Current Situation and Future Prospect of Japanese Machinery Industry Takayuki Sumita Executive Director, Japan Machinery Center Brussels Office May, 21
1.Current Japanese Economy [1-1] Growth Ratio 1)Mid-term (y on y % in real terms) 1 2 3 4 5 6 7 8 9 1 GDP Growth -.8 1.1 2.1 2. 2.3 2.3 1.8-3.7 (-2.6 ) (1.4) predicted Growth in Capital Expenditure -2.4-2.9 6.1 6.8 6.2 4.7 1.3-6.8 2) Short-term (q on q % in real terms) (year) 28 29 (quarter) 1-3 4-6 7-9 1-12 1-3 4-6 7-9 1-12 GDP Growth.7-1.1-1.3-2.7-3.6 1.5 -.1.9 Growth in Capital Expenditure 4.6-1.2-3.9-7.3-8.7-4.2-2.6.9 Source: Cabinet Office 1
[1-2] Machinery Industry 1) mid-term 2 Trend in Purchase Order for Machinery Trillion Yen 35 5% 3 25 4% 2 3% 15 2% 1 5 1% % 1987 年 199 年 1993 年 1996 年 1999 年 22 年 25 年 28 年 Year 外需 内需 外需比率 Foreign demand Domestic demand Ratio of Foreign demand Source: Statistics on Purchase order for Machinery
[1-2] Machinery Industry 2) short-term Year Quarter 28 29 (1 bil. Yen) 1-3 4-6 7-9 1-12 1-3 4-6 7-9 1-12 Total 84 794 722 577 484 453 51 54 change (q on q in %) +4.7-5.5-9.1-2.1-16.1-6.3 +1.4 +5.8 Domestic Demand 481 46 42 369 364 33 341 335 Priavate sector 369 355 328 28 26 257 251 249 change (q on q in %) +3.2-4. -7.5-14.7-6.9-1.3-2.4 -.5 Demand from Manu. Ind. 143 144 128 99 69 76 69 81 change (q on q in %) -3.1 +.4-1.9-22.4-31.1 +1.8-8.7 +17.8 Source: Statistics on Purchase order for Machinery 3
[1-3] Specific sectors in Machinery Industry 1) long-term Purchase Order (hundred million yen) 3 3 upper; export lower; domestic Construction Equipment 25 25 2 2 15 1 5 Machine Tools (million yen) 18 16 14 12 9 91 92 93 94 95 96 97 9899 99 1 1 2 2 3 34 45 56 67 78 89 9 year Source:Japan Construction Equipment Manufacturers Association 1 8 6 4 2 Equipment for Manufacturing Semiconductors (million yen) 25 2 15 9 91 92 93 94 95 96 97 98 99 1 2 3 4 5 6 7 8 9 year Source: Japan Machine Tool Builders Association 1 5 Source: Association for SC Manufacturing Equipment 97 98 99 1 2 3 4 5 6 7 8 9 year 4
2) short-term (Construction, Machine tools, SC manufacturing) Purchase Order Construction Equipment Machine Tools Equipment for Manufacturing Semiconductors Most Recent Figure Comp. with 29(%) Comp. with 28(%) Jan. 21 +15.7% - 43% Feb. 21 +217% - 54% Feb. 21 +1% - 23% 35, 3, 25, 2, 15, 1, 15 1 5, 5 1 月 2 月 (million yen) 3 月 4 月 5 月 6 月 7 月 8 月 9 月 1 月 11 月 12 月 25 2 15 1 5 (million yen) (million yen) 1 月 2 月 3 月 4 月 5 月 6 月 7 月 8 月 9 月 1 月 11 月 12 月 7 年 8 年 9 年 1 年 7 年 8 年 9 年 1 年 Source:Japan Construction Equipment Manufacturers Association 7 年 8 年 9 年 1 年 (year) 27 28 29 21 (month) (year) 27 28 29 21 (month) Source: Japan Machine Tool Builders Association (year) 27 28 29 21 Source: Association for SC Manufacturing Equipment 1 月 2 月 3 月 4 月 5 月 6 月 7 月 8 月 9 月 1 月 11 月 12 月 (month) 5
2) short-term (Electric and Electronics Industry) 6 Index of production, shipment and inventory of ICT industry (1=year 25) production shipment inventory (month) 28 29 21 (year) Source: Industrial Index of Production, METI
2. Future Prospect [2-1] General Diffusion Index of Major Companies on general business Conditions (Favorable minus Unfavorable) 28 29 21 9 12 3 6 9 12 3 6(Prospect) Manufacturing -3-24 -58-48 -33-25 -14-8 General Machinery 2-22 -64-63 -5 *-3 *-19 *-8 Electric Machinery -9-37 -69-52 -33-17 -12 2 Automobiles 5-41 -92-79 -49-21 -2-12 Non-manufacturing 1 - -31-29 -24-22 -14-1 Total -16-45 -39-28 -23-14 -9 note: * indicates that the classification has been changed since Dec. 9 on General Machinery Change in the amount of Capital Expenditure of All Companies (y on y in %) year 29 21 months 1-6 7-12 1-6 7-12 manufacturing -32.8-27.4.1-5.3 non-manufacturing -11.1-8.7-5.5-12.1 Total -2.4-16. -3.5-9.8 note: Figures after the second half of 29 are projected ones. Source: Short term Survey; Bank of Japan 7
[2-2] Machinery Industry 1) Industrial machinery 8 Prospect on Purchase Order 28(actual) 29(estimated) 21(predicted) Dom. Foreign Total Dom. Foreign Total Dom. Foreign Total Total (1 bil. Yen) 342 22 562 28 179 459 289 199 489 change (y on y in %) -18.3-18.5-18.3 +.3 +11.3 +6.5 Boiler/Engine (1 bil. yen) 11 79 18 111 59 17 111 68 179 change (y on y in %) +1. -25. -5.4 +15. +5.2 Chemical Eq. (1 bil. yen) 82 68 15 65 72 137 65 75 14 change (y on y in %) -2. +5. -8.6 +5. +2.6 Source; Japan Society of Industrial Machinery Manufacturers
2) Electric and Electronic Machinery 9 Prospect on Production trillion yen 27 28 29 21 actual actual estimated predicted (Producer) (y on y) (y on y) (yon y) Whole 236 223-5% 19-15% 2 +5% Japanese Domestic 51 48-7% 39-19% 4 +5% 2 19-8% 14-25% 15 +6% Source:Japan Electronics and Information Technology Industries Association
[2-3] Expected areas of future growth (Industrial Machinery) -Domestic; Capital Expenditure for complying with environmental regulation and for energy saving -Global; Surge in demand related to projects to build infrastructure in such areas as power plant, desalination, industrialization and development of natural resources especially in emerging countries and resources abundant countries, some which has been suspended due to the financial crisis (Electric and Electronics Machinery) - Equipment related to energy saving data center - Machinery or components used for Smart Grid - Equipment related to Photovoltaic Energy - Energy Efficient TVs and refrigerators - 3D TVs - Low price PCs, TVs and mobiles with limited function especially in emerging countries Source; Japan Society of Industrial Machinery Manufacturers, etc. 1
3. Transfer of Production Site [3-1] Investment Trend 11 (Mil. Yen) Direct Investment to Foreign Countries (Net) Change in Domestic Capital Expenditure (y on y in %) All industry, All size Source; Statistics on Balance of Payment, Ministry of Finance Source; Quarterly Statistics on Corporate Activities, Ministry of Finance
[3-2] Ratio of Overseas Production 12 Ratio of Overseas Production =Sales by Foreign Entity/(Sales by Foreign Entity + Sales by Domestic Entity) (%) 45 4 35 3 25 2 15 1 39.2% 3.4% 2.7% 17.% 12.8% 5 1 2 3 4 5 6 7 8 General Machinery Elec. Machinery Transportation Ttl of companies with overseas production General Ttl of Companies (Fiscal year ) Source:Survey on Overseas business Activities Ministry of Economy, Trade and Industry