring instruments, analyzing equipment andinterchangeable lenses for cameras despite of bigger production of gas meters. As for shipment, thereduced shipment of all product types, such as measuring instruments, optical parts and timepieces,
led to a substantial fall in shipment. By the destination of shipment, the shipment to the domestic
market fell all in measuring instruments, timepieces and optical parts, registering -24.9% year on
year. The shipment index for export decreased by 26.1% year on year due to smaller shipment of allof measuring instruments, optical parts and timepieces. The inventory index declined for two years
running as described above because the inventory of measuring instruments and optical parts
reduced although that of timepieces increased.

Fig. 1.15

Trend of the industrial indexes of the precision machine industry(year-on-year basis)

60
50
40
30

Production
Production

20

Shipment
Shipment

10

Inventory
Inventory

0
-10

2005

2006

2007

2008

2009

Inventory ratio
ratio
Inventory

-20
-30
-40

Source:Same as that for Fig. 1.1.

The production index of the precision machine industry by business category as compared withthe previous year is as shown in Figure 1.16. As indicated in this figure, for measuring instruments,
the index declined first in seven years with -28.8% year on year as a result of a drop in the
production of precision measuring instruments, analyzing equipment and industrial length meters
despite a rise in that of gas meters. It can be pointed out as the causes for this in relation tomeasuring instruments that for precision measuring instruments, the output of cylinder gauges for
the Japanese and European markets fell for three years straight with -61.5% year on year, that foranalyzingequipment,

theproductionofelectromagnetic

analyzingequipment

andchromatography/separation/ distilling equipment for the markets in Japan, China and the West16

1. Trend of the Machine Industry in Japandwindled, registering a fall first in six years with -20.6% year on year and that for industrial length
meters, the output of caliper squares for export to the West went down for the first time in two years,
standing at -43.5% year on year.

As to optical machines and parts, it is considered important thatthe production of interchangeable lenses for cameras for export to North America and Europe
dropped, causing the index to decline first in six years with -25.6% year on year. For timepieces, theindex fell for 11 successive years, registering -25.8% year on year, due to smaller production ofbattery-powered timepiece movements and battery-powered timepieces. The factors behind this is
the fact that the production of battery-powered timepiece movements fell for seven years straightwith -25.5% year on year as a result of a lower output for export to China and that the output ofbattery-powered timepieces fell for four consecutive years, standing at -26.4% year on year.

Fig. 1.16

Trend of the production index of the precision machine industry
by business category (year-on-year basis)

30
20
10
0
2005

2006

2007

2008

2009

-10

Measuring instruments
Measuring
instruments
Optical machines
machines and parts
Opticaland parts
Timepieces
Timepieces

-20
-30
-40

Source:Same as that for Fig. 1.1.

1.2. Trend of the industrial indexes of the machine industry in 2009
(1) Trend of the production index in 2009 by quarter

Figure 1.17 shows the trend of the production index (seasonally adjusted; 2005=100) in 2009by quarter of the entire machine industry and its main branch industries. As shown in this figure, theproduction index of the entire machine industry (excluding steel vessels and railway vehicles) in2009 declined to a little under 70% in the Ist quarter but began to show an upward trend in the IInd
quarter and after although only slowly, recovering to 85.7% in the IVth quarter. The production
index of the general machine industry was a little over 60% in the Ist quarter and continued to
decline in the IInd and IIIrd quarters, staying at a level of about 60% in the IVth quarter, too. The
production index of the electric machine industry was a little over 70% in the Ist quarter and hadthen an increasing tendency, recording a level of over 80% in the IVth quarter. For the informationand communication machine industry, the production index started with a little over 70% in the Ist171. Trend of the Machine Industry in Japan

quarter and kept a rising trend after that, registering a 90% mark in the IVth quarter. The production
index of the electronic parts and device industry was as low as a little over 70% in the Ist quarter but
rapidly entered a recovery phase in the IInd quarter, recording 107.3% in the IIIrd quarter and118.2% in the IVth quarter; this industry showed signs of revival at the quickest pace of all thebusiness categories. For the transportation machine industry (excluding steel vessels and railway
vehicles), the production index fell to less than 60% in the Ist quarter but started to show a gradual
recovering trend after that, restoring to a little over 80% in the IVth quarter. Finally, the production
index of the precision machine industry stayed at an 80% mark throughout all the quarters of 2009and increased to a little under 90% in the IVth quarter.

Fig. 1.17

Production index of the machine industry in 2009 by quarter(seasonally adjusted; 2005=100)

Production index(seasonally adjusted)

125

115

105

95

85

75

65

55

Source:Ist quarter

IInd quarter

IIIrd quarter

IVth quarter

Machine industry(excluding steel vessels
and railway vehicles)

67.4

72

78.3

85.7

General machines

64.3

55.9

57.8

63.8

Electric machines

75.3

77.2

80.4

83.2

Information andcommunication machines

76.2

81.2

84.1

92.2

Electronic parts anddevices

75.4

95.3

107.3

118.2

Transportation machines(excluding steel vessels
and railway vehicles)

58.3

68.1

77.9

86.4

Precision machines

86.3

81.4

82.2

89.8

Same as that for Fig. 1.1.

18

1. Trend of the Machine Industry in Japan(2) Trend of the shipment index in 2009 by quarter

Figure 1.18 shows the trend of the shipment index (seasonally adjusted; 2005=100) in 2009 byquarter of the machine industry and its main branch industries. As seen in this figure, the shipment
index of the whole machine industry (excluding steel vessels and railway vehicles) in 2009 fell to alittle under 70% in the Ist quarter but gradually rose subsequently, registering a little under 80% in
the IIIrd quarter and a little under 90% in the IVth quarter. For the general machine industry, theshipment index was a little over 60% in the Ist quarter but sharply declined to less than 60% in the
IInd and IIIrd quarters, failing to recover to the level in the Ist quarter by the IVth quarter. The
electric machine industry kept its shipment index at a level of 80% or so in general, showing areviving tendency in the IVth quarter with a little below 90%. The shipment index of the informationand communication machine industry began to be on the increase in the IIIrd quarter and after, rising
to 105.5% in the IVth quarter. For the electronic parts and device industry, the shipment index wason a level of about 70% in the Ist quarter and increased further after that, recording 113.9% in theIVth quarter. The transportation machine industry (excluding steel vessels and railway vehicles)
started with the shipment index of a 60% level in the Ist quarter, and the index then slowly rose andreached a little under 90% by the IVth quarter. The shipment index of the precision machine industry
remained on a similar level through all the quarters and registered a little over 90% in the IVthquarter.

19

1. Trend of the Machine Industry in Japan

Fig. 1.18

Shipment index of the machine industry in 2008 by quarter(seasonally adjusted; 2005=100)

Shipment index(seasonally adjusted)

115

105

95

85

75

65

55

Source:Ist quarter

IInd quarter

IIIrd quarter

IVth quarter

Machine industry(excluding steel vessels
and railway vehicles)

69.1

73

79.9

87.7

General machines

65.4

56

58.3

63.2

Electric machines

79.5

79.2

84

87.5

Information andcommunication machines

84.9

89.6

94.6

105.5

Electronic parts anddevices

73.4

93.2

103.1

113.9

Transportation machines(excluding steel vessels
and railway vehicles)

61.4

68.1

78.4

87.3

Precision machines

86.8

83.5

86.3

96.2

Same as that for Fig. 1.1.

1.3. Situation of the capital investment of the machine industry(1) Situation of the capital investment of the general machine industry

Figure 1.19 shows the trend of capital investment of the general machine industry from the Ist
quarter of 2008 to the Ist quarter of 2010. As this figure indicates, the capital investment of thegeneral machine industry began to substantially decrease in the IVth quarter of 2008 when theamount of investment fell by 23.4% and continued a record decrease rate thereafter, too, indicating aserious situation: -25.0% in the Ist quarter of 2009, -33.9% in the IInd quarter, -47.3% in the IIIrd
quarter, -37.2% in the IVth quarter and -36.7% in the Ist quarter of 2010. From these figures it canbe supposed that the global stagnant demand mainly in the automobile industry associated with the
Lehman shock that erupted in the fall of 2008 still continued to put the brakes on the investment201. Trend of the Machine Industry in Japanintention of this industry. Although some expectations are placed on the demand for eco-friendly
cars, it is feared that the inactive investment situation will continue for some more time.

Fig. 1.19

Situation of the capital investment of the general machine industry

Investment (¥100 million)
6,000
5,582

5,000

4,000

Investment
投資額
Increase rate
増加率

10.8
4,722

6.9

Increase rate (%)
20

-1.3
3,943

10
0

4,187
3,309

3,254

3,576

3,500

-10

3,198

3,000

-20
-23.4

-25
-30

-33.9

2,000

-37.2
-36.7
-40

1,000

-47.3

0

-50
-60

Ist Q 08 IInd Q 08 IIIrd Q 08 IVth Q 08 Ist Q 09 IInd Q 09 IIIrd Q 09 IVth Q 09 Ist Q 10

Note:

Source:Increase rate figures are those as compared with the same quarter of the previous year. Figures shown in italics arethose as a result of a change of classification where part of “general machines” and “precision machines” was moved
to “general-purpose machines,” “manufacturing machines” and “office machines.” Because of this, it is impossible tocompare the figures in the IInd quarter of 2009 and after with those in the same quarter of 2008, and these figures arepresented here only as references.
Based on the Ministry of Finance, “Statistical Survey of Incorporated Enterprises.”(2) Situation of the capital investment of the electric machine industry

Figure 1.20 shows the trend of capital investment of the electric machine industry from the Ist
quarter of 2008 to the Ist quarter of 2010. As seen in this figure, the capital investment of the electricmachine industry began to decrease greatly in the Ist quarter of 2009 and continued to fall at
increasing rates thereafter. In particular, the investment in the IVth quarter of 2009 decreased by asmuch as 52.0% as compared with that in the same quarter of 2008, and the investment remained
inactive in the Ist quarter of 2010 with -31.3% relative to the same quarter of 2009.

21

1. Trend of the Machine Industry in Japan

Fig. 1.20

Situation of the capital investment of the electric machine industry

Investment (¥100 million)
7,000

32.6
6,000

5,818

Increase rate (%)
40

Investment
投資額
Increase rate
増加率

30

5,748
18.6

20

19.6

5,132

5,000

10
4,139

4,000

-3.8

0

3,699
3,286

-10

2,922

3,000

2,541
1,986

2,000
-36.4
1,000

-42.8

-30
-31.3
-40

-43.1
-52

0

-50
-60

Ist Q 08
Note:
Source:-20

IInd Q 08 IIIrd Q 08 IVth Q 08 Ist Q 09

IInd Q 09 IIIrd Q 09 IVth Q 09 Ist Q 10

Increase rate figures are those as compared with the same quarter of the previous year.
Same as that for Fig. 1.19.

(3) Situation of the capital investment of the information and communication machineindustry

As seen in Figure 1.21, it cannot be denied that the capital investment of the information andcommunication machine industry was in a very difficult situation in all of the quarters. However,after reaching a bottom of -51.9% on a quarter-to-quarter basis in the IInd quarter of 2009, there
were signs of recovery of capital investment in the IIIrd quarter of 2009 and after although the pace
was slow.

22

1. Trend of the Machine Industry in Japan

Fig. 1.21

Situation of the capital investment of the information andcommunication machine industry

Investment (¥100 million)

8,000

Increase rate (%)

0

7,439

投資額
Investment
-6.2

7,000

Increase rate
増加率

-7.3

-10
6,000

-15.9 5,574
5,206

5,000

-20
-25.14,582
4,205

-26.6

4,000

3,361
-38.4
2,505

3,000
2,000

2,995

-37
2,649

-40

-46.3
-51.9

1,000
0

-50

-60
Ist Q 08

Note:
Source:-30

IInd Q 08 IIIrd Q 08 IVth Q 08 Ist Q 09 IInd Q 09 IIIrd Q 09 IVth Q 09 Ist Q 10

Increase rate figures are those as compared with the same quarter of the previous year.
Same as that for Fig. 1.19.

(4) Situation of the capital investment of the transportation machine industry

As seen in Figure 1.22, the capital investment of the transportation machine industry entered aphase of rapid decrease in the IInd quarter of 2009, when the capital investment suffered a fall of-41.4% as compared with the same quarter of the previous year. Investment in the IIIrd quarter of2009 showed a record decrease of 59.7%, and this downward trend continued in the IVth quarter of2009 and in the Ist quarter of 2010. As a factor behind this, it can be pointed out that the dull U.S.
market affected by the Lehman shock continued to have a serious impact on the capital investmentof this industry. It should closely be watched to what extent the domestic demand stimulated by the“eco-point” system and hybrid and electric vehicles will have positive effects on capital investmentin the years ahead.

23

1. Trend of the Machine Industry in Japan

Fig. 1.22

Situation of the capital investment of the transportation machine industry

Investment (¥100 million)

Increase rate (%)

20

14,0009.9

Investment
投資額
Increase rate
増加率12,00011,715
10,000

10
0

-2.4
9,504
-13.8

-10.4
8,228

8,000

-10
-18.9

7,208

-20

6,607
-30

6,000
-41.4

4,574

3,874

4,000

3,315

-51.6

2,000

-40

3,490

-59.7

-50
-51.9
-60

0

-70
Ist Q 08 IInd Q 08 IIIrd Q 08 IVth Q 08 Ist Q 09 IInd Q 09 IIIrd Q 09 IVth Q 09 Ist Q 10

Note:
Source:Increase rate figures are those as compared with the same quarter of the previous year.
Same as that for Fig. 1.19.

1.4. Situation of the export of the machine industry(1) Situation of the export of the entire machine industry

Figure 1.23 shows the trend of the amount and growth rate (year-on-year) of the export ofmachines and equipment (general machines, electric machines, transportation machines andprecision machines) from 2005 to 2009. As this figure indicates, the export of machines andequipment started to show a declining trend in 2008 with a negative growth rate of -5.5% anddecreased further in 2009, when the export dropped to a 4 billion-yen mark and the increase rate was-36.6%, a record figure. It can be said that these figures truly indicate that the deceleration of the U.S.
economy caused by the Lehman shock that erupted in the fall of 2008 as well as the inactive demandin EU countries began to have great effects on the export of machines and equipment from Japan in
2009. Supposing the export in 2007 to be 100, that of Japan’s export of machines and equipment in2009 decreased by 40%. It is evident that the export of machines and equipment to the Chinese andSoutheast Asian markets and the markets of other emerging countries will become the last resort ofthis industry’s export, and there is fear that the aftermaths of the Lehman shock will continue toaffect the export of machines and equipment from Japan for some more time.

24

1. Trend of the Machine Industry in Japan

Fig. 1.23

Situation of the export of machines and equipment

Total export (¥100 million)

Growth rate (%)
輸出金額
Export amount20

600,000
550,000

Growth rate
伸び率

13.1

15

9.5

500,000

10

4.5

450,000

5

400,0000

350,000

250,000-5-5.5

300,000
516,989

566,096-10
534,827-15

456,820200,000-20
339,328150,000-25

100,000-30

50,000

-36.6

0

-40
2005

Note:
Source:

-35

2006

2007

2008

2009

Increase rate figures are those as compared with the previous year.
Based on the Japan External Trade Organization (JETRO), “Trade Statistics Data Base.”(2) Situation of the export of general machines

As shown in Figure 1.24, the amount of export of general machines in 2009 sharply decreased
to a ¥9,000-billion level from a ¥15,000-billion mark in the previous year (growth rate: -39.4%), theworst situation ever. This can be seen as the outcome of the direct effect of slower growth of capital
investment in overseas manufacturing bases, mainly in the U.S.

Fig. 1.24

Situation of the export of general machines

Total export (¥100 million)

Growth rate (%)

180,000

40

Export amount
輸出金額
Growth rate
伸び率160,00030

28.8

140,000

20
7.3

120,000

10

12.5

100,000
80,00060,0000-3.3
155,165
107,114-10

150,044-20
120,457

90,87740,00020,000

-39.4

0

-40
-50

2005
Note:
Source:

-30

2006

2007

Growth rate figures are those as compared with the previous year.
Same as that for Fig. 1.23.

25

2008

2009

1. Trend of the Machine Industry in Japan(3) Situation of the export of electric machines

As Figure 1.25 shows, the amount of export of electric machines in 2009 fell to ¥10,000 billion
and the growth rate declined greatly to -30.3%. This is only about 60% of the export amount in 2006.

Fig. 1.25

Situation of the export of electric machines

Total export (¥100 million)

Growth rate (%)

180,000
9.5

160,000

Export amount
輸出金額

15

Growth rate
伸び率

10
5

140,000
0.6

120,000

0-580,000-5

145,316

100,000
154,793

169,556-9.8
161,016-10

101,296-15

60,000-20

40,000-25

20,000

-30

-30.3

-35

0
2005
Note:
Source:

2006

2007

2008

2009

Growth rate figures are those as compared with the previous year.
Same as that for Fig. 1.23.

(4) Situation of the export of transportation machines

Figure 1.26 shows that the amount of export of transportation machines in 2009 decreased to
the level of a little under ¥12,000 billion, with the negative growth rate of -41.0%, indicating a very
serious situation.

Fig. 1.26
Total export (¥100 million)
240,000
220,000
200,000
180,000
160,000
140,000

120,000
100,000
80,00060,00040,00020,0000Growth rate (%)
30

Export amount
輸出金額
Growth rate
伸び率

19.7

14

20
10

8
0

-3.6

-10
210,515
184,640

202,886-20

154,241
119,748
-41

-30
-40
-50

2005
Note:
Source:Situation of the export of transportation machines

2006

2007

Growth rate figures are those as compared with the previous year.
Same as that for Fig. 1.23.

26

2008

2009

1. Trend of the Machine Industry in Japan(5) Situation of the export of precision machines

As shown in Figure 1.27, the amount of export of precision machines in 2009 fell to ¥2,740,700
million and the growth rate was as low as -25.1%. This figure is a decrease of nearly 40% from thelevel in 2006 and shows the direct impact of falling capital investment abroad.

Fig. 1.27

Situation of the export of precision machines

Total export (¥100 million)

Growth rate (%)

50,00010

Exportamount
輸出金額

5Growth
伸び率 rate

4.1

40,0000

0.5
30,00042,33520,00040,67239,401

-5

-7.2

-6.9

-10
-15

36,581
27,407-20

10,000
-25.1
0

-30
2005

Note:
Source:

-25

2006

2007

2008

2009

Growth rate figures are those as compared with the previous year.
Same as that for Fig. 1.23.

1.5. Situation of the import of the machine industry(1) Situation of the import of the entire machine industry

Figure 1.28 shows the amount and growth rate (year-on-year) of the import of machines andequipment (general machines, electric machines, transportation machines and precision machines)
from 2005 to 2009. As seen in this figure, the import of machines and equipment in 2008 was lessthan that in the previous year, amounting to ¥18,757.2 billion, and the growth rate managed to stay at-7.4%. But the import in 2009 was ¥13,538 billion, a decrease of ¥5,200 billion from the previous
year, registering a negative growth rate of -27.8%, a great fall. What can be regarded as a reason forthis is the fact that affected by the Lehman shock, the automobile industry heavily dependent on the
U.S. market reduced its capital investment in Japan, which resulted in restraints on the import ofmachines and equipment, mainly industrial machines and automotive parts. In addition, the import ofelectric and precision machines also dropped by 25% or so, and it is supposed that electric andelectronic equipment, which are within the link structure of global supply chains, were affected by
the Lehman shock, too. For precision machines, it is considered that a stagnant demand for products
in relation to capital investment, such as analyzing and measuring instruments, influenced the importof foreign products and parts by this industry. However, machine-related manufacturers may regard
strong yen as a good chance for their business and may increase their import of raw materials andparts from abroad. It is expected that moves toward reviewing the existing global supply chain
system will grow more active in the future.

27

1. Trend of the Machine Industry in Japan

Fig. 1.28

Situation of the import of machines and equipment

Total import (¥100 million)

Growth rate (%)

250,000

20

Import amount
輸入金額

200,000

15

Growth rate
伸び率

14.2

9.3

10

5.3

5
0

150,000-5-7.4
100,000
168,472

192,363

202,563-10

187,572-15
135,385

50,000

-25
-27.8

0

-30
-35

2005

Note:
Source:

-20

2006

2007

2008

2009

Growth rate figures are those as compared with the previous year.
Same as that for Fig. 1.23.

(2) Situation of the import of general machines

As shown in Figure 1.29, the amount of import of general machines in 2009 decreased to¥2,768.8 billion affected by the sudden restraints on capital investment in Japan. The growth rate
was a record drop of 31.9%.

Fig. 1.29

Situation of the import of general machines

Import amount (¥100 million)

Growth rate (%)

50,00040

Import amount
輸入金額

31.3

Growth rate
伸び率3040,000
20

21.8
14.6

10

30,000043,18520,00032,887-5.8
40,66727,003-10
27,688-20

10,000
-31.9
0

-40
2005

Note:
Source:

-30

2006

2007

Growth rate figures are those as compared with the previous year.
Same as that for Fig. 1.23.

28

2008

2009

1. Trend of the Machine Industry in Japan(3) Situation of the import of electric machines

As seen from Figure 1.30, the amount of import of electric machines in 2009 considerably
declined to ¥7,379.9 billion, and the growth rate showed a great fall of 25.1%.

Fig. 1.30

Situation of the import of electric machines

Import amount (¥100 million)

Growth rate (%)
Import amount
輸入金額

110,000

90,000

10

7.45

5
0

-0.7

70,000-5
107,194

50,00015

Growth rate
伸び率

11.36

96,257-7.4

106,442-10

98,574-15

73,799-20

30,000-25.1 -25-30

10,0002005

Note:
Source:

2006

2007

2008

2009

Growth rate figures are those as compared with the previous year.
Same as that for Fig. 1.23.

(4) Situation of the import of transportation machines

Figure 1.31 shows that the amount of import of transportation machines in 2009 dropped to¥1,522.1 billion, registering a record negative growth rate of -35.1%.

Fig. 1.31

Situation of the import of transportation machines

Import amount (¥100 million)

Growth rate (%)

30,00011.8

9.1

25,00020

Import amount
輸入金額
Growth rate
伸び率

10

7.5

20,0000-8.4

15,00010,00020,98422,897

25,610-10

23,452-20
15,221

5,000

-30
-35.1

0

-40
2005

Note:
Source:

2006

2007

Growth rate figures are those as compared with the previous year.
Same as that for Fig. 1.23.

29

2008

2009

1. Trend of the Machine Industry in Japan(5) Situation of the import of precision machines

Figure 1.32 shows that the amount of import of precision machines in 2009 was ¥1,867.7
billion, far below the ¥2,000-billion mark. The growth rate was -24.9%, an unprecedented decrease.

Fig. 1.32

Situation of import of precision machines

Import amount (¥100 million)

Growth rate (%)

35,00030

Import amount
輸入金額
Growth rate
伸び率

21.28
30,00020
12.68

25,00010

20,00027,32515,000024,87829,38424,227-9-710,000-10
18,677
-20

5,000
-24.9

-30

0
2005
Note:
Source:

2006

2007

2008

2009

Growth rate figures are those as compared with the previous year.
Same as that for Fig. 1.23.

 Summary of Chapter 1

As described so far, the data of the various statistics quoted shows that the global financial
crisis triggered by the Lehman shock that took place in the fall of 2008 had a very grave impact on
the machine industry in Japan after a little in 2009 regardless of business categories. This situation is
likely to continue for a while in the years ahead considering the slower growth of the Japanese
economy and the trend of strong yen.
In this situation, it is obvious that the tendency of the Chinese economy will increase its impact
greatly not only on the machine industry in Japan but also the world economy in the years ahead.
But considering the fact that the heavy dependence on the U.S. market of the automobile industry inJapan had serious negative effects on Japan’s machine industry just after the Lehman shock in 2008,
it must be remembered that any global strategy relying only on China (its market and production
strategies) too much involves the risk of making the same mistake, too.
Therefore, in the future, the machine industry in Japan should, while carefully watching the
economic and industrial growth in China, observe from various angles the situation of otheremerging countries as well as ASEAN nations where Japanese manufacturers have been establishedand succeeded in raising the productivity of the machine industry and reconstruct the mechanism ofglobal supply chains.

30

1. Trend of the Machine Industry in Japan

In the medium term, it will be important for this industry, as part of the efforts to create
employment opportunities at home, to make more positive investment in such new growth areas as
new energy resources, aircraft and health care and welfare equipment. Also significant for themachine industry in Japan will be strategic activities for social infrastructure projects abroad,especially in newly industrializing countries.

31