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Japanese Firms Reaffirm Their Manufacturing Prowess (February 28, 2005)

A worker assembles a car at a Toyota plant in Aichi Prefecture. (PANA)
The lean economic times of the 1990s caused many of Japan's biggest manufacturers to downsize and move their production bases overseas. This prompted some commentators to express concern about a "hollowing out" of Japanese industry and to ask whether Japan would soon be supplanted as a manufacturing powerhouse by China, South Korea, and newly industrialized countries. Yet now that the gloom has lifted, it is clear that many Japanese manufacturers have not only survived the lean years but have emerged stronger and more profitable than ever.

The Key to Toyota's Success
Take Toyota Motor Corp., Japan's number-one carmaker. In consolidated results for the six months to September 2004, the company reported its highest-ever profits, up 13% to ¥870 billion ($8.29 billion at ¥105 to the dollar) from the previous year. That was based on sales of around ¥9 trillion ($85.7 billion), an increase of 10%.

Toyota's record-setting performance made it the world's second biggest auto manufacturer, overtaking Ford Motor Co. What is more, many analysts predict that the Japanese carmaker will supplant General Motors Corp. as the global number one in as little as two years.

Much of Toyota's success, as well as that of numerous other Japanese manufacturers, is based on what Fujimoto Takahiro, a professor of economics at the University of Tokyo, calls suriawase, which literally means "grinding" but is better translated here as "integration." Fujimoto asserts that there are two main approaches to manufacturing in this day and age: assembly and suriawase.

Suriawase involves integrating a vast number of individual parts and components to make a fine-tuned whole product. Rather than simply putting the different parts together, it entails ensuring that each of the parts complements the others and contributes to maximizing the performance of the product in question. This is achieved by maintaining close contact among all the different divisions involved in the production process, such as research and development, design, production technology, purchasing, and sales. Many of Japan's top manufacturers are enjoying success by focusing on this advanced method of production.

Integration Approach Yields Results

Automaking is a good illustration of an industry that relies on the suriawase approach. Here, success requires using advanced technology to organize a mind-boggling number and variety of parts and components. The expertise required to do this is a black box even within the manufacturing companies themselves. In other industries, such as PC manufacturing, companies rely on assembly, which simply involves putting parts together in the same way that toy models are made.

In Japan, the suriawase approach is used extensively in the manufacture of some consumer electronics products, such as flat-panel TVs, relying on advanced technologies not available anywhere else. Using technologies that cannot be replicated in other countries enables Japanese companies to make high-added-value products.

Manufacturing issues are explored regularly at a series of public lectures that have been given by Fujimoto and other Tokyo University instructors since last summer in Tokyo's business district of Marunouchi. The events have proved extremely popular among Japanese business people eager to learn more about the state of the country's manufacturing industry.

The key to Japan's success in global markets lies not in simply assembling products but in nurturing companies with the cutting-edge technology that will enable them to take advantage of the suriawase approach.

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Copyright (c) 2005 Web Japan. Edited by Japan Echo Inc. based on domestic Japanese news sources. Articles presented here are offered for reference purposes and do not necessarily represent the policy or views of the Japanese Government.

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