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FOODS The production value of the food industry ranked third among manufacturing industries after electric and transport machinery. It produced a great variety of products, ranging from traditional Japanese items, such as soybean paste ( Miso ) and Soy Sauce , to Beer and Meat . The industry as a whole experienced mild growth in the 1980s, primarily from the development of such new products as " Dry Beer " and Precooked Food , which was increasingly used because of the tendency of family members to dine separately, the trend toward smaller families, and convenience. A common feature of all sectors of the food industry was their Internationalization . As domestic raw materials lost their price competitiveness following the liberalization of imports, food makers more often produced foodstuffs overseas, promoted tie-ups with overseas firms, and purchased overseas firms. TEXTILES The textile industry showed a strong revival in the late 1980s because of increased domestic demand from the construction, automobile, housing, and civil engineering industries for various synthetic fibers. The clothing industry also fared well in the late 1980s, thanks to the expansion of consumer demand, especially in the area of women's apparel. Production of high value-added fashionable clothes became the mainstay of this industry. MINING As the coal-mining industry declined, so did the general importance of domestic mining in the whole economy. Only 0.2 % of the labor force was engaged in mining operations in 1988, and the value added from mining was about 0.3 % of the total for all mining and manufacturing. Domestic production contributed most to the supply of such nonmetals as silica sand, pyrophyllite clay, dolomite, and limestone. Domestic mines were contributing declining shares of the requirements for the metals zinc, copper, and gold. Almost all of the ores used in the nation's sophisticated processing industries are imported.
NONFERROUS METALS The nonferrous metals industry fared very well in the late 1980s, as domestic demand for these metals reached record levels. Japan's consumption of the main nonferrous metals, such as Copper , Lead , Zinc , and Aluminum , was the second highest in the noncommunist world after the United States . In 1989 sales of copper products exceeded 1.5 million tons for the first time. Production of electric wire and cable, which accounted for 70 % of Japan's copper demand, and brass mills, which used the other 30 %, experienced sharp growth, as did the demand for aluminum. IRON AND STEEL Iron and Steel had been a leading industry in Japan and had been considered critical to economic growth by the Japanese government in the 1950s. This attitude, exemplified by government loans offered at favorable rates, led to rapid modernization and expansion of the domestic industry. By 1970 iron and steel were the leading exports from Japan, accounting for over US$2.8 billion, or 14.7 %, of total exports. This export share peaked in 1974, at 19 %. Because of both the domestic industry's strength and import barriers, imports of iron and steel represented a minimal US$276 million in 1974. Japan's success in this industry, however, generated large imports of raw materials— Iron Ore and concentrates, and coking Coal . Iron and steel were a classic case of a processing trade, with Japan importing raw materials, building state-of-the-art, integrated steel plants at harborside, and exporting part of the output to the rest of the world. Iron and steel products were the object of major trade disputes in the 1970s. The United States steel industry alleged that Japan engaged in dumping to increase its market share in the United States. These disputes led to various responses. In 1978 the United States government instituted the " Trigger Price Mechanism ": when iron and steel imports reached a certain low price, the United States would initiate dumping investigations, effectively setting a minimum price for imports. These prices were based on estimates of Japanese production costs, because the Japanese were assumed to be the lowest-cost producer in the world. This system lasted until the early 1980s and was replaced in 1984 by a set of voluntary export restraints negotiated separately with major suppliers of iron and steel to the United States. Japan's shipments to the United States remained subject to these restraints for the rest of the decade. Despite the emphasis placed on the iron and steel industry in the Japanese economy and its export success, the industry proved to be mature and declining in the 1980s. Its share of total Japanese exports slipped to only 5.8 % by 1988. Imports of iron and steel to Japan rose rapidly in the 1980s, reaching US$4.6 billion, or 2.5 %, of total imports. South Korea , for example, was rapidly moving into certain parts of the industry and managed to penetrate Japanese markets despite opposition from the Japanese industry. As a leader in steelmaking technology by the late 1970s, Japan had also become an important source of technology for South Korea, China , and other developing nations building their own steel industries. PETROCHEMICALS The Petrochemical industry experienced moderate growth in the late 1980s because of steady economic expansion. The highest growth came in the production of plastics, polystyrene, and polypropylene. Prices for petrochemicals remained high because of increased demand in the newly developing economies of Asia, but the construction of factory complexes to make ethylene-based products in the Republic of Korea (South Korea) and Thailand by 1990 was expected to increase supplies and reduce prices. In the long term, the Japanese petrochemical industry is likely to face intensifying competition as a result of the integration of domestic and international markets and the efforts made by other Asian countries to catch up with Japan. BIOTECHNOLOGY AND PHARMACEUTICS The pharmaceutical industry and bioindustry experienced strong growth in the late 1980s. Pharmaceuticals production grew an estimated 8 % in 1989 because of increased expenditures by Japan's rapidly aging population. Leading producers actively developed new drugs, such as those for degenerative and geriatric diseases, and also internationaled operations. Pharmaceutical companies were establishing tripolar networks connecting Japan, the United States, and Western Europe to coordinate product development. They also increased merger and acquisition activity overseas. Biotechnology research and development was progressing steadily, including the launching of marine biotechnology projects, with full-scale commercialization expected to take place in the 1990s. Biotechnology research covered a wide variety of fields: agriculture, animal husbandry, pharmaceuticals, chemicals, food processing, and fermentation. Human hormones and proteins for pharmaceutical products were sought through genetic recombination using bacteria. Biotechnology also is used to enhance bacterial enzyme properties to further improve amino-acid fermentation technology, a field in which Japan is the world leader. The government cautions Japanese producers, however, against overoptimism regarding biotechnology and bioindustry. The research race both in Japan and abroad intensified in the 1980s, leading to patent disputes and forcing some companies to abandon research. Also, researchers began to realize that such drug development continually showed new complexities, requiring more technical breakthroughs than first imagined. Yet despite these problems, research and development, especially in leading companies, was still expected to be successful and to end in product commercialization in the mid-term. MOTOR VEHICLES The motor vehicle industry is the most successful industry in Japan. In 1991 Japan produced 9.7 million automobiles, making it the largest producer in the world (the United States in that year produced 5.4 million). Just under 46 % of that output was exported. Automobiles, other motor vehicles, and automotive parts were the largest class of Japanese exports throughout the 1980s. In 1991 they accounted for 17.8 % of all Japanese exports, a meteoric rise from only 1.9 % in 1960. Fear of protectionism in the United States led to major , Toyota , Nissan , Mazda , and Isuzu (in a joint plant with Subaru ). Following the major assembly firms, Japanese producers of automobile parts also began investing in the United States in the late 1980s. Automobiles were a major area of contention for the Japan-United States Relations hip during the 1980s. When the price of oil rose in the 1979 Energy Crisis , demand for small automobiles increased, which worked to the advantage of Japan's exports in the United States market. As the Japanese share of the market increased, to 21.8 % in 1981, pressures rose to restrict imports from Japan. The result of these pressures was a series of negotiations in early 1981, which produced a "voluntary" export agreement limiting Japan's shipments to the United States to 1.68 million units (excluding certain kinds of specialty vehicles and trucks). This agreement remained in effect for the rest of the decade, with the limit reset at 2.3 million units in 1985. As Japanese assembly lines in the United States came on line, imports of Japanese automobiles in 1988 actually fell below the limit. Similar restraints on Japanese exports were imposed by Canada and several West European countries. Japan's investment increased in Western Europe as well, but it faced pressure to achieve high local Value Added with the then-forthcoming establishment of the European Union in 1993. Foreign penetration of the automotive market in Japan has been less successful. Imports of foreign automobiles were very low during the forty years prior to 1985, never exceeding 60,000 units annually, or 1 % of the domestic market. Trade and investment barriers restricted imported automobiles to an insignificant share of the market in the 1950s, and as barriers were finally lowered, strong control over the distribution networks made penetration difficult. The major United States automobile manufacturers acquired minority interests in some Japanese firms when investment restrictions were relaxed, Ford obtaining a 25 % interest in Toyo Kogyo (Mazda), General Motors a 34 % interest in Isuzu, and Chrysler a 15 % interest in Mitsubishi Motors. This ownership did not provide a means for United States automobiles to penetrate the Japanese market until the end of the 1980s. After the strong appreciation of the yen in 1985, however, Japanese demand for foreign automobiles increased. The greater sense of affluence in Japanese society was accompanied by a rising interest in European design. In 1988 automobile imports totaled 150,629 units, of which 127,309 were European, mostly West German. Only 21,124 units were imported from the United States in 1988. SHIPBUILDING Japan dominated world shipbuilding in the late 1980s, filling more than half of all orders worldwide. Its closest competitors were South Korea and Spain, with 9 % and 5.2 % of the market, respectively. Japan's shipyards replaced their West European competitors as world leaders in production through advanced design, fast delivery, and low production costs. The Japanese shipbuilding industry was hit by a lengthy recession from the late 1970s through most of the 1980s, which resulted in a drastic cutback in the use of facilities and in the work force, but there was a sharp revival in 1989. The industry was helped by a sudden rise in demand from other countries that needed to replace their aging fleets and from a sudden decline in the South Korean shipping industry. In 1988 Japanese shipbuilding firms received orders for 4.8 million gross tons of ships, but this figure grew to 7.1 million gross tons in 1989. AEROSPACE The aerospace industry received a major boost in 1969 with the establishment of the National Space Development Agency (now Japan Aerospace Exploration Agency ), which was charged with the development of satellites and launch vehicles. Japan's aircraft industry was only one-twentieth the size of that of the United States and one-twelfth that of Western Europe, and its technological level lagged as well. However, in the late 1980s Japan began to participate in new international aircraft development projects as its technical capabilities developed. The Asuka Fanjet-powered Short Takeoff And Landing (STOL) Aircraft made a successful test flight in 1985. In 1988 Japan signed an accord with the United States to cooperate in building Japan's next-generation fighter aircraft, the FSX . The FSX agreement was cancelled due to American fears of technology transfer, convincing Japan to build the next-generation fighter on its own (''see'' Defense Industry Of Japan ). COMPUTERS Japan was a latecomer to computer manufacturing. IBM Japan , a wholly owned subsidiary of IBM, along with other foreign subsidiaries, originally dominated the Japanese market. Until the 1980s, Japanese computer manufacturers viewed their marketing battle as one of capturing Japan's domestic market from IBM Japan, not of penetrating world markets. However, Japan's industry developed with extraordinary speed and moved into international markets. The leading computer manufacturers in Japan at the end of the 1980s (in the domestic market) were Fujitsu , IBM Japan, Hitachi , NEC , and Unisis in mainframes, and NEC, Fujitsu, Seiko Epson , Toshiba , and IBM Japan in personal computers. Despite the benefits extended by Japanese Industrial Policy to the domestic computer industry, IBM was able to maintain a significant market position in Japan—a 24 % share of the mainframe market and a 6 % share of the personal computer market in 1988. In 1988 Japan exported US$1.5 billion of computer equipment, up more than twelvefold from the US$122 million in 1980. Japanese firms were not very successful in exporting mainframe computers, but they did very well in peripheral equipment, such as printers and tape drives. In the rapidly growing personal computer market, Japan achieved a modest market share in the United States during the 1980s. Imports of computer equipment in 1988 came to US$3.2 billion (including parts). However, much of the computer equipment produced by foreign-owned firms that is used in Japan is manufactured domestically by subsidiaries rather than imported. The special treatment extended to the computer industry became the subject of trade disputes with the United States in the 1980s, in particular the government procurement practices for Supercomputer s. At issue was the inability of United States manufacturers to sell these machines to government-funded agencies in Japan. Some rules were changed in 1987, but supercomputers remained one of three products singled out for further negotiation by the United States in 1989 under the provisions of the 1988 United States Trade Act . Earlier, conflict ensued over a Japanese proposal to protect computer software under patent law rather than under copyright law, a move that the United States felt would reduce protection for United States-designed software in the Japanese market. This issue was resolved when the patent law proposal was dropped. Economic developments, namely Outsourcing and Globalization made these disputes obsolete by the 1990s. Japanese and U.S. influence in the computer market dwindled, with Taiwan ese and Mainland Chinese companies taking over component production and later research and development. Supercomputers lost their importance, with large clusters of cheap consumer or server market components taking over their role. SEE ALSO REFERENCES
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