5. Precision Machine Sector

5. Precision Machine Sector
5.1. Electric measuring instruments,equipment and electric controls
5.1.1

measuringequipment,analyzing

Supply and demand trend(1) Outline

The production of electric measuring instruments and electronic application devices in 2008
declined by 17.45% as compared with the previous year to ¥1,362.02 billion. All of the electricmeasuring instruments and electronic application devices experienced a smaller amount ofproduction. As for measuring equipment, the output of industrial weighing machines, pressuregauges, testers and surveying instruments decreased as compared with the previous year. Moreover,the export and import as well as trade balance of electric measuring devices suffered a fall in almost
all cases compared with 2007. Some of these devices registered a larger amount of export, however,
the growth was very small.
(2) Production

Let’s look at Figure 5.1.1. This figure shows that the production of electric measuring
instruments and electronic application devices fell in all types of products. For example, the output
of all electric measuring instruments and electronic application devices dropped by 17.45%, that ofelectric measuring instruments, by 28.34% and that of electronic application devices, by 11.87%, ascompared with that in 2007.
Measuring equipment, analyzing equipment and switching control devices and switches
registered a small increase in production in 2008, too, but the amount of output dropped from 2007
for industrial weighing machines (down 3.72%), pressure gauges (down 6.34%), testers (down0.01%) and surveying instruments (down 11.95%).

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5. Precision Machine Sector

Fig. 5.1.1

Production of electric measuring instruments andelectronic application equipment(Calendar year, ¥100 million; rounded off to the ¥100 million)
Growth rate in2007-2008

Ratio

15,341.6 15,926.6 16,723.0 16,498.5 13,620.2-17.45%100%

6,284.6

5,803.9

6,074.9

5,647.5

4,047.2-28.34%

29.7%

387.4

426.2

444.6

389.8

370.3

-4.99%

2.7%

Electric measuring devices

4,442.6

4,018.1

4,155.1

3,697.6

2,197.3-40.58%16.1%

Industrial metering and control equipment

1,454.6

1,359.6

1,475.2

1,560.2

1,479.6-5.16%

10.9%－100.2

119.1

124.7120.2-3.64%

0.9%

9,057 10,022.5 10,529.1 10,726.2

9,452.7-11.87%

69.4%

2004
Electric measuring instruments/electronic applicationequipment
Electric measuring instruments
Electric meters

Gas alarms
Electronic application equipment
X-ray devices

2005

2006

2007

2008

1,657.6

2,047.8

2,171.0

2,163.8

1,894.1-12.47%

13.9%

Radioactive substance application equipment

239.9

230.4

217.2

166.1

196.3

18.15%

1.4%

Radiometric equipment

101.7

99.6

87.1

97.6

93.3

-4.41%

0.7%

High-frequency power application equipment

63.4

56.6

54.1

52.845.0-14.69%0.3%

5,194.1

5,885.3

6,240.1

6,396.8

5,742.7-10.23%

42.2%

2004

2005

2006

2007

2008

Growth rate in2007-2008

Ratio
100%

Other electronic application equipment

Measuring equipment

4,204.0

4,493.6

4,827.5

4,995.2

5,234.0

4.78%

Industrial length meters

321.0

374.1

383.2

350.8

372.8

6.29%

7.1%

Displacement meters

553.4

615.9

743.4

856.1

876.8

2.42%

16.8%

Industrial weighing machines

338.8

337.6

358.1

376.0

362.0

-3.72%

6.9%

Pressure gauges

128.8

137.8

131.6

131.6

123.3

-6.34%

2.4%

Precision measuring instruments

665.9

841.3

884.3

792.3

802.5

1.29%

15.3%

Environment measuring instruments

208.1

184.4

186.2

208.7

256.5

22.88%

4.9%

Testers

295.4

293.3

296.8

294.8

294.8

-0.01%

5.6%

Surveying instruments

237.8

233.7

252.2

252.2

222.0

-11.95%

4.2%

Analyzing equipment

36.7%

1,454.9

1,475.8

1,591.8

1,727.7

1,923.2

11.32%

Optical analyzing equipment

210.8

223.2

242.9

258.9

275.5

6.41%

5.3%

Electromagnetic analyzing equipment

305.1321.1

340.7

350.4

373.9

6.69%

7.1%

Chromatographs, separators, distilling equipment

312.6

311.1

325.5

326.5

352.6

8.00%

6.7%

Other analyzing equipment

626.4

620.4

682.8

791.9

921.3

16.34%

17.6%

2004

2005

2006

2007

2008

Growth rate in2007-2008

Ratio

Switching control devices/switches

12,948.4 13,680.2 14,767.4 14,818.0 15,245.2

2.88%

100%

Switching control devices

6,252.0

6,820.9

7,456.3

7,586.1

7,976.8

5.15%

52.3%

Switches

6,696.4

6,859.3

7,311.1

7,231.8

7,268.4

0.51%47.7%

Source:Ministry of Economy, Trade and Industry, “Annual Report of Machinery Statistics”(3) Export and importFigure 5.1.2 shows the trend of export and import of electric measuring instruments, analyzing
equipment, industrial meters and switching control devices and switches in 2008. The export ofelectric measuring instruments fell by 8.8% year on year to ¥232.65 billion. While the export ofanalyzing equipment showed a small increase (¥305.37 billion or up 1.3% year on year), that ofindustrial meters (¥57.35 billion or down 2.45%) and switching control devices and switches(¥1,075.77 billion or down 6.5%) fell from the level in 2007. It can be said that the upward trend ofexport of electric measuring instruments, analyzing equipment, industrial meters and switching
control devices and switches, which had continued for the previous several years, ended finally.
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5. Precision Machine Sector

In 2008, a considerable growth was observed in the amount of import of electric measuring
instruments (¥104.09 billion or up 53.4% year on year). However, the import of analyzing
equipment (¥120.27 billion or down 11.0%), industrial meters (¥91.2 billion or down 9.8%) andswitching control devices and switches (¥361.17 billion or down 5.6%) decreased substantially. The
impact of the worldwide recession had on the manufacturers of electric measuring instruments,
analyzing equipment, industrial meters and switching control devices and switches can be seen fromthese figures, too.
It can be said that in the past several years, a large trade surplus was attained in the field ofelectric measuring instruments, analyzing equipment and switching control devices and switches
excluding the industrial meter segment. But it should be pointed out that the coefficient ofspecialization has been on the decline.

Fig. 5.1.2

Trend of the export and import of electric measuring instruments
and electronic application devices
2004

2005

2006

2007

Growth rate in2007-2008

2008

Electric measuring instruments
Export3,255.7

2,981.4

3,986.6

2,552.1

2,326.5-8.8%

Import1,106.1

112.6

1,292.2

678.6

1,040.9

53.4%

Trade balance

2,149.6

2,868.8

2,694.4

1,873.4

1,285.5-31.4%

0.493

0.927

0.510

0.580

0.382

-

Export2,094.8

2,256.5

2,666.0

3,014.4

3,053.7

1.3%

Import1,130.1

1,196.8

1,295.1

1,351.2

1,202.7-11.0%

Trade balance

964.7

1,059.7

1,370.9

1,663.2

1,851.0

11.3%

Coefficient of specialization

0.299

0.307

0.346

0.381

0.435

-

Export

547.5

550.2

574.1

587.6

573.5

-2.45%

Import

603.5

753.5

802.1

1,010.3

912

-9.8%

Trade balance-56.0-203.3-228.0-422.7- 338-

Coefficient of specialization-0.049-0.156-0.166-0.265-0.228-

Export9,122.0

9,514.9

10,685.4

11,500.210,757.7-6.5%

Import2,646.3

2,913.7

3,465.5

3,824.0

3,611.7-5.6%

Trade balance

6,475.7

6,601.2

7,219.9

7,676.1

7,146.0

-6.9%

0.550

0.531

0.510

0.501

0.497

-

Coefficient of specialization
Analyzing equipment

Industrial meters

Switching control devices and switches

Coefficient of specialization

Source:Ministry of Finance, “Trade Statistics of Japan”

5.1.2

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

Figure 5.1.3 shows the trend of management of seven main manufacturers of electric measuring
instruments, measuring equipment, analyzing equipment and electric controls.
About a half of the seven manufacturers of these products suffered lower sales and operating
profit than those in 2007. For example, Anritsu had a 21.0% decrease in sales and a 119.2% drop in87

5. Precision Machine Sector

operating profit year on year and explained about this that, customers’ moves to reduce and postpone
capital investment increased after the second half of 2009 and that demand rapidly fell in general,including one from the U.S., which had been good in the past. Not only Anritsu but all otherbusinesses in the field of electric measuring instruments, measuring equipment, analyzing equipment
and electric controls must have experienced this business environment. From the situation mentioned
above, it can be said that in 2008, owing to the impact of the global recession directly caused by theLehman shock, the manufacturers of electric measuring instruments, measuring equipment,
analyzing equipment and electric controls have faced with a downward business trend and that theseindustries were greatly affected by the recession.

Fig. 5.1.3 Consolidated settlement of accounts of main businesses associated withelectric measuring instruments, measuring equipment, analyzing equipment
and electric controls (the latest announcement)(Consolidated; ¥100 million; rounded off to the ¥100 million)
FY2007

FY2008Operatingprofit

Sales

Sales

Year-on-year ratio

OperatingprofitSales

OperatingprofitIndustrial length meters
Mitsutoyo-991

100993

165

0.2%

64.8%

Tokyo Seimitsu, measuring equipment segment

244

60

210

35-13.8%-42.2%

Anritsu, measuring equipment segment729

41576-8-21.0%-119.2%

Precision measuring instruments

Analyzing equipment
Shimadzu, measuring equipment segment

1,645

262

1,526

212

-7.2%

-19.2%

Hitachi High-Technologies, life science segment

975

184

979

194

0.4%

5.3%

353-382

-

8.3%

-388

15403

24

3.9%

64.0%

Gas meters/water meters
Aichi Tokei Denki, measuring equipment-related
segment
Electric energy meters
Osaki ElectricMetering and control equipment segment

Note: 1.
2.
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 Mitsutoyo are those of the entire company.
Based on the financial statements of the companies.

(2) Technological innovation and the environment of the industry

Let’s look at the situation of R&D activities in 2008 of the main businesses related to electricmeasuring instruments, measuring equipment, analyzing equipment and electric controls. Tokyo
Seimitsu, for example, adopted “Nano Contour” and “TIMS II SOFT” as its main subjects ofresearch for 2008. Behind this is the fact that customer businesses have made positive efforts torationalize production and introduce factory automation (FA) and have great demand for thecompany’s higher-precision and higher-performance and less expensive precision measuring
instruments. Shimadzu has developed a “high-speed, high-sensitivity liquid chromatography massspectrometer” capable of analyzing the infinitesimal ingredients of medicines and pollutants. Osaki

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5. Precision Machine Sector

Electric focuses on the research and development of electronic electric energy meters that willaddress the needs to deal with the deregulation of electric power business mainly in the field ofpower generation. For example, Osaki regards electronic electric energy meters as a sort of
information terminals and is doing R&D work on industrial and household meters applicable to thevarious billing systems of electric power companies. It should be added that Hitachi
High-Technologies has started, for example, marketing and technical assessment activities forbacteria and gene tests in cooperation with a French business.
(3) Future prospects and problems

At present, Asian countries continue to increase their efforts to industrialize themselves. IfJapanese machine industries are to compete with these nations, they need to rationalize theirproduction and introduce FA positively. Thus the demand of user businesses of precision measuring
instruments for higher-accuracy and higher-performance products is likely to rise further in thefuture. As a result, the market of measuring instruments may expand both at home and abroad in thelong run. In addition, demand for these instruments will grow in overseas markets due to increasingawareness of food safety and environmental conservation.
But the sub-prime loan problem and the global recession directly triggered by the Lehmanshock, which is on an extension of the problem, will increase their impact on industries concernedwith electric measuring instruments, measuring equipment, analyzing equipment and electriccontrols in the years to come. As Japanese and foreign businesses have reduced their capital
investment and their demand for R&D has diminished greatly, these industries are faced with lower
demand in Japanese and overseas markets, too. In fact, in 2008, most major manufacturers suffered
poorer sales and operating profit. This trend will become more dominant in 2009. On the other hand,manufacturers will need to make technical development efforts to meet users’ demand for productswith a higher performance. “Measuring” will be a key technology for Japanese manufacturers incompeting with their rivals in the world. In such a situation, measuring equipment manufacturers
will have to allot their management resources to more advanced technical development work in theface of the worldwide recession and declining capital investment. A meaningful strategy for themwill be an attempt to positively cooperate with businesses, universities, public research institutes andthe like in Japan and abroad.

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