I 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?