5. Precision Machine Sector

5. Precision Machine Sector
5.1. Bearings
5.1.1

Supply and demand trend(1) Outline

The production of all types of finished bearing products in 2009 was about ¥490.4 billion(down 34.7% year on year), which was a sharp decrease contrary to the steady trend until 2008. The
sales of all finished bearing products showed a big fall, too, amounting to about ¥504.4 billion(down 33.8%). The export of finished bearing products and bearing parts declined considerably toabout ¥273.4 billion (down 33.8%). The import of finished bearing products and bearing partssuffered a bigger drop than in the previous year with about ¥42.1 billion (down 42.2%).
As noted above, both the output and sales of bearings in 2009 experienced a marked decrease
and so did their export. The import had already turned into a negative growth in 2008, but the size ofthe drop in 2009 was greater than in 2008. It looks as if the uncertainty about demand for bearings inJapan pointed out in the 2009 edition of this report were realized. It is supposed that the main causeof these poor results was the impact of a huge drop and stagnancy in domestic production due to theLehman shock rather than a sudden change in domestic demand. The scale of decline in import was
greater than that in production and export, indicating that uncertain factors behind demand, including
the shift of automobile production to overseas, have not been removed yet.
(2) Production

The production of bearings (finished bearing products) in 2009 amounted to ¥490.431 billion,
and the production index when the figure for 2005 is supposed to be 100 was 74.7 points, a sharp
decrease, suddenly changing from the upward trend until 2008 (See Fig. 5.1.1).

Fig. 5.1.1

Production of bearings (finished bearing products)

800,000

140

700,000
600,000

106.5

120

114.4

110.6

100

100

500,000
400,000

656,864

699,619

726,592

751,18474.7
490,43180
60

300,000

Production index
生産指数(2005 = 100)
（05年＝100）40

200,000

20

100,000

00
2005
Source:Amount of production
生産金額(¥ million)
（百万円）

2006

2007

2008

2009

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

91

5. Precision Machine Sector(3) Sales

The sales of bearings (finished bearing products) totaled to ¥504.371 billion, and the sales index
when the figure for 2005 is supposed to be 100 was 75.2 points. Just as in the case of production,
sales had continued to grow in 2005 and after but suffered a rapid fall in 2009 (See Fig. 5.1.2).

Fig. 5.1.2

Sales of bearings (finished bearing products)

900,000

120

800,000
700,000

113.6

111.6

107.3

100

100

600,00075.2

80500,000
60
400,000

670,872

720,108

748,662

761,980

504,37140

300,000

Amount of sales
生産金額(¥ million)（百万円）
Production index
生産指数(2005 = 100)
（05年＝100）

200,000
20
100,000
00
2005
Source:

2006

2007

2008

2009

Based on the Ministry of Economy, Trade and Industry, “Annual Report of Machinery Statistics.”(4) Production by the type of product

The production of ball bearings (excluding bearing units) in 2009 showed a steep decline of
37.3% year on year to ¥243.838 billion, and the increasing trend that had started in 2005 had aturning point. The production index when the figure for 2005 is supposed to be 100 was 69.8 points,
which means that the output in 2009 was only 70% of that in 2005 (See Fig. 5.1.3). Similarly, theoutput of roller bearings suffered a big fall of 31.9% year on year to ¥232.970 billion, although thesize of decrease was not so great as that for ball bearings. The production index stood at 81.3 points,suggesting that the upward trend seen at least for six years up to 2008 turned into a sharp drop (Fig.
5.1.4).
As outlined above, the production of ball and roller bearings both shifted from a growing trend
to a big decrease tendency. In both cases, it can be supposed that restricted capital investment andstagnant demand from the automobile industry and other users, the factors already mentioned in the2009 edition of this report, seriously affected demand for bearings, causing it to drop greatly. Thissituation indicates that the recyclable energy sector, such as wind power generation, and the aircraft
sector represented by B787 and MRJ, which had run in the favor of bearing industries, remained to
be factors for greater demand by the export of bearings but were unable to prevent falling demand
due to the business cycle of the global recession triggered by the Lehman shock.

92

5. Precision Machine Sector

Fig. 5.1.3

Production of ball bearings

450,000

120
111.3

400,000
350,000

100

108.8

105.8

100
80

300,000
69.8

250,000
200,000

349,330

369,43360
380,076

388,630
243,838

150,000

40

Amount of production
生産金額(¥ million)（百万円）
Production index
生産指数(2005 = 100)
（05年＝100）

100,000
20
50,00000
2005

Source:

2006

2007

2008

2009

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

Fig. 5.1.4

Production of roller bearings

400,000

140

350,000

120

119.4
108.6

300,000

114.0
100

100
250,000

81.3

80

200,000
150,000

286,616

311,161

326,831

342,119

232,907

Production index
生産指数(2005 = 100)
（05年＝100）40

100,000

20

50,00000
2005

Source:60

Amount of production
生産金額(¥ million)
（百万円）

2006

2007

2008

2009

Based on the Ministry of Economy, Trade and Industry, “Annual Report of Machinery Statistics.”(5) Export

The export of bearings (finished bearing products and bearing parts) in 2009 amounted to about¥273.422 billion (down 33.8% year on year). The export had gradually reduced the scale of growthin 2006 and after and suddenly showed a big fall in 2009. While this outcome was largely affectedby the global-scale recession, there are some factors likely to help recovery, such as growing demand
for automobile parts mainly in BRICs and demand related to the development of high-speed railway
infrastructure.

93

5. Precision Machine Sector

Fig. 5.1.5

Export of bearings (finished bearing products and bearing parts)

450,000

120.0
110.1

110.1

108.5

105.9

400,000

100.0
350,000
80.0

300,000
66.2
250,000
200,000

326,559

359,57660.0

413,291

390,297

273,42240.0

150,000

Export amount
生産金額(¥ million)（百万円）
Year-on-year ratio
生産指数(%)（05年＝100）

100,000
20.0
50,0000.0

02005

Source:

2006

2007

2008

2009

Based on the Ministry of Finance, “Trade Statistics of Japan” and data of the Japan Bearing Industrial Association.

(6) Import

The import of bearings (finished bearing products and bearing parts) in 2009 declined as in2008 to about ¥42.129 billion (year on year). The scale of drop was far greater than that in 2008, and
it is supposed that this performance was affected by the fact that the aftermath of the Lehman shock
was actualized and orders from Japanese automakers and related machine industries, the main users,
decreased greatly.

Fig. 5.1.6

Import of bearings (finished bearing products and bearing parts)

80,000140.0

70,00060,000

118.4

120.0
108.0

113.2

100.0

99.0

50,00080.068,11440,00030,00073,56772,85757.8 60.0
42,12940.0

57,52920,000Year-on-year ratio
生産指数(%)（05年＝100）

20.0

10,0000.0

02005
Source:Import amount
生産金額(¥ million)
（百万円）

2006

2007

2008

2009

Based on the Ministry of Finance, “Trade Statistics of Japan” and data of the Japan Bearing Industrial Association.

94

5. Precision Machine Sector

5.1.2

Results of operations and the trend of the bearing industry(1) Trend of management

According to the data of the four major bearing manufacturers, the sales for the year ended
March 2010 and year-on-year ratios are as shown in Fig. 5.1.7. As a result of the global recession
caused by the Lehman shock in the fall of 2008, the production of automobile parts, etc. wascurtailed and capital investment was controlled at home and abroad, and foreign exchange rates
continued to be in favor of yen. In such a situation, the three of the big four, excluding NSK Ltd.,
experienced a drop of over 10% in sales, and NSK’s sales decreased by 9.3%. These figures mean thatthe business environment in fiscal 2009 was more unfavorable than ever, but considering that the sizeof the fall in sales for the bearing industry was no so large as that for all industries and that a similar
decline in sales occurred at the end of March 2009, too, it can also be considered that the bearing
producers managed to prevent any too lower sales owing to the reviving demand at the end of the fiscal
year and their own management efforts.
In the circumstance stated above, JTEKT Corp. defined the energy segment, such as wind
power generation, iron and steel and railway vehicles as the main areas for their activities forincreasing sales. NSK worked to cut down procurement from the outside and review the manufacturingsystem in addition to cost reduction efforts and strove to increase the sales of bearing products. NTN
Corp. suffered lower sales as a whole because of the effects of foreign exchange rates and less demandin Japan for bearings for automobiles in spite of greater sales of bearings for railway vehicles andaircraft. NTN says that it will reinforce sales promotion activities for industrial machines and efforts to
reduce costs. Minebea Co. has focused on activities for higher profitability, that is, cost reduction, thedevelopment of high value-added products and new technology and sales promotion.

Fig. 5.1.7

Import of bearings (finished bearing products and bearing parts)
8,000

0%

7,000
6,000

-5%

5,000
-10%

4,000
3,000
2,000

-15%

1,000
0

Note:
Source:

JTEKT

NSK

NTN

Minebea

Sales in the year ended in
March 2010 (\100 million)

6,785

5,876

4,528

2,285

Year-on-year ratio-18.3%-9.3%-14.1%-10.8%

The figures for JTEKT are those of the company’s machine tool and parts segment.
Based on the quick report on the settlement of accounts of each company.

95

-20%

5. Precision Machine Sector(2) Trend of the bearing industry

In July 2009, JTEKT agreed with the Timken Co. in the U.S. to acquire Timken’s needle
bearing division in an effort to become the top company in automobile bearing business in the world,and expects synergy effects from the integration of supply chains. NSK has accelerated the global
reorganization of ball screw production and plans to integrate NSK Precision (Maebashi, Gunma
Prefecture) into NSK Kyushu and start the local production of ball screws at NSK Shenyang, China,
in 2011. In October 2009, NTN founded and started the operation of NTN Houdatsushimizu Factoryin Hakui-gun, Ishikawa Prefecture in anticipation of a future rise in demand for super-large bearingsfor general industrial machines, including wind power generation devices. This was NTN’s priorinvestment aiming at dealing with growing demand in the future by transferring manufacturingfunctions from the existing Kuwana Factory to the new one. Minebea says that as a result of arecovering world economy, the output of ball bearings reached an all-time high level in March 2010.
Thus the company decided to temporarily postpone the predetermined plan to expand its ball bearing
business in the low-priced product market, that is, the Chinese market.

5.1.3

Future prospects and problems

There are some promising markets for the bearing industry, and the aircraft industry is one ofthem. In the aircraft industry, the mass production of new models was started in 2008 and the
manufacture of domestic passenger planes (MRJ) was begun in 2009, too. Bearings are used for
airplanes, and JTEKT and Minebea have already entered the aircraft industry market positively.
Because aircraft parts require high-grade quality control, it will be very difficult to manufacture themin low-cost countries. Therefore, Japan will have comparative advantage in the production of theseparts. The bearings that need a similar level of quality control to one for aircraft parts are those forhigh-speed railway vehicles. High-speed railway vehicles require safety while running at a highspeed, and thus the manufacture of these bearings in Japan will have international competitiveness,
too. The production of railway vehicles is likely to increase considerably in the years ahead
considering a rush of high-speed railway construction projects in Asia and the starting of high-speed
railways in Europe. What strategies should be mapped out and pursued in this situation will be an
important subject for Japanese bearing manufacturers.

5.2. Dies
5.2.1

Supply and demand trend(1) Outline

The domestic production of dies in 2009 amounted to ¥315.92 billion or a decrease of 29.5%
from 2008. The output of all types of dies, including dies for press and dies for plastics, dropped. In
addition, although no detailed data is shown here, it should be pointed out that the tendency of
declining numbers of dies manufactured and rising average weight and average unit price of dies96

5. Precision Machine Sector

generally continued even in the situation of recession.
The export of dies in 2009 was ¥232.96 billion or a decrease of 32.1% from 2008. Similarly, thetrade balance also fell by 31.2% year on year to ¥176.29 billion. The import of dies totaled to ¥56.67
billion or a big fall of 34.9% from 2008.
(2) Production

Let’s look at the trend of production of the dies industry in Japan. Figure 5.2.1 shows the trendof output of dies in Japan (at the manufacturers having 20 or more employees) based on the Ministryof Economy, Trade and Industry, “Annual Report of Machinery Statistics.” According to the figure,the production of dies in 2009 dropped by over ¥130.0 billion from the previous year to ¥315.92
billion (down 29.5% year on year). This was a decline for three consecutive years and tells the factthat the recession in the Japanese and overseas markets and the deterioration of business sentimentof automakers and other users hard hit the dies industry in Japan, an equipment-based industry.
Then let’s look at the trend of production by the type of product. In 2009, all types of dies
experienced a steep drop in output: dies for presses (down 21.0% year on year), dies for plastics(down 30.3%), die-casting dies (down 47.8%), forging dies (down 39.6%), dies for rubber (down
40.9%), casting dies (down 42.4%), powder-metallurgy dies (down 39.9%) and dies for glass (down
9.0%).
In 2009, the amount of production of dies for presses and dies for plastics combined accounted
for more than 80% of the total dies output: 43.7% and 37.5, respectively. Thus, this section discusses
the situation of production of the dies industry in Japan focusing on dies for presses and dies forplastics.

Fig. 5.2.1 Trend of production of dies(at manufacturers having 20 or more employees)(Calendar years, Unit: ¥100 million)
2005

2006

2007

2008

2009

Growth rate in 2008-2009

Ratio (2009)

Dies, total

4,392.7

4,879.6

4,804.2

4,483.0

3,159.2-29.5%

100%

Dies for presses

1,748.4

1,909.5

1,945.0

1,747.0

1,379.9-21.0%

43.7%

Dies for plastics

1,680.9

1,821.0

1,790.9

1,700.8

1,185.5-30.3%

37.5%

Die-casting dies

384.7

527.2

483.4

474.3

247.6

-47.8%

7.8%

Forging dies

176.7

211.1

205.5

203.8

123.2

-39.6%

3.9%

Dies for rubber

127.3

125.8

119.9

110.8

65.5

-40.9%

2.1%

Casting dies

135.8

151.0

136.3

129.4

74.5

-42.4%

2.4%

Powder-metallurgy dies

78.7

79.4

77.9

75.8

45.6

-39.9%

1.4%

Dies for glass

60.4

54.6

45.3

41.1

37.4

-9.0%

1.2%

Source:Based on the Ministry of Economy, Trade and Industry, “Annual Report of Machinery Statistics.”(3) Export and import

Now let’s look at the trend of export and import of the dies industry in Japan. In 2009, the total
amount of export of dies declined by about ¥110.0 billion to ¥232.96 billion (down 32.1% year on97

5. Precision Machine Sectoryear). As shown in Figure 5.2.2, the amount of dies export dropped for three years running. The
export of dies in 2009 was only about 60% of that in 2008. On the other hand, the amount of dies
import stopped an upward trend and began to decline recently. As a result, the import of dies in 2009amounted to ¥56.67 billion, which was a fall of about ¥30.0 billion or 34.9% from 2008. The exportof dies for presses and dies for plastics also decreased markedly in 2009 year on year: the export ofdies for presses amounted to ¥92.77 billion (down 29.6%) and that of dies for plastics, ¥87.27 billion(down 34.0%).
Figure 5.2.2 shows the international competitiveness of the whole dies industry in Japan using
the indicator known as “coefficient of specialization.” This indicator tells us that the international
competitive power of Japanese dies manufacturers has lowered since 2004.

Fig. 5.2.2

Trend of export and import of dies1(Calendar years, Unit: ¥100 million)

2005

2006

2007

2008

2009

Growth rate in2008-2009

Dies, total
Export3,488.5

3,816.0

3,569.5

3,431.3

2,329.6-32.1%

Import

780.6

861.5

911.3

870.5

566.7

-34.9%

2,708.0

2,954.5

2,658.2

2,560.8

1,762.9-31.2%

0.634

0.632

0.593

0.595

0.609

-

1,309.9

1,484.4

1,341.1

1,317.8

927.7-29.6%

1,354.1

1,451.4

1,363.8

1322.8872.7-34.0%

Trade balance
Coefficient of specialization
Dies for presses
ExportDies for plastics
ExportSource:Ministry of Finance, “Trade Statistics of Japan.”

5.2.2

Results of operations and the trend of the dies industry(1) Trend of management

The dies industry is characterized by a very high percentage of small manufacturers. This
makes it difficult to study the trend of management of individual manufacturers. But some Japanesedies businesses have been listed on the stock exchange and present their financial statements to theoutside. Figure 5.2.3 utilizes these materials and summarizes the dies-related sales and operating
profit in 2008 and 2009 of the main dies manufacturers in Japan involved in the production of diesfor plastics, dies for presses, forging dies and dies parts.

1

Note that because the source adopts the classification “dies for molding rubber or plastics,” the figures forthe export and import of dies for plastics include those for the export and import of dies for rubber, too.
Coefficient of specialization: One of the indicators of international competitiveness; calculated by theequation: (export amount - import amount)/ (export amount + import amount). It is considered that thecloser the coefficient is to 1, the higher the international competitiveness (export competitiveness) is, andthe closer the coefficient is to 0, the lower the international competitive power is.

98

5. Precision Machine Sector

Fig. 5.2.3

Consolidated settlement of accounts of main dies businesses(the most recent announcement)(Consolidated; ¥10,000; rounded off to the ¥10,000)
FY2008FY2009Growth rate in 2008-2009

Sales

OperatingprofitSales

Operatingprofit29,742,200

438,700

12,218,600-500,400-58.9%

Fell into
the red

720,208

43,272420,060-28,775-41.7%

Fell into
the red

1,076,711-170,465

1,244,231

38,221

15.6%

Went into
the black507,230

18,703289,349-2,883-43.0%

Fell into
the red284,200-

209,800--26.2%-

342,927

55,340285,203

39,050-16.8%-90.5%

511,800

76,100148,400

18,600-71.0%-75.6%

699,400

96,200502,500

20,900-28.2%-78.3%

623,228

11,737410,300-32,700-34.2%

Fell into
the red

3,407,900-114,900

2,596,400-218,300-23.8%In thered

Sales

OperatingprofitDies for plastics
ARRK Corp.
Sekisui Machinery Co.
Dies division
Dies for presses
Fuji Technica Inc.
Dies for presses for automobiles division
Kuroda Precision Industries
System equipment division
Dies for presses
Hoden Seimitsu Kako Kenkyusho
Die division
Marujun Co.
Dies business division
Mitsui Hi-TechDies for presses division
Forging dies
Nichidai Corp.
Net-Shape division
Dies parts
Futaba Corp.
Manufacturing equipment division

Note: 1.
2.
3.
4.
Source:The description following the company name is the name of the segment to which the product’s business belongs.
Sales figures include those of sales between different segments.
Figures for ARRK Corporation are those of the company’s total sales and operating profit (Sekisui Machinery is
ARRK’s subsidiary).
Kuroda Precision Industries announces figures of sales of dies for presses in the data for the system equipment division.
Based on the financial statements of the companies.

As shown in Figure 5.2.3, most dies businesses recorded an operating loss or a sharp decrease
year on year in 2009. Kuroda Precision Industries, Nichidai Corp. and Futaba Corp. suffered an
operating loss, while Hoden Seimitsu Kako Kenkyusho, Marujun Co. and Mitsui High-Techregistered an operating profit but had a big fall in profit.
(2) Technological innovation and the business environment

Fig. 5.2.4 shows the R&D expenditure to sales ratio of major bearing manufacturers in Japan.
All of these companies focus on R&D on the forming of parts involving dies and on CAD/CAM andother peripheral systems instead of on dies themselves. It can be said that as they have suffered
poorer sales and a smaller profit, these manufacturers have managed to continue having incentives
for R&D, which will help them raise productivity and obtain new technology.

99

5. Precision Machine Sector

Fig. 5.2.4 R&D expenditure to sales ratio of main dies manufacturers

2.5%

2008

2009

Sekisui
Machinery Co.

Fuji Technica
Inc.

2.0%
1.5%
1.0%
0.5%
0.0%
ARRK Corp.

Source:KurodaPrecision
Industries

Futaba Corp.

Same as that for Fig. 5.2.3.

(3) Future prospects and problems

On September 17, 2010, Fuji Technica Inc., main manufacturer of dies for presses forautomobiles in Japan, agreed with Miyazu Seisakusho Co., on business merger. This was an eventthat occurred in the circumstance where Japanese bearing-related businesses experienced a severe
slump in business due to intensified global competition and changes in industrial structure. The poor
performance and business merger of the two companies can be called an example that plainly shows
the situation in which bearing manufacturers in Japan have been. According to the opinion of theauthors, the most important problem of Japanese bearing industries is the fact that they have notshaken themselves free from the conventional management system based on the “full-set” industrial
structure where industries own all levels of functions ranging from low to high ones. Because they
have long been satisfied with the traditional full-set industrial structure, bearing manufacturers inJapan have no function of positively making proposals and doing sales activities. Because of this,they lack networks with foreign companies and know-how to get orders from abroad. As a result,they are unable to take advantage of overseas demand and are faced with poor business results
although business activities are expanding in Asian countries and regions. In the circumstance statedabove, it can be said that Japanese bearing companies should develop and increase management
capacity helpful for making good use of demand abroad as soon as possible.

100