JPRS ID: 10500 JAPAN REPORT

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• Collection: JPRS
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00850R000500060013-6
• Release Decision: RIF
• Original Classification: U
• Document Page Count: 46
• Document Creation Date: November 1, 2016
• Sequence Number: 13
• Content Type: REPORTS

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JPRS L/ 10500
_ 7 M�y 1982
Ja an R~ ort
p p
CFOUO 28f 82)
~
Fg~$ FOREIGN BRdADCAST iN~ORIVIATION ~ERVICE
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NOTE
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JPRS L/10500
7 May 1982
JAPAN REPORT
(FOUO 28/82)
~ CONTENTS
POLITICAL
~ Upper House LDP L'~ietmen Are at Odds With Their Counterparts
(THE DAILY YOMIURI, 9 Apr 82) 1
National Priorities, Cold Realities Considered
(Editorial; THE DAILY YOMIURI, 11 Apr 82) 3
Editorial on AdministratiL~e Reform, Defense Recommendations
Criticized
(Editorial; MAINICHI DAILY NEWS, 10 Apr 82) 5
Decline of Shunto Analyzed
~ (Masahiko Ishizuka; THE JAPAN ECONOMIC JOURNAL, 20 Apr 82) 7
Depoliticization of Electorate Reported
, (Tetsuo Tamur~; THE JAPAN ECONOMIC JOURNAL, 20 Apr 82) 8
MILITARY
t~utline of Fiscal Year 1982 Program Unveiled
(Motohashi; NIKKEI SANGYO SHIMBUN, 4 Feb 82) 10
ECONOMIC
` Japan Co.icerned by Trade Friction With ASFAN Countries
(NIHON KEIZAI SHINBUM, various dates) 14
Japan-US 'Tax Friction' Becoming Serious
(THE JAPAN ECONOMIC JOURNAL, 7 Apr 82) 20
'MAINICHI' Views Japanese Economic Prospects
(Editorial; MAINICHI DAILY NEWS, 16 Mar 82) 23
I Government To Increase Financial Expenditures To Expand
Domestic Demand
(MAINICHI DAILY NEWS, 4 Apr 82) 25
- a - [III - ASIA - 111 FOUO]
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Tax Revenue Deficit in Local Autonomous Entities
(THE JAPAN ECONOMIC JOURNAL, 10 Apr 82) 28
Contents of 'Second Package' of Market-Liberalization Measures
(DAILY YOMIURI, 10 Apr 82) 30
Automobile Parts Industry's Struggle for Existence Reported
(Kawabe; NIKKEI SANGYO SHIMBUN, various dates) 33
Early Farm I~port Liberalization Difficult
(THE DAILY YOMIURI, 10 Apr 82) 42
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POLITICAL
UPPER HOUSE LDP DIETMEN ARE AT ODDS WITH THEIR COUNTERPARTS
~
Tokyo THE DAILY YOMIURI in English 9 Apr 82 p 2
[Text] Suspicious goings-on among Lil~eral.Democratic House of Councilors members
were ol~served by the LDP executive during an ordinary Diet session about a year ~
1a0.
The executive was 'puz- Which the power they wield unhappy. They feel d1s-
zied, for � exampl8, by the has much do to with the cri~minated against. At
shelving of important bills outcome of elections. ceremonies marking Com-
toward ~ the end of each $CrR U er House ing-of=Age Day or the con-,
Diet session, and by the p pp struction of a new primarr
- denouncements made.at�the In fact, such is the cur- school, ,for instance, young
way in which the LDP were rer.~.t animosity that in the lower`�:house . membe~rs get
running 1Diet sesslons.~ Be- view of one LDP Dietman, much, better . seats than
hind such ar.tics were none a member oi the Suzuki aged upper house members.
other than . LDP .,'upper ca.binet who has been pride is at stake, inleriority
house Dietmen. , cY:airman oi the party ex- complexes abound.
True, it is common know- ecutive and policy board as Within the �LDP there is
led e that, even within the well as LDP secretary-gen- a flve-year old supra-tac-
g eral, the upper house should tional organization called
same political party, the be dismantled and the task the Religion and Politics
relationship . between ~he should be the flrst .underr Study Soclety. � It holds
lower and upper, house taken in the refoiun oE.,the meetings every Thursday
members is not always govErnment's flnances a31d and recently its member-
smooth. � admtnistratton. ship has increased rapidly.
And disarray within the gcrapping the upper Last year the society's mem-
LDP is one geod example. house would, the Dietman bership was 74. As of April
Friction .~between. LDP lower ~ontends, save the . aountry 1 it was 104 and 15 more
and upper house Dietmen hundreds of billions of Yeri. LDP Dietmen ar2 soon to
has become particularly The house was, in any case, ioin. In~ terms of only
- apparent this spring. The simpiy doing the ~ob of the ~membership, the group can
upper house members, in ~ower house. Its members compete with the strongest
fact, have tacitly declared were "just wasting time." faction which is led bY
"war" on their lower house Their tenure in offlce �w~s Kakuei Tanaka.
counterparts, who have an six Years during which time A study of the society's
absolute majority and there wa~ no election, while ranks .shows that 74 mem-
whose instructions the up- lower house members had bers, , the majority, are
pcr house Dietmen are to be prepared for electlons from the upper, house. Of
~ supposed to carry out. Be- Which could be held at uny those, 30 joined . this year.
hind the declaration lurks time. And if they feel There' are �136~ LDP up-
_ a deep-seated grudge in moi�tlt~ed by his words, the per house members, so
the hearts of the upper more than half have .join-
house members. Dietman sa1d, they should
stand in a general election ed. In reality, the mem-
In almost every wor]d bership comprises, the
there exfsts iealousy and tO become lower house ��mainstaq troops" of those
members.
prejudice. Such is especi~l- , upper,house Dietmen hold-
ly strong, and emotionally Speeial Society ing grudBes against the
expressed, among Dietmen pther upper house mem- lower house members. Ac-
because theirs is a world in bers, indeed, are rather cording to the society, no �
upper house LDP member
is statisSed with the status
quo.
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Kazuo Tamaki, president LDP upper house members'
of the society, reports that fund amounts to al~c~ut ~250
upper house discontent is milli0n a year: Each mem-
widespread. By ~oining ber donates ~~150,000 ~a
forces, he said, the society month to the tund. To as-
~ould do some good. sure Snancial independence,
LDP upper house mem- the society estimates it
bers, led bY Tamaki, had r,eeds at least ~3 billion a
persuaded the government year. This can be obtairied
to accept pay hikes for by holding potitical recep-.
government employes, as tions, and by inviting dona-
_ recommended by the Na- tions from private business,
tional Personnel ~Authority the society believes.
INPA) at the Diet session For shock treatment, the .
_ last fall, in exchange for society intends to see that
suppurt of a lower house some LDP-originated bills
~ bill on administrative re- are shelved at the end oi
form. OPAosition parties, the current Diet session. As
too, had urged ~suppoit ~ of Tamaki says, there is no
the NPA recommendations. reason � to unconditionally
~ Criticism of the LDP..upper accep�; the lower house bills.
house members was strong. Tamaki himself has a re-
but oi course they. weFe cord of previously thwart-
~ happy wlth the result of ing two bills. ' '
their lobbyir.g, flietmen, however, should
Tamaki's society has w~n be reminded oi the fact
the support of veteran LDP that the supporters of Jap-
House of Councilors mem- anese politics are, in the ,
bers such as former end, tho people.
posts and telecommunica-
tions minister Torasaburo
= Shintani, former ' upper
house president Ken Yasui
and former home affairs
minister Yuichi Kori. All
feel nostalgia for the good '
old days when the upper
house had power and in- .
fluence. �
SF~ock Treatment .
When the K1shi cabinet
was formed during the
tenure of pTesident Tsuru-
hei Matsuno (1056-1962),
Matsuo had withdrawn all
a�ould-be upper house cabi-
net ministers because he
was dissatisfled with the al-
luttnent of posts. And when
YuLO Shigemune was upper
house president (1J62-1971), ~ ~
the then prime ministers
made it a rule to politely
greet the upper house pres-
ident at the start of each
uppcr house mnin session.
The society's flrst goal is
to become flnanctully inde-
pendent. At present, the
COPYRIGHT: The Daily Yomiuri 1982
CSO: 4120/244
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POLITICAL
NATIONAL PRIORITIES, COLD REALITIES CONSIDERED
Tokyo THE DAILY YONIURI in English 11 Apr 82 p 2
[Editorial: "National Priorities"]
[ Text The prospect of a revenue shortfall of ~�2 trillion
in fiscal 1981 has prompted debate on whether to
go ahead with plans for administrative refor.m or
to concentrate on measures to stimulate businese.
Opinion is growing that the government might have
to revise its austerity program.
These developments raise the queation of Prime
Minister Suzuki's responsibility. .
It is right and proper that economic and fiscal
management should be heatedly debated. But point-
less charges and recriminationa will only produce
cha~tic policies.
The core of the issu~e is ~simply that the govern=
' ment overestimated the natural inerease in tax re-
~ venues by calculating national economic growth be-
i , yond its real power, while acting lackadaisically on
.nECessary sp.ending cuts.
The government figured that the econ~my could
maintain a mid-term real growth rate of more ~ than .
five percent. However, many people in the private
sector estimace the rate at three to four percent.
Three Taaka Necessary
It is wrong to blame the revenue shurtfall on such
a transitory phenomenon as a delay in busineas re-
covery.
The cold :eality is that the revenue shortfall will
total over ~`2 trillion in fiscal 1981 and ~3-4 trillion
in fiscal 1982. We deem that the government has to
tackle three tasks: ~ ~
, Firstly carry out a thorough review of the aaven-
year economic development plan. This will lead to a
drastic revision of the gov~ernment's mid-range fiscal
; prospects and will require the scrapping af the easy-
go~ng program to reconstruct the national finances
based on naturalincreases in tax revenue.
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We do not take issue with the government's move
to place orders for 77 gercent of public works proj-
~ ects planned in fiscal 1982 in the first half of the
year. However, its effects could be extremely limited
and merely psychological. '
It is totally unthinkable that this step will re-
charge the economy in one stroke. We should not
repeat the mistakes of 1977 and 1978 when govern-
ment bonds were issued in great quantities, produc-
ing hPavy burdens but little economic stimulus.
Slash Spendi-ng
The second task is to alash spending by resolutely
reforming the administrative setup. We disagree
with the view that business priming measures should
take precedPnce over administrative reform. On the
contrary, the prospect of a revenue ahortfall in-
creases the urgency of cutting national spending.
All unnecessary expenditures should be eliminated
to bring things in line with economic realities an~.l
also to stop the . practice of covering deficits with
government bonds. The cutback should take accour~,t
of the revenue shortfalls in 'fiscal 1981 and 1982, as
well as the compilation of the fiscal 1983 budget.
. The third task is to rectify the ratios between di-
rect and indirect taxes. There are calls for~ revising
the ultra progressiv~e tax rate. It is only natural to
iower the rate and income tax rates should be re-
duced at the same time.
Such tax cuts can be offset by slashing govern-
ment spending through administrative reform and
by introducing a larg~e indirect tax.
~ It appears that both the government and the Lib-
eral-Democratic Party are hesitant to tackle this
issue in view of the general electiona scheduled next
y~ear. This would mean relin~uishment of their polit-
ical responaibility. We urge Prime Minister Suzuki
t'o have the courage to tell the public the truth.
- (April 11)
COPYRZGHT: The Daily Yomiuri 1982
CSO: 4120/244 ~
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POLITICAL
EDITORIAL ON ADMINISTRATIVE REFORM, DEFENSE RECOI~RrIENDATI0N5 CRITICIZED
Tokyo MAINICHI DAILY NEWS in English 10 Apr 82 p 2
[Editorial: "Adm. P.eform and Defense"]
[Text ] The first section of the Second Ad Hoc Council on
Adlthinistrative Reform is now corripiling a draft
rec~mmendation on the "preparafion of Japan's own
deI'~nse system." This refers to "defense" in the
gep~eral security of Japan but we think it to be in-
compatible with the administrative reform which is
under study by the council. We are airaid that the
study by the council section deals with dangerous
aspects which run counter to the real meaning of the
reform. � .
It is quite natural for the council to study the
possible rationaliiation of the defense administration,
buC an attempt to sanctify the expansion of Japan's
defense capability should not be made in the name of
adYninistrative reform. ~
Referring to the defense policy; the draft �
recommendation said that Japan's , own , deten'se
system must be prepared within the iramework of the
U.S.-Japan Security Treaty and emphasized the
importance of realizing a general defense plan and
improving the defense c'apability from a qualitative
vie.wpoint to meet an emergency.
We believe that the council departed from its task
to,study administrative reform when it went into the
- plan of national defense which is the basic policy of ,
the~Japanese government. ~
' In its first recomrnendation, the council seemed
to have emphasized a"smaller government" but as
far as the defense problem is concerned, the council's
dir~ection is not necessarily toward a"smaller"
defense capa~ility. Promotion of tne defense
~ capability's expansion runs counter to the goal of
aciaievin~ a smaller government. ,
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. People may suspect that the administ~ative
~ retorrr~ is being utilized as a means to expand military
c~pability at the sacrifice of social welfare. We can
= expect ups and downs bet'ore the final recom-
mendation is adopted but we urge the council ta draw
_ up a recommendation which would not turn its back
_ on the people.
COPYRIGHT: Mainichi Daily News 1982
CSO: 4120/244
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PQLITTCAL
~
DECLINE OF SHUNTO ANALYZED
Tokyo THE JAPAN ECONOMIC JOURNAL in English 20 Apr 82 p 10
[Article by Masahiko Ishizuka]
[Text ] For a foreign observer of the shunto happened - failure of more and more alienaled from
Japanese economy, shunto - transportatiot~ strikes to ma- .ideology-oriented, strike-prone
conveniently ~ translated in terialize. This illustrated more labor moveTnent.
somewhat gaudy "spring labor than anything else the collapse Moreover, the national
offensive" - should by now be a ot the shunto tormula. railways under mounting at-
familiar word just as it is tc the Behind such a development tack for a staggering ~E 2,000
; 100 million Japanese people. are vario~ factors, but the billion deficit and deteriorated
~ But some may be missing it in most obvious is the decline of , job disciplines resulting in
~ the future because this annual the ~ leadership of public serious, and some unbelievable,
' event with 30 years' history workers' unions, including, kinds of accidents hardly could
~ appears to have come to an end am~ng others, national railway afford to go on strike.
, this year as its kraditional workers', which traditionally ~a~espnnding to the decline
pattern and leadership have dominated the Japanese of public warkers' forces is the
apparently broken down. organized labor forces. Public rising move to shift leadership
Shunto, Japan's unique workers, equipped with the to unions of private.industries.
pattern of concerted rvage powerful weapon of sViking tt~e This year, private railway
settlement bargaining and railways, had been the more v~rorkers from the beginning
campaigns, in the past militant segment of the labor ~d no intention of joining
depended on synchronized movement. This militancy was forces with national railway
strikes both hy public and capable of having influence Workers in strike sched~xles.
private industrial workers, over the lat:,: as a whole, espe- It is certain that next year
with transportation strikes cially in concerted actions with
, and af ter wage bargainings at
acrass the nation dramatizing priva!e railway workers most companies and industries
the whole scene and multi- unions which also resort ~ �yill remain concentrated
piying the effects to push up strike tzctics, actual or during March and April, but
wage increases. Such a pattem threatened. ~e pattern and formula will no
started 30 years ago when the ~ One underlying cause for the lon er be like ahunto in the
nation's postwar labor move decline of public workers' influ- ~ g It may already have
ment was burgeo~vng. ence and strik� tactics is the ceased to be "offensive."
This year, somethin~ un- loss of sympathy from the
- precedented in hi~tory of public, which in affluence is - MasahilcoI~h?zuka
C~JPYRIGHT: 1982 The Nihon Keizai Shimbunsha, Inc.
CSO: 4120/244
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POLITICAL
DEPOLITICIZATION OF ELECTORATE REPORTED
Tokyo THE JAPAN ECONOMIC JOURNAL in English 20 Apr 82 p 10
[Article by Tetsuo Tamura]
[Text ] Some recent events clearly indicate that a speak of won a victory in the fight against
considerable change is underway in Japan's communist forces which boast . of a solid
political climate. When the ruling Liberal organizational power. From its inception, khe
Democratic Party clinched an overwhelining LDp has lacked traits common to political
victory in the elect~ons of the both Houses held parties and accordingly, a strong backing
simultaneously in June 198~, observers all organization. The JSP used to have an
pointed out the electorate's trend toward organization formed mainly by labor union
"reversion to conservatism," but the recent members, but that organization has disinte-
political phenomena seemeci to insinuate a grated gradually. All this leaves the Japan
trend for "accelerated depoli+.icization" of Communist Party as the only organized force
the electorate rather than "reversion to in Japanese politics, but the elections in
conservatism.'' ~ Kyoto and Yokohama demonstraled that
Firstly, there were two elections recently even the organized JCP last out to un-
which characterized such a trend: the Kyoto organized voters whose ideological identity is
gubernatorial and the Yokohama mayoral amorphous. Such a situation was evident
contests. In the Kyoto election, an unex- more than anything else in the fact that the
~ pected overwhelming victory of the incum- JSP did not pick any candidate of its own nor
bent mayor, backed by conservatives and gave support to any candidate running in the
centrists, stunned the ruling LDP it~elf and Kyoto election. ~
especiaUy, his wide margin over the oppasi- To sum up, it is possible to say that the
tion cand�.date endorsed by communists and Japanese people are not reverting to con-
reformists. LDP officials first hinted at the 5eryatism, but are simply depoliticized. A
possibility that the incumtae~nt might lase the recent survey by the Prime Minister's Office
election because Kyoto was, an area where a revealed that people hav,e a keen interest in
reign of reformist forces had cantinued for 28 o~y local assemblymen's elections; they are ~
years betore the incumbent mayor came.to ~~~ng their interest in elections at prefec-
pbwer. But the result was an astonishing tural and nationwide levels. The survey indi-
margin of 180,000 votes (560,000 over 380,000). cated that the Japanese people now tend to
A similar trend emerged in the Yokohama pay little attention to things, elections~ in-
mayoral election. The conservative camp cluded, which do not have direct influence
was apprehensive because Yokohama was a with their immediate concerns.
city where Chairman lchio Asukata of the The same trend could be said to constitutg
Japan Socialist'Party fiad rlle~ for a very back~ound of this year's spring wage
long time as mayor. But the outcome was an negotiations which did not have a general
overwhelming victory for the consetvative railway strike for the first time in 30 years.
incumbent, just as in the Kyoto election. As more and more people are interested only
- One characteristic common to the two ~n their own matters, it would have threa-
elections is that the conservative and centrist tened the foundation of its own existence if
forces which do not have any organization to the Council of Public Cor~ration Workers'
Union went on a large-scale strike because
members of the unions themselves are just
as turned off.
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The LDP and the Government have already
_ been ruling the nation through politics
geared to the "amorphous masses" and wil(
move more and more in that direction in the
fulure. Their constant refusal to take up the ~
issue of amending sl.ems from their desire 20
prevent "the general public" from splitting
into pros and cons. 'rr~e same psvchology
applies to their efforts to keep divisive dis-
putes from erupting on such fundamental
issues of the nation like education, security
an~i defense.
lf Japanese politics is to continue to func-
- tion along the same lines in the years to ~
come, it wili be practised more and more
without principles. This will not give rise to
any disputes domestically for the time being,
but it will not work well externally. Some
symptoms of "the disease" inherent in such
a trend have already began to show up in
Japan's trade frictions with the United
_ States and the issue of $6 billion aid requested
by South Korea.
External problems, if confined to eco-
nomic issues, may be somewhat soluble but
- the situation could get really serious if they
are political issuas. -
(Telsuo Tamura is a Nihon Keizai deputy '
po(itical editor)
COPYRIGHT: 1982 The Nihon Keizai Sttimbunsha, Inc.
CSO: 4120/244
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MILITARY
OUTLINF OF FISCAL YEAR 1982 PROGRAM UNVEILED
Tokyo NIKKEI SANGYO SHIMBUN in Japanese 4 Feb 82 p 7
[Article by reporter Motohashi: "Defense Related Industries Excited by 'Fat
Budget ]
[Text] The defense budbet, which registered a 7.75-percent
increase over the previous f iscal year, is currently the fo-
cus of a Diet debate. The defense related industries are
quite satisfied with the "large appropriation" under the
Financial Rehabilitation Plan: "The amount of the frontal
equipment order is just about right." (Mitsubishi Heavy
Industries Ltd Executive Kenya Ikeda) in the 1980's Interim
Operation Estimate that the Self-Defense Agency is currently
framing (for 1983-1987), the ma~or equipment orders are ex-
pected to expand further; thus the defense related industries
will continue to enjoy the favorable business trend.
At the Japan Weapons Industry Association's New Year gathering, the president
of the organization, Mankichi Kanno (president of Japan Steel Works, Ltd),
praised the Self-Defense Agency's "efforts." "Under diff icult circumstances,
it framed an unusually favorable def ense budget." In res.ponse, Self-Defense
Agency Director-General Ito urged "the industry to endeavor to establish
effective def ensive strength alongside the Self-Defense Agency. Thus went the
mutual exchange of salutations between the civilian and official sectors.
. Exchange of Salutes Between Civilians and Officials
Equipment purchase allocation, an item of great relevance to the defense re-
lated industries, in the 1982 def ense budget of 2,586,100,OQ0,000 yen, is �
580.3 billion yen. This represents a 7.5-percent increase over the previous
year. It is somewhat less than the overall gain in the defense budget, but
that is because the first-year expenditure for major equipment is relatively
low. The order base quantity is close to the full amount.
Appropriations for the main strength fig;lterplane F-15 (23 planes) and anti-
submarine patrol piane P3C (7) are less than the requested amount (43 F-15's
and 17 P3C`s were requisitioned respectively); but the balance is expected to
be ordered under the FY-83 budget, and the impact on the def ense-rPlated
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industries is not significant. Mitsubishi Heavy Industri~s, which is manufac-
turing the F-15 under a license agreement, says that "the delivery dates for
materials and oth-~r imported articles are being extended, and perhaps the
industry ought to defray the cost and order them" (Aircraft and Special Vehi-
cles Project Headquarters~, but the company is satisf ied that the quantity of
orders is steadily incre~~.sing.
Among land equipment, 72 model 74 tanks were ordered--less than requested (80).
- However, orders for this model tank have increased from 48 in 1979 to 60 in
1980 to 72 in~1981. Even a Self-Def ense Agency Equipment Bureau source com-
mented that "the procurement tempo has been rapid thus far, and a purchase of
80 units would have baen impossible at any event."
The Ground Self-Def ense Force's anti-tank helicopter AH1S, too, has made its
appearance. Fuji Heavy Industries, Ltd, is slated to obtain a lice~se for pro-
duction from the Bell Corporation of the United States. The Self-Defense
- Agency is planning to order at least 54 helicopters in this category (including
12 scheduled for 1982), The cost is nearly 2 billion yen per unit. Although
there is an element in the United States which frowns on furnishing Japan with
defense equipment production licenses, Fuji Heavy Industries, Ltd, Executive
Iwao Shibuya says that "there is no such feeling with regard L�o AH1S itself."
The AH1S will most likely become the mainstay of the firm's Airplane Division.
~
"Continuous Buildup" Impossible
In the vessels category, ttiree 2,900-ton escort ships--one less than requested--
were ordered. A request for a 1,400-ton escort ship was not approved. The
escort ships are handled by five shipbuilding firms--among them Mitsubishi
Heavy Industries, Ltd, and Ishikawajima-Hari.ma Heavy Industries Co, Ltd. "A
continuous buildup," whereby one vessel per year is ordered, will not be under-
- taken in 1982, but that format hopefully will be revived during the 1983-1987
Interim Operation, says the industry.
The attention of defense related industries has already been shifted to the
- 1983-1987 Interim Operation Plan. The goal is to reach the def ense capability
and level set forth broadly in the government's Self-Defense Plan for the
period specif ied; work to this end is currently undeYway and is expected to be
completed this summer.
Ttie Self-Uefense Agency's investiga~ive operation includes the following
figures: (1) approximately 95 F-15 planes, including 20 carried over from
the 1978 Medium Term Defense Program; (2) 65 P3Cs, including 20 carryovers;
:18-19 escort ships, including missile loading DDG's; (4) 7 submarines;
and so on. Also, the number of model 74 tanks is expected to be about 400
uni ts .
1 Orders Will Increase, But Increase Will Be Small
The 1983-1987 Interim Operation has several large projects, such as the
selection of the (SAM-X)--a successor to surface-to-air missiles such as Hawk
and Nike; and construction of an automatic aerial defense warning/control
sys tem (Badge X) .
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It i.s true that deiense purchases are steadily ir~creasing under the 1983-1987
Interim Operation Plan. But ir is not such a drastic increase as to affect
the defense industry in any sig,nificant manner. Mitsubishi Heavy Industry is
~ producing the F-15 at the rate of one aircrsft per month, but "we can double
the current production rate with the existing facility" (Mitsubishi Heavy
' Industries Director Yoshio Sasaki), so i~ is not operating at full capacity.
Even in the case of the model 74 tanks, although the total order during the
1983-1987 Interim Operation Period wo~uld be 400, the annual average is 80--
eight more than the 1982 figure (72i. "It is not a case of terrif ic business
and all smiles." (Mitsubishi Heav-~ Industry, Ltd, Special Vehicles Division
chief Iwao Hayashi) The industry emphasizes that there is not such a"bulge
out" mood as the public at largF~ believes.
Another worry is that with regard to the issue of o�fering American military
technology to others, the Ur.ited States is becoming very cautious about giving
Japan the licenses. In thF- case of the ~iIM 9L aerial missile (Sidewinder)
(Mitsubishi Heavy Industry) and 203 mm automatic howitzer (Komatsu Ltd),
which became licensed pr~~duc~ion items in 1981, the U.S.'s attitude was quite
unyielding. Even thougn there is licensed ;~~duction, if the proportion of
direct imports from tb.e United States is great, a large piece of the pie, that
is slated to become ].arger as a result of 1983-1987 Interim Operation, may have
to be given up to tt;e United States.
Self-Def ense Agen~.y's Main Equipment Budget Breakdown
(Firearms, tanks, etc) 1980 1981 1982
9 mm gun 1,800 1,800
Model-64 rifle 5,100 5,000 5,000
Model-62 machinegun 51 51 51
Model-74 tank machinegun 38 38 38
- 84 mm recoilless mortar 188 219 221
Model-79 antivessel, antitank roving firing
facility 8 set 9 set 8 set
Model-64 81 mm trench mortar 65 44 43
Model-75 155 mm automaic howitzer 26 30 34
203 mm automatic howitzer 6 ~ 13
Model-75 130 mm automatic rapid-fire
rocket firing facility 8 8 8
Model-75 automatic surface wind measurement unit 3 3
Model-74 tank 60 72 72
Model-73 armored car 9 9 9
Wheeled mount armored car " Z~
Model-78 tank recovery vehicle 3 3 5
Model-78 snowmobile 22 22 22
Model-70 automatic pontoon 2 3 3
(Surface-to-air guided missile)
Modified Hawk 1 1 1
Short SAM 6 set 9 set
Portable SAM 20 set 65 set
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FQ~R OFFICYAL USE OtiILY
(Aircraft) 1980 1981 1982
Ground Self-Defense Force
Antitank helicopter AH1S " ~2
Reconnaissance helicopter OH6D 10 8 6
Multipurpose helicopter HU1H 5 8 6
Communication/reconnaissance craft LR1 2 1 1
Transport helicopter V107A 1 "
Maritime Self-Defense Force
Antisubmarine patrol plane P3C 10 7
Beginner pilot training craft KM2 1 2
Instrument flight training craft TC90 2 4 3
Antisubmarine helicopter HSS2B 2 6 ~
Rescue helicopter S61A 1 4
I Beginner pilot training helicopter OH6D 2
Rescue aeroboat US1 1 "
Air Self-Defense Force
Fighter plane F-15 34 23
Supportfighter F-1 3 2 2
Transport C13QH 2 2
Advanced training craft T2 4 6 5
Search and rescue craft MU2 1 1
~ Rescue helicopter V107A 2 2 1
Early warning craft E2C 4
(Vessels)
4,500-ton escort DBG 1
2,900-ton escort DD 2 2 3
~,400-ton escort DE 1 �
Submarine SS 1 , 1 1
Medium-size minesweeper MSC 2 2 2
Submarine rescue mother ship AS 1 �
Support vessel 3 2 3
Modernization of boats for 1 for 2
vessel vessels
COPYRIGHT: Nihon Keizai Shimbunsha 1982
I i146o
C.SO: 4105/59
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ECONOMIC
JAPAN CONCERNED BY TRADE FRICTION WITH ASEAN COUNTRIES
Tokyo NIHON KEIZAI SHIMBUN in Japanese 18, 19 Mar 82
[18 Mar 82 p 7]
[Text] Worsening Market for Primary Products
"We cannot a:~.cept that the United States offers less favorable treatment
for imports frc;. ASEAN countries than for those from Caribbean countries."
Thus, Vicente Valdepenas, Philippine Vice Minister for Industry and Trade,
who chaired the conference between the U.S. and ASEAN governments held in
Washington for 3.'ays beginning on the 9th, acting as spokesman for ~
ASEAN, expressed strong concern about the effect on ASEAN of the Reagan
administration's policy concerning assistance to Central America. The
United States is going to lift all taxes on Central American products; if
this happens, major damage will be unavoidable, as it will mean the
cessation of exports to the United States of Philippine sugar, and so on.
To judge from the expressions of dissatisfaction with American aid to
Central America, the ASEAN countries' prospects for exports will be ruined.
For countries like Thailand and the Philippines, which export primary
products, the value of exports declines with the drop in ~iewand accompanying
a recession in the advanced countries, and starting about the middle of last
year the growth of exports suddenly weakened. Thailand's reduction last
July of the rate of exchange it had maintained for 12 years (8.7 percent),
with the goal of strengthening the competitiveness of exports, had no
significant effect on the lowered value of rice, rubber, tin, and so on,
and last year Thailand recorded its highest deficit ever, 67.6 billion bhat
(about 3 billion dollars).
In the Philippines, also, copper and lumber shoo~ed a considerable decline
because of the slump; exports, which in the second quarter of the previous
year had strongly increased by more than 20 percent, decreased 0.4 percent
in the same period last year. Deliverance from the nightmare of drastically
increasing oil prices and the controls on tY.~: growth of imports failed to
reduce the trade deficit, and last year it again exceeded 2 billion dollars.
On the other hand, the oil-producing countries are also gloomy. Indonesia,
for which exports of oil and natural gas make up 80 percent of all exports,
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maintained the level of income of the previous year through October of last
year, but after that it was forced to cut production, and the situation this
year is even worse. Malaysia was also forced to cut production in the second
half of last year by nearly 20 percent.
For both countries, the most serious situation was the catastrophic drop in
the nonoil portion of their exports. In Indonesia, in addition to coi.fee,
rubber, and other primary products, the sale of industrial products su~:h a~
cloth and chemicals declined greatly, and in the period from April to O,ctober
of last year, nonoil products decreased 31.9 percent in comparison to the same
period of the previous year. In Malaysia, also, veneers and textiles slumped
and the trade balance shifted into the red for the first time in 21 years.
Gloom Also in the Newly Industrialized Countries
:11so fully suffering from the impact of the wave of recession in the advanced
countries were the NICS [newly industrialized countries]. South Korea, which
last year recorded exports of 20.9 billion dollars, 19.9 percent higher than
the previous year, and which seemed on the road to revolution, is now again
~ beginning to see clouds. The value of exgorts for January and February this
year was 3.04 billion dollars. Although this is a 7.3-percent increase over
the same period of last year, it is lower than expected and is not a
r_ircumstance which permits optimism concerning future prospects for exports.
In Singapore, too, exports to the Middle East of oil rigs and ships, for which
there remain good prospects, and to Europe of electronics and cloth and the
like decreased greatly. In addition, the growth of exports to Indonesia,
Malaysia, and others in ASEAN was weak, and the deficit in the trade balance
for 1981 increased to 6.6 billion U.S. dollars. Taiwan and Hong Kong are in
a similar situation.
' This is the first time since the f irst oil crisis of 1973 that a trend has
appeared for the Asian developing countries, centering on ASEAN, to
simultaneously show increases in trade deficits and large reductions in
surpluses. This is a11 the more reason far these countries simultaneously
to develop policies to revive exports. Ameliorating the conditions for the
financing of exporters is a policy common to all the countries. For example,
in Indonesia in the middle of January ~here were, among a group of 18 detailed
policies designed to encourage exports, 1) a liberalization of the control
of currency exchange (for U.S. dollars) for exports, and 2) new systems for
Che protection of exports.
At the beginning of January, Thailand too enacted 1) tax relief for the
export of major agricultural products, 2) a reorganization and simplification
of procedures for exporting, and 3) the establishment of a special fund for
export assistance. The Thai Government has explained that the 0.5-percent
surcharge levied against all imports (except petroleum products and milk for
infants) at the end of February is intended to provide revenue for this
special fund. It is thus more for the purpose of promoting exports than
restraining imports.
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Missions Aimed at Diversifying Markets
~ Further, efforts to diversif.y export markets are being intensified. All of
these countries are studying the dispatch of trade missions, and South Korea
is ready to send a mission at the end of this month to some 20 countries,
chosen mainly in Africa, Central America, and South America, where it has had
little business. Also in the area of opening new markets, Thailand this year
has concluded a long-term contract with the USSR for tapioca. Thailand has
until now been expanding exports of tapioca to the EC (European Common
Market), but the EC has been seeking a voluntary limitation of its exports,
and the future has become insecure, so the Thais are happy to agree to export
2.2 million tons to the USSR over a 5-year period.
Table: Japan's Asian Trade (in millions $US, deficit or decrease)
1981 1981 1981 Compared to 1980
~ountry Exports Imports Balance Er:ports Im orts
Indonesia 4,123 13,305 *9,182 19.2 1.0
Malaysia 2~424 2,927 *503 17.6 *15.6
Singapore 4,468 1,944 2,524 14.2 28.9
Thailand 2,251 1,061 1,190 17.4 *5.2
Philippines 1,928 1,731 197 14.5 *11.2
ASEAN total 15,194 20,968 *5,774 16.6 *1.1
South Korea 5,658 3,389 2,269 5.3 13.1
Taiwan 5,405 2,523 2,882 5.0 9.9
(Source: JETRO figures)
This no-holds-barred scramble for markets has gradually begun to have its
eff ect on Japan. A typical example is the shipbuilding industry. Japan's
shipbuilders last year made bids on 13 large international orders totaling
43 ships, but they did not get an order for a single ship. They were
totally defeated by South Korea, asserting its position as "king of the
st~ipbuilders," and others. 'The Korean shipbuilders' efforts to overthrow
Japan, with generous assistance from the government, are steadily achieving
results.
[19 Mar 82 p 5]
[Text] "Japan's strength in exports is the proper result of the efforts of its
industry. However, when the surplus of exports passes a certain limit, it
becomes unbearable for [countriesJ such as Taiwan." Thus a businessman
resid~nt in Taipei--Ch'en Chia-hsin--complained in a letter to his head-
quarters concerning the sudden imposition in the middle of February by the
Taiwanese authorities of a ban on the import of Japanese consumer goods.
According to Ch'en, Taiwan's trade with Japan has been in the red for the 29
years from 1952 through last year, with the exception of 1955. Moreover, as
the amount has increased year by year, it has been strongly questioned
whether "Japan is sinking into trade imperialism."
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Striking Out Due to Irritation
Taiwan thus has banned imports of 1,533 Japanese products--not only
~ electrical products such as video recorders and refrigerators, but cosmetics,
foods, and the Iike. There is no time limit. Moreover, in a later enactment,
it was announced that imports of large trucks, buses, and engines from Japan
have been banned for 1 year.
Among these [items], the limited ban on truck imports is intended to protect
ti:e automobile manufacturing plant jointly established by the American GM
(General Motors) and Taiwan interests, but the ban on consumer goods is a
direct expression of Taiwan's anger at its growing trade deficit with Japan.
According to the announcement by the Taiwanese authorities, last year's trade
- def icit with Japan was 3.4 billion dollars, nearly 300 million dollars greater
than the previous year's, with the total over the last 4 years amounting to
11 billion dollars. The Taiwanese have already held several discussions with
Japan aimed at improving trade problems, and they explain that, since nothing
at all has been arranged, they have decided to take this f irm step "pending
real coaperation on the part of Japan" (Taiwan Ministry of Economic Affairs).
Although not explicitly designating Japan as the target, in the manner of
Taiwan, the return export (counterpurchase) system that the Indonesian
Government has just enacted is largely directed at Japanese firms.
Undc~r this system, foreign companies from which the Indonesian Government
has ordered construction projects for national enterprises of more than 500
million rupees (about 800,000 dollars), as well as materials and supplies,
must purchase for their own countries nonpetroleum products from Indonesia
(natural rubber, coffee, veneers, textiles, and the like--a total of 11
~ designated items) in proportion to their receipts, which makes this a powerful
measure for revitalizing the nonpetroleum sector of exports.
The Indonesian Government says that "projects and supplies ordered from
foreign companies wi11 amount to about 4.5 billion dollars this year"
(Minister of Trade Radius Prawiro), so this new system, if enforced 100
percent, will by itself increase exports enoughto rectify the trade balance.
~ When this policy was announced, the countries of Western Europe--including
West Germany, France, and Britain--were at first critical, and Japan, too,
did not conceal its doubts. This is because Japan's exports to Indonesia
amount to about 30 percent of Indonesia's total imports, and, in addition,
since most of them are plan.ts and other heavy industrial products, they will
- nearly a11 be subject to the counterpurchase obligation.
Concern has been expressed that "if this policy produces definite resu~ts
for Indonesia, other Southeast Asian countries will follow suit, and the
basic conditions of Southeast Asian trade will be changed."
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Further Measures in D~.sre~ard of Concern
Disregarding such concerns, the Indonesians have designated deals for
developmental imports this year worth some 250 million dollars and amounting
to about 1 million tons as the ~irst phase of the counterpurchase export
~ system, and are steadily progressing toward its enforcement. Consequently,
first the Europeans but now also Japanese firms have shifted from their
initial protests to a flexible stance,of "cooperating with Indonesia's
policies to promote exports." Within the Japanese trading companies, the
view has emerged that 11if present habits are transformed by a real system
to recognize Third World exports, o~ur own opportunities for business will
increase."
The Thai import surcharge enacted at the end of February will also inevitably
have its greatest impact on Japan. Thailand's adverse trade balance with
Japan has always been large, and the value of imports is almost double that of
exports; this move is also an indication of the dissatisfaction that is rapidly
building up beneath the surface. Very recently a Bangkok economic newspapex,
at the top of its front pages, took up the problem of the imbalance in trade
with Japan and made the ominous prediction: "In the latter half of this year,
groups in the government, in the military, and among businessmen will start
an anti-Japanese movement."
It is imposs~.ble to predict at this point whether the growing dissatisfaction
concerning trade with Japan within ASEAN and the NICS will erupt everywhere,
following Taiwan's lead. For example, in Thailand the 9th yen loan, amounting
to 70 billion yen, was tentatively agreed upon just this past February, so
the government's unhappiness with the trade deficit can be termed mild.
Moreover, the Indonesian counterpurchase exports are to enable the Suharto
government, which is anticipating a general election in May, to promote
exports of primary products, and the tendency is growing to see this as a
policy aimed domestically--to encourage confidence within the depressed
agricultural villages, to lead to victory for his party in the election, and
to anticipate flexibi?~ity in enforcement following the election.
Even in the case of th~e Taiwanese import ban, the goods covered amount to
only about 1.7 percent (some 100 million dollars) of TaiwaT~~�s imports
of Japanese products, and [the ban] is not considered to have any great
immediate impact. It is also true that there are voices in Taiwan which say
that the problem is in the crade structure, in which--in contrast to Japan's
exports to Taiwan being ne;irly all capital goods and industrial raw materials,
without which Taiwan's industry cannot operate--Taiwan's exports to Japan are
mainly agricultural and marine products and light industrial goods for which
there are alternative sources. Since the Taiwan authorities are fully aware
of this, there are many who see the import ban as a political gesture.
Following the Adjustments with Europe and America
However, one may also observe that the various countries of Asia are
simultaneously coming up with demands upon Japan as an aftermath of the
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adjustments ma.de with Europe and America, as may be seen in the view of one
knowledgeable Taiwanese that although "Taiwan was not c,rise to risk Japanese
retaliation by taking the lead in banning imports," yet "when we consider the
effects of Japan's adjustments with Europe and America, we are but following
in their wake-." As it is certain that, with the narrowing of the American
and European markets, Asia will become steadily more important to Japan, it is
safe to say that it is necessary for Japan to hear them out and keep cool.
COPYRIGHT: Nihon Keizai Shimbunsha 1982
9898
CSO: 4105/79
~
I'
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ECONOMIC
JAPAN-US ~TAX FRICTION~ BECOMING SERIOUS
T~~cyo THE JAPAN ECONOMIC JOURNAL in English 7 Apr 82
LTE'.Xt~
"Tax fric~tion" has become serious between Japan and the US, in
addition to the trade imbalance problem, and it is being worried about as
a new cause of friction with foreign countries, Recently, there is one
Japar.-affiliated enterprise after another which is subjected to additional
impositions of taxes in the US, due to the difference in the interpretation
of the tax law between Japan and the US. In addition, it is expected that
the taxation under a new formula which the US Internal Revenue Service (IRS)
will carry out from July toward the enterprises in the US, will deal a big
blow to the Japan-affiliated enterprises, the rate of whose own capital is
low. Voices of strong repulsion are being raised from among the Japan-
affiliated enterprises. Therefore, the Finance Ministry and the National
Tax Administration Agency will make the following proposals at the periodic
confei~ence between Japanese and I!S revenue offi~cials, which will be held soon:
(1) When Japan-affiliated enterprises in the US are to be investigated,
Japanese revenue officials~also should be present; and (2) Japanese and US
revenue officialsshouldinvestigate Japanese parent companies and their sub-
sidiaries in the US simultaneously by specafication of work. Their policy is
to do their utmost so that the problem will not become more serious
than at present.
As to a dispute between Japan and the US over taxes, there is a case
oF US Honda, which is a subsidiary of Honda Giken. When a Japanese parent
company decl~res~for the US corporatior~ income tax on its subsidiary too
lorr by intentionally raising the export price for the subsidiary in the US
and compressing the profits of the subsidiary, tne US levies the tax by
applying tt~e "moved price tax system." US Honda was subjected to this
suspicion as to its income for fiscal 1975, and the case is pending in a
US tax court even at present.
- According to the Finance Ministry and the National Tax Administration
Agency, ~imilar disputes over taxes are occurring frequently among several
Japan-affiliated enterprises, including the subsidiaries in the US of two
other major automobile-manufacturing companies (Toyota Motors and Nissan
Motors). Also, 'the National Tax Administration Agency points otit: "Even
when an enterprise is subjected to an irrational additionalimposition of taxes,
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~ it may be made an object of tax investigations by Japanese and US revenue
I officials, when it lodges an objection. So, there ax~e increasing cases of
putting up with such a step without receiving a deduction as to the amount of
~ foreign taxes.
i
Such disputes arise because the Japanese and US tax laws are basically
different in the handling of the "burden of proof" toward an income which has
arisen, in addition to the moved price tax system. Japan is adopting the
actual amount tax system under which national tax officials, who conduct
investigations,havethe burden of proof, and even when the income of a tax-
payer is suspected to be too low, there is no other way but to levy a tax
or.i the income w,zich is too low, when the tax officials cannot prove it.
In the US, on the other hand, the ta:t authorities estimate that there ought
to he a certain income if there are certain earnings, and levy a tax on
the amount of these earnings. When the real income is smaller tl~an the amount
estimated by the authoriti.es, the tax-Payer himsslf must prove it. Therefore,
it is usual tl~at the amount of the tax imposed is larger than that under the
~ctual amount tax formulain Japan.
1'urthermore, ttle excessively small capital tax system, which is to be
carried out in the US Fram July this year, will deal a bi~ blow to Japan-
affiliated entez~prises. Under this system, even borrowed money is regarded
as a part of capital, and a tax is levied without handling the payment of
a inter~:st as a loss of money. The view is strong that this is aimed at
Japan-affiliated enterprises which highly depend upon borrowed money and which
are makin~ good sYiowings on the average.
_ . .
.
Ttlere are many cases where Japan-affiliated enterprises in the US
depend u~on r~oney borrowed from their parent companies in Japan. In carrying
out the t~lx system from ~Tuly, transactions between parent companies and their
:,ub~icliari.es between nations are to be handled separately. However, the '
~ I~S is }~urrying to lay down rules covering international transactions, and
it is lik~:ly that one enterprise after another will be pressed for a complete
r~,view of procurement of funds by their subsidiaries in the US. As the
moved price tax and the excessively small capital tax do, not exist in JaFan,
some Japan-affiliated enterprises point out that "Both are non-tariff barriers
on the US side toward Japanese enterprises."
In the State of California, a unitary tax system is being carried out
under which taxes are levied on the subsidiaries and branch offices of
large enterprises which have advanced into the State, in the light of the
- ~~.ituation of yields as an enterprise group as a whole, even when their settle-
ment ~~f accounts shows a deficit. Thi.s is presenting a problem among the
enterprisec which nave advanced. The Japanese authorities concerned are
taking a serious view of the fact that a dispute has begun to arise even~with
the IRS, in addition to such moves in each State.
_ Therefore, the Finance Ministry and the National Tax Administration
A~enc~~ want to request the US side to hold at an early date the periodic
conference between Japanese and US revenue officials, which is scheduled to
bc held by this coming su~r~mer, and prevent the expansion of the disputes
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through talks. In cancrete terms, their policy is to work upon the US
~ side to co-ordinate taxation at the actual scenes, with Japanese revenue
personnel also present, when the US side conducts investigations, and
carry out interna.tional simultaneous investigations, with Japanese and US
xevenue officials conducting revenue investigations by specification of
worko ~
As to such moves, there are growing voices from ar:ong Japanese
enterprises, which are a focal point af the tax friction, requ?sting that the
deduction as to the amount of foreign taxes in Japar, (TN: sic) be implemented more
flexibly, and seeking a revision of the Japan-US Tax Treaty, not only for
co-ordination between the officials concerned on the investigation level
but also for the prevention of dual taxation.
However, the Japanese Government, which is suffering from small tax
yields, strongly intends to levy taxes, as much as possible, on the incomes
which Japanese enterprises have earned overseas. On the other hand, the US,
which is making desperate efforts to overcome the fanancial deficit, views
Japan-affiliated enterprises, which are obtaining la?^ge amounts of yields
in that country, are a good target for securing tax yields. Therefore,
~ many ~eo~le think that the difference of opinions between the Japanese and
US enterprises over taxation on Japan-affiliated enterprises in the US will
~ continue, for the time being. It is feared that this may become a new
cause which will make the Japan--US economic t'riction more serious.
COPYRIGHT: 1982 The Nihon Keizai Shimbun, Inca
_ CSO: 4105/99
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ECONOMIC
'MAINICHI' VIEWS JAPANESE ECONOMIC PROSPECTS
OW171101 Tokyo MAINICHI DAILY NEWS in English 16 Mar 82 p 2
[Editorial: "World Economy 'Engine
[Text] The economic planning agency has disclosed that Japan's economy
during the October-December period in 1981 recorded a decline of 0.9 percent
from the previous quarter, a 3.5-percent negative growth in annual terms.
This was the first time since the January-March period of 1975 that a nega-
tive quarterly real-term economic growth had been recorded, indicating the
serious economic situation in Japan.
The decline was mainly caused by a considerable drop in exports. However,
there is a bright spot in domestic demand in expanded equipment investment.
Compared with the negative growth immediately after the first oil shock in
1973, however, there seem to be less pessimistic trends in the current
economic sit-uation.
Firstly, we have stable prices of commodities including oil. Secondly,
individual consumption and equipment investment are not in as bad a condi-
' tion as might be. Thirdly, earnings of large business firms are not low.
Accordingly, some people view that the current sluggish economy is just a
temporary phenomenon.
We must, however, watch the overseas economic situation carefully. The
United States and European nations are suffering from high inflation and
unemployment, with increasing numbers of bankruptcies. The U.S. move
towards protectionism has become more pronounced. Eastern European nations,
including Poland, and nonoil producing developing nati.ons are deeply in
debt, which may invite international financial instability.
The high American interest rates have prompted worldwide economiG instability.
Aimed at controlling inf lation, the high interest rates have at the same
time caused inactive equipment investment and, subsequently, declined
earnings for business f irms, inadequate tax revenues and expanded fiscal
def icits. In addition, they have helped reduce currencies other than the
U.S. dollar to levels below their actual value.
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The basic cause of the U.S, fiscal deficit is i~s arms expansion race with
the Soviet Union, which has sharpened East-West tension and curtailed
East-West trade. Thus, the arms expansion can be termed the "root cause
of various evils."
Under such circumstances, we have no reason to be optimistic about the
future of the Japanese economy. While Japan has enjoyed exceptionally low
inflation rates and unemployment, what worries the Japanese government is
the fiscal deficits, but the government has taken no drastic action to
cope with this.
Prime Minister Zenko Suzuki has pledged to suspend the issuance of national
bonds which are aimed at covering f iscal deficits by 1984, but this pledge
has prevented him from taking steps to reactivate the economy, except for
advancing the implementation of public works programs in fiscal 1982.
What will become of the world economy if Japan fails to take active measures?
Doing nothing will accelerate a reduced world economy and the trade friction
will remain as it is. Some Western European nations and the United States
have demanded that Japan, a model of economic policy, play a more important
role as an "engine" to boost the world economy. We believe that Japan,
an economic power enjoying 10 percent of the world gross national product
(GNP), must change its policy to come up to world expectations.
For this purpose, we call for an expansion of domestic demand, an increase
in official governmental assistance to developing nations and efforts for
world disarmament. If and when these policies can provide a lift, even a
modest one, to the world economy, criticism leveled at Japan will moderate.
This demand must be realized through the promotion of public works and
housing construction as we11 as an income tax cut in fiscal 1982. A
revision of the economic structure through these measures will help Japan
remove the trade friction.
The increase in government assistance must be welfare-oriented, aimed at
preventing hunger, for example. The aid to least developed nations will
settle the unstable international fiscal situation. Japan must also urge
the promotion of disarmament because, we believe, Japan should be a pioneer
in this field. After all, Japan achieved its present prosperity by keeping
military expenditures to a minimum.
COPYRIGHT: Mainichi Daily News 1982
CSO: 4120/249
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ECONOMIC
GOVERNMENT TO INCREASE FI~iADTCIAL EXPENDITURES TO EXPAND DOMESTIC DENIAND
Tokyo MAINICHI DiAILY NEWS ir '~nglish 4 Apr 82
[Text]
It became clear on the 3rd that the OECD, which is a group of
advanced r.ations, has sought Japan's drastic conversion of its management
of the economy. This was formally conveyed to the Japanese side for the
first time at the meeting of the Secretaries of the OECD Economic Policy
Committae (EFC), which was held in Washington late last month. It pressed
Japan to (1) raise the interest rates anci (2) bolster business, The
Government is taking the posture of basically rejecting this, saying that
"Raising the .interest rates runs counter to business measures." However,
the situation makes it inevitable for the Government to decide on measures
to expand domestic demand further from two fields elimination of
the trade friction with Europe and America and bolstering of domestic
business. Therefore, the Government has firmed up the policy of starting
studies on comprehensive economic ~raasures centering on the expansion of
domestic demand, to~ether with measures for opening the market, including
partial liberalization of a~ricultural products, after the passage of the
fiscal 1982 Budget Bill on the Sth, completing the framework for business
measures led by finances, including the expansion of loans by the Housing
~,oan Corporation, an increase in the expenses for public works, an increase
in the number of independen� local projects, and a tax�reduction, and
announcing the framework by the timc of the Versailles Summit (Advanced
Summit Conference) in June.
At the Cabinet meeting on March 16, the Government decided and carried
out t}ie lst round of ineasures to bolster business, including advance
implementation of public works and housing construction with public funds.
However, as the sec~nd round which is to be newly checked into, expansion
of lo~ins by the Housinp, Loan Corporation and increase in the amount of
clectric power facilities investments are,expected to be included, centering
on an addition of expenses for public works in this coming fall and there-
after.
Government leaders including Economic Planning Agency KOMOTO are
already hinting at measures to bolster business. Finance Minister
WATAi1ABE, too, who.has so far been taking a cautious posture, says that
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"We will not cause the Japanese economy to become weak from this coming
fall." Thus, new business measures will be boiled down from early this
week, when the Buclget Bill will be passed.
The probability is great that the contents of the business measures
this time will resemble the case of the supplementary budget (enterprise
scale: ~�2 trillion l.l percent of the GNP) which.was announced after
the London Summit in fiscal 1977. In concrete terms, such measures are
expected as to increase tti~ expenses for public works by more than ~'1 trillion
and expand the Housin~ Loan Corporation loans for tens of thousands of
houses. Whether or not the tax reduction can be carried out by fiscal 1982
is fluid. However, there is the following voice: "A tax reduction by
~300 billion~or ~400 billion will be possible by breaking down a part of
the reserve funds for the recovery of subsidiary coins, which amount to
~�1,200 billion at present" (Government source).
On the other hand, the Economic Policy Committee, where the criticism
against Japan's economic policy was voiced, is an organization to check
into econor~ic situations and policies in the OECD. A secret meeting of
the Secretaries was held in Washington on March 27, with representatives of
major advanced nations participating. ,
With US Presidential Economic Advisory Committee Chairman W~IDENBAUM
as Chairman, the representatives of various countries discussed the present
economic situation in the world and economic policies. According to the
G,~verunic~tit :,ourr_e, OECU 5ecret~zry General VAN LENNEP and representntive~
~ of two or three countries expressed opinions to seek a change of Japan's
economic policy, at the meeting.
As to the gist of these opinions, they showed the,view that the policy
mix of the policy to easa the money situation and the policy to restrain
financial expenditures (combination of financial and monetary policies), which
mix Japan is adopting, is "eventually inducing a lower yen," and sought
the raising of interest rate~ and the increasing of financial expenditures,
as a measure to improve it.
This is a criticism against Japan's having been holding down financial
expenditures as far as possible for the re-construction of finances, and
depending mainly upon the easing of the money situation as a business
measure. It is said that Secretary General VAN LENNEP clarified the judgment
that Japan's economic policy is linked to a lower yen under the high interest
rates in the US, and is intensifying the trade friction between Japan and
advanced nations.
As to this request for raising the interest rates, there are many who
are of the following opinion: It is possible to induce a higher yen by
raising the interest rates, but on the other hand, it will drag down on
the feet of business through declines in facilities investments and housing
investments and the worsening of enterprise yields. So, we cannot accept it"
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(Finance Ministry leader). Wxthin the Government, there is rather the
intention that it. is�reasonable to request the US to lower the interest rates
and work to lower the domestic interest rates.
However, in regard to the request for bolstering business through the
e:cpansiori of domestic demand, the Government has apparently been driven
into a situation where it cannot but carry it out, in view of the internal
and external situations. Domestic business has bright aspects, too, such
as the fact that inventory adjustment has run its course, and that the
rise in commodity prices has calmed down. In industry circles, however,
there is a growing sense of depression mainly among medium and small
enterprises, and there is a widespread sense of crisis to the effect that if
the situation continues as is, the vitality of the economy will be lost.
As to the trade friction with Europe and America, on the other hand, a
limit has begun to be seen to individual measures, and it has become
indis~ensable for Japan to change its policy to show its posture of
internatioTial co-operation, before the time of the Versailles 5ummit.
COPYRIGHT: Mainichi Daily News, 1982
CSO: 4105/99
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ECONOMIC ~
TAX REVENUE DEFICIT IN LOCAL AUTONOMOUS ENrITIES
Tokyo THE JAPAN ECONOMIC JOURNAL in English 10 Apr 82
~Text~
According to the Autonomy Ministry, the deficit in the tax
revenues of prefectures is expected to reach about ~340 billion, as
against the estimafie in the Local Financial Plan, and the deficit
amount is expected to reach the second highest level ever registered,
after that seen in fiscal 1975, The reason for this is that the amount
of revenues from the corporation business tax, which accounts for
about 400 of the amount of prefectural tax-revenues, will decrease sharply
from the originally estimated level, reflecting the poor business
results of enterprises. The total amount of tax revenues in prefectures up
until the end of February showed a one-digit, low-rate ir.crease,
compared with t~he corresponding period of the preceding year. 1fie fear
is becoming stronger among the persons concerned that a large-scale lack of
tax revenues may arise in fiscal 1982, too.
inis will be the sourth time since riscal 1977 (~28.5 billion) for
prefectures to suffer from a lack of tax revenues. The deficit amount
w=-.t1 reach the second highest level, after that (~f748.7 billion) seen
in fiscal 1975.
According to the Autonomy Ministry, the amount of tax revenues in
prefectures as of the end of February was ~f6,362,6 billion (excluding
the amount of increase in revenues from non-legal ordinary taxes and
excessive taxation), 6.7o above the level registered in the corresponding
period of the~preceding year. This figure is 4.7 points below the
estimated increase rafie (11.4%) in the Local Financial Plan formulated
by the Autonomy Ministry, as a guideline for the compilation of budgets
by local autonomous entities. It is estimated that if the situation
develops as is, the lack of tax revenues will reach ~337 billion.
In the case of the State, the corporation tax on companies, which
carry out settlement of accounts in the March term of 1982, will be
included in the tax revenues for fiscal 1981. In the case of local
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autonomous entities, however, the corporation business tax will be included
in the tax revenues for fiscal 1982. Unlike the case of the State,
therefore, there is hardly any room for tax revenues to be affected
by the business results of companies which carry out settlement'of
accounts in the March term.
Among the various tax ite;ns, it is the corporation bus iness tax
which has become markedly stagnant. The total amount of ta x revenues
up until the end of February increased by 3.2~, compared with the
corresponding~period of the preceding year. This figure is as much as
14.6 points below the estimated increase rate (17.80) iri the Local
Financial Plan. When limited to the corporation business t ax alone,
- it is estimated that the deficit will reach ~396 billion. It seems that
it will be impossible for even the increase in revenues from the
individual residents' tax and the individual enterprise tax, which are
in a comParatively favorable tone, to o.ffset completely the decrease in
revenues from the corporation business tax.
- COPYRIGHT: 1982 The Nihon Keizai Shimbun, Inc,
CSOP 4105/99
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ECONOMIC
CONTENTS OF ~SECOND PACKAGE' OF MARKET-LIBERA,LIZATION MEASURES
Tokyo DAILY YOMIUF.I in English 10 Apr 82
~Text~
The contents of the concrete measures which ~he Government formulat~d
on the 9th, as the "second round" of market-liberalization measures, are as
follows:
"Various Measures for Exter,nal Economic Relations, for the Time Being"
_ In the light of the present international situation, it is considered
that the f~~llowing measures should be taken, for the time being, in order to
maintain co-operative relations with other~countries, and to suppress protec-
_ tionism and to maintain free trade.
(Those marked with asterisks are measures which should be taken
before the Summit)
I. General Arguments (omitted [TN: by the paper and not by the translator])
II. Concrete Measures
1. Promotion of the liberalization of the market
(1) Easing and Abolition of the Remaining Import Restrictions The
policy for the easinfi and abolition of the remaining import resfirictions will be
firmed up, based on the exchar~~e of views, etc., with the US, at the Japan-US
A~ricultural Products Working Group (April 12 and 13).
(2) Lowering of Tariffs In regard to items for which the
international competitive power of our country's industries has improved in
recent years (for example, h g~i technoiogy products, including computers),
reciprocal lowering of tariffs will be called for (however, depending on cases,
unilateral lowering will also be studied).
(b) The intention of a unilateral lowering of tariffs will be expressed
for items which have become symbolic problems (for example, cookies, chocolate,
brandy, wine, whiskey, etc., in regard to the EC, and semi-processed lumber,
sucr, as spruce, pine and f ir, in regard to Canada).
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`(3) Tobacco Concrete plans for a large-scale increasing of tobacco
retail shops and for a lar~e-scale increasing of advertizing expenses will be
shown to the US side and talks will be pushed. As regards the monopoly system
itself, expectations will be attached or, the promotion of the studies at the
Provisional Administrative Affairs Research Council, in the direction of pro-
moting imports.
(4) Removal of the "invisible barrizrs" in the distribution structure,
administrative guidance~, etc. (a) A general policy to the effect that
"Restrictive action~ in regard to transactions, on the enterprise level,will
not be permitted, and there will be no restrictions on imports through adminis-
trative guidance, etc., and depending on circumstances, strict and fair actions
will be taken~by the Fair Trade Commission," will be announced: �
(b) .The actual situation in regard to soda-ash, paper and pulp, and
. medical instruments, regarding which the US side is showing interest, will be
: clarified, and necessary measures will be taken.
(c) Studies will be carried out on concrete measures for the promotion
of imports, centering on manufactured products.
~ (5) Imgrovement of import-related procedures, such as standards, etc.
(a) As regards the transparency of the process for the establishment of
standards, etc. (includin~; the partic~ipation, etc., of forei~;n persons, whose
interests are involved, etc.), it will be tackled as a task for the future,
; and work in this re~ard will be started.
~ (b) Forward-looking conclusions will be reached on the standards
; for automobiles, plywood, medical drugs, cosmetics, etc., on the problems of
~ cherries and papaya produc ed in the US, apples produced in France, flower bulbs
in the Netherlands, customs clearance procedures (speeding up of screening
; under the laws coming under the jurisdiction of Ministries and Agencies other
than the Finance Ministry, etc.), import procedures for wild rice, the grading
~ of "sake", tests for the safety of thermos bottles, sani-Eation standards for
' bacon, etc.
: (6) Trade in services and capital transactions (aj A general '
policy to the effect that "internationalization in the field of services will
be promoted, and our country will contribute in a positive way to the establish-
ment of international rules" will be announced.
(b) The problem will be tackled, with emphasis on the problem of
lawyers, and liberalization will also be pushed gradually.in regard to the
insurance and banking businesses.
, (c) The improving of access to the capital market will be tackled.
(d) A.statement to the effect that investments in Japan will be wel-
comed, will be isstied.
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(7) Utilization of the Ombudsman system (Omitted)
2. Promotion of Positive Co-operation
(1) Ways for concrete co-operation with the US and the European
nations, such as the establishment of a Japan-US joint working group concerning
high technolo~y, will be explored.
(2) Promotion of overseas investments, centering on the manufacturing
industries.
(3) Studies will be pushed on the development-imports of US general
coal.
(4) In connection with our country's food aid, efforts will be made
to utilize US-produced wheat, in addition to the grains produced by the
developing nations.
(5) Purchase of specific products will be promoted (nuclear-energy-
connected machinery, heavy electric machinery [US], automobile parts [US and
Canada], aircraft, helicopters, ferro-nickel and enriched uranium [France]).
COPYRIGHT: DAILY YOMIURI 1982
CSO: 4105/99
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ECONOMIC
AUTOMOBILE PARTS INDUSTRY'S STRUGGLE FOR EXISTENCE REPORTED
'Tokyo NIKKEI SANGYO SHIMBUN in Japanese 3, 9, 10 17 Feb 82
Feb 82 p 8]
[Article by reporter Kawabe: "Mie Giken Kogyo--Direct Introduction of Robotics"]
[Text] Mie Giken Kogyo is a Honda Motor Company affiliate parts manufacturer
that is considered to have top-ranking capability (main office: Tokyo; presi-
dent: Noboru Hasegawa; capital: 500.5 million yen). The firm's main plant is
the Yasuno plant (about 300 employees) located in Yasuno, Mie Prefecture. Just
this January, Honda Vice President Shigeru Sasamiya, together with representa-
tive., from the parts division of BL Corporation (Britain), Honda's partner, as
well as a delegation from BL affiliate parts manufacturers, visited the Yasuno
plant to present an outstanding factory award and obsArved its "certified high-
yield production system." (Vice President Sasamiya)
Double-Digit Growth
Let us enumerate Mie Giken's "strengths"~ As of June 1981, its sales figure
(35.2 billion yen) exceeded the projected figure by about 3 billion yen. The
profit-loss diverging point was 71.3 percent (3.0 point decline from the pre-
vious period). The monthly per persc.~ added value, excluding materials cost,
was 1,302,000 yen (increase of 112,000 yen). In the midst of the "auto reces-
sion," the firm has achieved a double-digit increase in sales. Added to that
is the above detailed f inancial accomplishment. For these reasons, it f ar out-
distances others in the Honda group in skillful management. Since last year a
certain work process has been introduced at the Yasuno plan~ as an energy-
saving, automated operation model. A year ago, three lines of the same work
process occupied eight men and nine women workers--a total of 17 employees.
A partial reorganization of the work procedure and introduction of automated
machines reduced the number of workers to 11 (7 men and 4 women) while main-
taining the same production volume in the same timef rame. Honda is planning
to employ this technique not only at Mie Giken but at other affiliate parts
manufacturing operations.
Tiioroughgoing Independent Management
A thoroughgoing total quality control (TQC) system with significant delegation
of authority emphasizing the lower echelon workers has been implemented and
' each employee is committed to the "self-management" concept. This has been
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the key to Mie Giken's success in the all-out business competition. None of
Mie Giken plants has full-time inspectors. Rather, the system "infuses"
quality at each manufacturing step. It is said that the executives of Mitsui
Bank--the firm's main financial bank--receive "lectures" regarding the unique
management's annual plan frequently.
Mie Giken President Hasegawa, although reserved, is confident: "I believe we
have had considerable posit~-.*~ achievements in terms of efficient management."
After making its initial overseas expansion move in Taiwan (September 1980).,it
pooled capital with Honda and another firm and set up a parts manufacturing
company in the United States last autumn. Its overseas strategy as a member
of the Hon3a group was launched successfully. Mie Giken appears to be sail-
ing full sail under a favorable wind.
President Hasegawa, howe~c~, is fond of saying: "From here on is the new
challenge." He is of the opinion that "the automotive parts industry has left
the era of automated rationalization and has now stepped into a revolutionary
era of robotics." That is, he has decided on a plan to implement an efficier.t
production mode qualitatively very diff erent from the model work process of
last year. "Traditionally, we have been a small to medium-size operation in
which personal contacts and interresearch were our big assets. Robotics is a
different matter from what we have been used to, but the tide is unmistakable
when we look to the future. If we were to resist the introduction of robotics,
we would endanger our business foundation." There is a sense of urgency in
his speech.
Currently, Mie Giken has approxi.mately 30 processing and assembly robots in-
stalled in all four of its factories. The company is examining a plan to in-
crease this number dra~tically, to about 100 robots, in another year. Presi-
dent Hasegawa would not disclose the long-range installation plan, but the
firm's operating policy since its inception in 1958 has always been: spare no
expense on equipment!
ThF firm's capital was 800,000 yen during the early part of the sixties, and
equipment purchases amounting to double, triple, even 10 times the capital
~ have been implemented more than once. Even now, the annual repayment cost is
over 2 billion yen. Interest in investing in equipment for the future is
extremely high at Mie Giken.
Toughened by Trials
Mie Giken has used increased volume as leverage while investing in equipment
and revolutionary technologies. Although demand for two-wheeled vehicles
will continue to be strong, a large-scale introduction of robots will create
surplus workers among the firm's approximately 500 employees. President
Hasegawa has no intention of cutting back the current work f orce. Thus,
Honda points out that, "the topic for the future is diversification of pro-
ducts."
But taking over products handled by other parts manufacturers, on the strength
of a high-efficiency production system, would c~~.use friction among the group
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members. Therefore, President Hasegawa describes the firm's future direction
as "the creation of a new market in the plastics field, which is just starting
*o run smoothly, and expansion into the industrial machinery sector."
The Yasno plant is associated with some 40 subcontractors. Mie Giken admits
that "we ourselves have had close calls three times in the past and we became
stronger as a result of those ordeals." It is likely, therefore, that under
Mie's high-pitched leadership, the subcontracting~firms will be asked to
respond expeditiously to shifting needs.
[9 Feb 82 p 9]
[Article by r,eporter Takahashi: "Nihon Radiator--Finds Solution in Co~ercial
Sale of Air-Conditioning Units"]
[TexC] Nihon Radiator's president, Jukichi Tada, is extremely busy of late.
He is the firm's top salesman in trying to increase the sale of car air-
conditioning units. He is about to celebrate his 70th birthday and yet, he
himself must dash all over the country. Why? Because there is a need to
strengthen the business framework to stave off the rapid decline of the
automotive industry. Although the firm has annual sales figures of 100
billion yen, it is not secure from the prevailing tide of stringent business
climate. Thus, he cannot sit idly in the president's easy chair.
"Limit to Growth"
Nihon Radiator is an automotive parts manuf acturer that is a direct lineal
descendant of Nissan Motors. Nissan supplies 48.5 percent (36.12 billion
- shares) of its capital. It has been highly successful as a specialty manufac-
turer of radiators, car heaters, muff lers and so on. However, it decided
that "there would be a limit to growth if the existing operation were.pursued
exclusively," so it entered the car air-conditioning market several years ago.
Since then, it has built up a position as Nissan M tors' car air-conditioning
manufacturer, but it has been forced to find other growth avenues as a result
of the lack of growth in the sale of automobiles. That is, the firm is try-
ing not only to maintain its status as the official supplier to Nissan but
also to develop steady sales on the open market.
President Tada's New Year's speech to employees was as follows: "We must fur-
ther strengthen our business skill. Although we are Nissan's legitimate heir
in the parts manufacturing sector, we cannot take that position for granted.
The circumstances have changed. Concentrate all your energy on strengthening
the operational framework. We have to perf orm this tas~ ourselves." Up to
now the majority of automotive parts manufacturers directly affiliated with
automakers--including Nihon Radiator--have only been required to make and
deliver parts in response to the parent company's direction. They have not
been adept at sales. But what is needed for Nihon Radiator now is the "will
to do it (selling)!" For that reason, the president of the f irm is leading the
personnel in an a.ll-out sales campaign.
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Weakness in the Production Format
The firm has a weakness in its production ~ormat. Although last fall, a new
assembly line was completed at its Gunma plant (Yurakucho, Gunma Prefecture)
and a consistent production format capable of producing 100,000 units per
month was established; a vital component of the product--the compressor--is
not made by Nihon Radiator. The company must purchase it from other Nissan
group affiliate firms such as the Atsugi Aut~motive Parts Company and so on.
If production from beginning to end--compressor to completed unit--could be
produced in a cohesive operation, it is eminently clear that quality control
and cost management could both be easily accomplished. Nihon Radiator's weak-
- ness lies in the fact that it does not have full control over the entire pro-
, duction operation.
When Nihon Radiator decided to undertake car air-conditioning production, it
had planned to make its own compressor. But upon witnessing Atsugi`s diffi-
- culty at that time, with the decline in propeller shaft demand resulting from
a switch over to FF (front engine, frent-wheel drive), Nissan decided to
allocate compressor production to Atsugi, and the subsequent division of labor
format between Nihon Radiator and Atsugi Auto parts was affected.
Technological Exchange With Atsugi
In order to survive in the fiercely competitive open commercial market, over--
all cost management and comprehensive, cumulative technology--including after
service--are needed. While the factory installed car. air-conditioning market
is demanding, open commercial market competition is fierce. Commercial market
manufacturers, pushed by the made to order makers are beginning to roll back
the tide.
Securing a place in the open co~umercial market against this backdrop under
such a handicap req.~~ires some doing. Nihon Radiator first of all set compre-
_ hensive technological. advancement as its priority objective. First, it scouted
professional technicians at Nissan and began emphas.izing technical exchange
with Atsugi Automotive Parts. With the latter, cooperation was pledged at a
- top-level conference attended by Nihon Radiator President Tada and Atsugi
President Shigeru Kitamura. The solidarity between the two firms has begun
already.
Moreover, great effort is being expended to gather technicians by means of
mid-career hiring, and the firm is intent on upgrading its comprehensive
technol.ogical capability.
In the car air-conditioning market, Toyota Motor group's Nihon Denso has begun
to put its muscle behind expanding its co~nercial sales volume. Sankyo
- Electric Appliance--a top-ranking open commercial market manufacturer--is
counterattacking. In addition, the Nissan group has other "senior" ranking
car air-conditioning manufacturers besides Nihon Radiator--Hitachi Works and
Diesel Machinery. With close scrutiny from these quarters, Nihon Radiator's
car air-conditioning unit consolidation policy has many dif�icult facets. How
effective will the campaign led by President Tada to expand into the open mar-
ket be as the mainstay of the firm's structural improvement? This year will
be the "win or lose year." (President Tada)
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[10 Feb 82 p 8]
[Article by reporter Kawabe: "Nihon Hatsujo--Development of Nonautomotive
Secror" )
[Text] "Very soon, we will at last begin the second phase construction at the
Komagane plant, with the goal of completing the synthetic products manufactur-
ing plan t in October of this year," says Nihon Hatsujo President Masao Iketani,
demonstrating confidence at having finally translated a long-standing plan
into a new business strategy. The firm's Komagane plant, located in Komagane
ci.ty, Nagano Prefecture, is on a site of about 60,000 square meters. The f irst
phase co nstruction, which was completed toward the close of last year, con-
sisted of a research and development wing which will bring together and house
the firm's development engineers. The second phase construction involves a
building with about 4,000 square meters of floorspace for a synthetic goods
plant (urethane products for industrial machinery use and so on) to be built
at a cos t of about S00 million yen. The plan is to develop this site into a
"nonau:- ?motive goods mecca."
Clear Objectives
Nihon Hatsujo is the largest manufacturer of automotive board springs and coil
sprin~s. Its long-term business strategy is "lucidity." The total sales for
1980 was 87.8 bil.lion yen. The plan is to expand that figure to 135 billio n
yen ~ver the next S years and at the same time to increase the profit margin
- from 5 p ercent to 7 percent. In terms of financial status, over 40 percent
of the c apital is company held. The profit-loss diverging point is below 80
percent. The goals thus are set in nLUnerical terms and are clearly laid out.
Moreove r, President iketani predicts that "demand i~ the automotive field will
be limited to an annual growth rate of about 2 percent at most." Consequently,
the firm's strategy puts development of new products slated for general indus-
try--other than automotive--as the generating force for sustaining business
growth. Steady growth for automotive spring products and high growth for non-
automotive products, based on application of automotive spring manufacturing
technology, are the company's twin goals. The Komagane plant's second phase
construction plan is slated to translate these goals into reality, and thus,
President Iketani is taking great interest in bringing the project to fruition.
In the nonautomotive sector, Nihon Hatsujo's emphasis is on four categories:
(1.) pre ci.sion springs; (2) industrial and (3) processing equipment based on
spring technology; and (4) mald processing for synthetic materials. In every
- instdnce techniques accumulated through automotive spring manufacture are
applied to other fields. President Iketani says: "Replenishment of tech-
nolo~ical capability is our most important topic up to 1985." In other words,
= ti~is rea lly means multifaceted product development.
Even in the field of electronics technology--which has become the quickly
r:ising s tar in the automotive parts industry--the firm's Processing Equipment
Division is steadily translating the spring sensor and the NC coiling machine
into finished products. "Although electronics-related products occupy only
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2-3 percent of total sales now, we intend to raise this ratio threefold under
our 5-year plan." (President Iketani) That would mean that Nihon Hatsujo,
with its background of inechanical technology, will have a"new face."
Replenishment Phase for Overseas Ventures
The "Company Ob~ectives for This Year" published internally by Nihon Hatsujo
at the beginning of this year list quality control at production site (QC) as
- well as total quality control (TQC), which includes indirectly related depart-
ments, coordinated strengthening of overseas operations and strengthening of
individual firms within the group structure, in addition to consolidation of
technological capability. Among the listed items, overseas strategy is
described as "having entered the second phase--from the development stage to
the replenishment stage."
Nihon Hatsujo has recently provided technological knowhow to an Indonesian
spring manufacturer. It intends to form a technological tie with a Malaysian
automotive parts f irm soon. Since 1973 it has been steadily increasing over-
seas ties through capital advancements and technological offers--beginning with
Thailand, then Taiwan, the Philippines, Singapore, Australia, Indonesia and
:talaysia.
President Iketani proclaims the firm's overseas strategy's repletion phase in
the following words: "The strategic foundation building in the western Paci-
fic rim has now been completed. The goal for this area now is upgrading
business strength and further replenishment of market competitiveness. At the
same time, we will get down to serious business with our overseas strategy in
the as yet uncultivate~ European/U.S, arena."
In the United States, the mecca of automobile manufacturing, it is working on
a new cooperative tie with the firm's former technological partner, Rockwell
International Corporation. Nihon Hatsujo's international strategy is to feel
out the receptiveness to a basic capital participation proposal among firms
that it alreaciy has ties with or expects to have ties with.
Developing Talent
Nihon Hatsujo's sales structure at present is as follows: a little less than
80 percent automotive and the rest general industry. During the 1985-1995
decade, it plans to change the firm's orientation drastically by reducing the
automotive ratio to 60 percent and allocating 40 percent to other f ields. The
related firms and subcontractors will be asked to make the necessary shifts,
too. Last year, the Nihon Hatsujo group--25 firms led by Nihon Hatsujo--
worked toward improving the business and financial status. Starting this year,
the emphasis will be shifted to developing talent and establishing autonomous
technology. President Iketani states: "Her:.after, we will observe the develop-
ment of various enterprises, and if need t~e, we will think about consolidation
and reorganization." The firm has acquir.~ed its present position as the largest
spring manufacturer by absorbing its competitors. That tradition will be car-
ried forward, and it will not shrink from reorganization if need be.
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Approximately 50 firms that supply materials and parts to Nihon Hatsujo belong
to a cooperative organization called "Shinwa kai [Fraternal Association]."
Nihon Hatsujo's mainstay tlzus far has been steel (springs), but in the future
it will transform itself to deal with synthetic, electronic and processing
equipments technologi_es; and the organization of subcontracting businesses
with a slightly different focus than before and with a certain degree of
systems technology will be needed. The reorganization of subsidiary busiiless
groups may very well determine the success or failure o~ Nihon Hatsu~o's
future.
[17 Feb 82 p 9]
[Article by reporter Takahashi: "Sankyo Denki (S;~nkyo Electric Appliance)--
Unification of Manufacturing and Distribution Operations"] ~
[Text] Toward the close of last year, the largest commercial automotive air-
conditioning unit manufacturer--Sankyo Electric Appliance Company--tentatively
decided that its president and founder, Kaihei Ushikubo, would be elevated to
chairman of the board, and his younger brother, Managing Director Shuji
Ushikubo would be promoted to the firm's presidency. This top-level ma.nage-
ment change was formally promulgated on 12 January when everyone was sti11
aglow from the New Year's festive mood. At the same time, the leadership of
Sanden Sales (main off ice: Tokyo; capital: 200 million yen), in charge of
Sankyo's sales and distribution was also changed. Sankyo Executive Director
Eijiro Masagaki became Sanden Sa1es' president. A move patterned after the
unification of Toyota Motor Manufacturing and Toyota Automotive Sales appears
to signal the beginning of a unified production and sales strategy designed to
strengthen the bus iness framework.
Reduced Volume Is the Only Way
The reason that Mr Kaihei Ushikubo decided to retire ~rom the presidency of
the firm--an office he filled for 40 long years--is because an expeditious
reworking of the business framework is urgently required, or else the company
may not survive. The Sanlcyo Electric Appliance group (made up of Sankyo Elec-
' rric Appliance, Sanden Sales, and Sankyo International) showed a significant
decrease in income and profits at the March 1981 settlement of accounts.
The reason for thz decline was overstocking. The sales amounted to 12.9 per-
cent less than the previousterm, 65.9 billion yen. There was a drastic drop
in profit after tax--1 billion yen or 82.5 percent less than the previous
period. In order to recover the earnings, it was considered that there is no
other way but to unify the manufacturing and distribution phases and to effect
a"volume decrease"; and toward the end of last year this view was translated
into a concrete plan.
Using the retirement of the founder as a turning point, a chain of personnel
chan~es was made. The new format assigns overseas strategy to chairman of the
board Kaihei Ushikubo, and new President Shuji Ushikubo will concentrate on
strengthening the general business framework. As soon as he assumed office,
the new president initiated action. He told the 60 some subcontractors to
! "create a self-reliant operational structure that can survi.ve without depend-
ing on the parent enterprise." President Shuji is at the same time the
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president of a subsidiary firm, Sanwa Toso Company, and he has long investigated
ways to escape from total dependence on the parent company.
Yromotion of Personnel Exchange
Beginning with the top-level management change at Sanden Sales, exchange of
personnel between the manufacturing and sales sectors will become more f requent.
First of all, Sankyo's president's quarters, currently at I~ezaki, Gunma Pre-
fecture, will be transferred to the Sanden Sales complex in A ibahara, Tokyo.
The air.iof th~s move is: by moving the president's office to Tokyo, Sankyo's
officers will be permanently stationed in Tokyo, thereby removing the barrier
separating manufacturing from sales. It is certain that the eventual inten-
tion is for Sankyo Electric Appliance and Sanden Sales to merge--very much in
the same vein as Toyota's merger o~ processing and distribution departments.
Sankyo Electric Appliance Company was started in 1943. Up until 1964 the Ope-
rational Headquarters was in charge of sales; but it was decided that in terms
of capital procurement and so on, the separation of manufacturing from distri-
bution was desirable. So, in 1965, the Operational Headquarters was renamed
Distribution and Sales and given an independent status. Thereafter, riding
the fair wave of "motorization," the company rose to the position of a top
open market automotive air-conditioning unit manufacturer.. The rapid decline
- of the automobile industry forced it to resume its original organizational
format.
- Rushing About All over the World
Although Sankyo Electric Appliance had been hailed as the top commercial auto-
motive air-conditioning unit manufacturer, the circumstances surrounding Sankyo
for the past year or two have become increasingly difficult. The ratio of
factory installed automobile air-condix ioning units (that is, instead of instal-
lation of commercially purchased urits) is gaining each year. Moreover,
Toyota Motors group affiliates such as Nihon Denso and the Nissan motors
group firm Nihon Radiator have started to commercially market their units in
earnest. In the midst of the stagnating domestic sales of automobiles, it is
not easy to increase commercial sales of automotive air-conditioning units.
Even with manufacturing and distribution departments unified and the produc-
tion volume decreased, the future is fraught with difficulties. Strong mea-
sures are needed to recover profits and turn back the tide to achieve a better
business showing. As a mainstay in that effort Sankyo Electric Appliance has
chosen overseas business development. It was the first in the automotive air-
conditioning equipment industry to establish a.plant in Dallas (United States),
which began fu11-scale production last year. This year, another plant will
be built in Singapore in an attempt to effect rapid enlargement of overseas
production.
Within the main office in Gunma Prefecture, an organization called "Ford Re-
search Room" has been created. It is seeking avenues to open supply routes
to the Ford Piotor Company. It is dead serious about its overseas strategy.
The chairman of the board who yielded the presidency to his younger brother
, 40
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is busily rushing around the world, for in order to reap maximimm benefit from
a strengthened business framework, a strong overseas operation is essential.
How successful will be the duo teamwork of President Shuji and Chairman Kaihei,
entitled "The Shape~Ip Strategy?" It is clear that each step taken is directly
tied to the success or failure of the company. The situation is grave indeed.
COPYRIGHT: Nihon Keizai Shimbunsha 1982
11460
CSO: 4105/60
~
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ECONOMIC
EARLY FARM IMPORT LIBERALIZATION DIFFICULT
Tokyo THE DAILY YOMIURI in English 10 Apr 82 p 1
~ Text ] Early I:beralization of im- necessary for the agricul- nattonal cooperatlon. It
ports of fnrm produce is ture industr}� to work for noted that various ud-
diPficult in the light ef the structurai improvement in vanced countrles were ta6-
present. sftuation faced by the future. ing protective measures on
Japan's ugriculture and in Faced with the increasing farm products in accord-
~~iew� of many problems Still severity of Japan-US trade ance with their domP~tic
remaintng to be sol~~ed. friction and criticism raised situation.
by the Second Ad Hoc Ad- �~d increases in the
- This was st,ressed by the food supply-demand situ-
- Agrir_ulture, Forestry and ministrat.ive Reform Council
that the guvernment is ation since the middle part
Fisheries Ministry in its of the 1960s, the nation's
annual a�hite paper on La}:ing an overprotective food supply structure hns
agriciilture announced on Policy toa�ard agriculture.
FridaS�. this year's a`hite paper cited shifted to a diial st.ructurc
furiher improve~ent of compasltion With thc self-
On the prublem of libera- agricultural productivity suPticiency rate for ~ome
lization of farm produce based on structural impro- ltems being high and that
imporLti, the a~hite paper vements as the biggest task of others dra~tically lo~~.
s:~id i; v~�as important to iaced bs� Japan's abricul- The o~~erall .;eli-SUfTicfrnry
t~ke a}~proprilte measures tural induscry. rate for food, excluding
on the matter a~hile main- IL st.rongly appealed for feed, stands at 72 u�ith that
tainin~ h:irmon}� n�ith sound raising productivity through of grain registerin~ 33 per-
drv~�iopment of domestic ~chnological innovation cent.
:,~.riculttire. and expanding the scope of � Prices in Japan oi such
It said problems exist in ugriculture. products as wheat. ric�e
tuF:in~ hast}~ ~ction or~ the The white paper also ~d beei are St~arnis�
m:itter. said: higher than international
The ~~hite paper said the � Since Japan's rate a~. re- levels a�hile Lhose of rhick-
country's aKricultural and liance on imports of en, eggs and pork are 1ow~er.
t:~rmin~ ~~illages v~~ere ful- iarm produce is higri, even � Z'he per capita con~ump-
fillin~ their role oi forming g JT1~1l~iIlA1 shortage in basic tion oi rice in fiscal 1980
z healthy regional societ�y~ foodstuffs will pose dangers declined 1.1 percent due to
:~nd mainta.ining the na- of big social confusion and the effects uf a drop in re11
tural en~�ironment besides uncasiness. Therefore, a income and the ab~zormalll'
~~�orkinR for a st-.~b]e suppl} stabilized supply of iood- coo] summer. R.ice ~on-
o[ fa~dstuSs. stutis has become increas- ~umption is still shua~in~, a
dF^lining trend.
It said labor ~roductivlt 1n~ly import,ant. ~
r Y The number of fui�mine
in Jnpan's ugi�leu]ture rose � Japan's imports o1 larm h~~~tieholds dc�rlinc~d 1t a
ut an annual rate of 5.6 Product~s alreadY have S~~�, ,,~~nlidl rate� of 1 3 I~cr-
c ~
percent beta~ren fiscal 1965 reached n hlgh 7eve1 and ~,~n~ n~lti,,,,~n 1Si7.+ ci~~ci IfiLl.
nnd 1980. Thls, it. said, w~as a sharp increase us in the ,I,~~~,~~, a,~rc a ~~>>:~l uf 1.09
due Chlefly Lo tectinologlcal pz~t cannot be nntieipated n~illiun h~.u~eholds h:ivin!,
innovations nnd efforts to in the future when viewed m,~~~s cxc:usivrly en~:a~ed
overcome such adverse con- f~'~m movements of food- in farmSng in 1E+81. ac-
dltions as n dro in farm ~tuff expendit.ures.
P coun!ing for 23 percc�nt of
ncreage. It i~ important to make the total farming house-
It sLrc~scd that. it w1s ~i�Ports of foodstufls in holds.
the future based on inter-
COPYRIGHT: The Daily Yomiuri 1982
CSO: 4120/252 END
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