Is the sun setting on Japan’s defence industry?

flag-of-japan (Custom) (2).jpgI am in Tokyo doing some research on the Japanese aircraft manufacturing industry and are looking very closely at the Japanese defence market.

For decades Japan has been a closed shop where western aerospace companies wishing to sell into Japan have had to partner with one of the large Japanese manufacturing conglomerates such as Mitsubishi Heavy Industries, Fuji Heavy Industries and Kawasaki Heavy Industries.

The local partner assembles the aircraft in Japan at great cost and everyone benefits except for the Japanese tax payer.

The western aerospace company makes a profit, the Japanese partner makes a profit and the government can take comfort from the fact it is helping to keep Japan’s aerospace manufacturing industry alive.

But recent budget constraints has led the government to question the high cost of procurement.

It has even taken the bold step of cancelling an order for Fuji manufactured AH-64D Apache helicopters, citing the high costs of each helicopter.

Fuji has responded by suing the government, hence signalling the end to the cosy relationship that once existed between government and Japan’s aerospace manufacturing industry.

By cancelling the order, the government has signalled that it has had enough with paying so much for defence equipment. The question is, what is it planning to do next?

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One Response to Is the sun setting on Japan’s defence industry?

  1. Dave 13 May, 2010 at 6:12 am #

    One could argue Japan’s defense industry died in 1945 really… Any real innovation died back then.

    Mostly what they do in Japan is license build US designs at extraordinary cost, granted sometimes they do modify said designs as was the case with the F-2 or their Aegis ships. You mentioned in your post that it’s extremely expensive- they don’t get the bang for their buck if you will, that others spending that kind of money would. Further, They don’t really develop much on their own and when they do, they really can’t recoup costs since exports are forbidden. They have a limited user base and limited innovation, and it’s a problem of their own making.

    I would argue, Japan’s inability to export defense equipment coupled with its constitutional restrictions on the military really stifle the industry. They treat it like a make wok project like the Europeans in a lot of ways. The problem is further compounded by their near total reliance on the United States to do the heavy lifting in terms of development and doctrine.

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