Table of Contents
History of Japanese Automobile Industry
Japan is the leading giant in the manufacture of the automobile. However, 100 years ago this was not the case. The first step of Japan’s journey to success started in 1904 when Tarao Yamaha manufactured a bus with a capacity of ten passengers. The bus used a steam powered engine (Cusumano, 2015). In the year 1907 a Japanese by the name, Komanosuke Uchiyama manufactured the first Japanese car to use gasoline. In 1910 the Kunisue Automobile Works built the Kunisue while in the following year they produced the Tokyo with together with Tokyo Motors Vehicles limited. However, Japan began producing motor vehicles in large scale after the First World War. The government in collaboration with the Imperial Army started to produce army trucks. This cooperation led to the birth of companies such as Toyota, Nissan and Marks. This was the beginning of the revolution in the production of automobiles. In the year 1933, Toyota Jido Shokki a weaving company, established an automobile department; the department was called Toyota. Nissan was also established in the same year under the name Nihon Sangyo.
When the Second World War began the motor companies in Japan concentrated in the production of military trucks and buses. The Toyota Company collapsed after the war was over; the company was undergoing liquidation due to insolvency. However, when the Korean wars started the company got an opportunity to repair Korean military vehicles as well as manufacture new vehicles when the war escalated (Cusumano, 2015). This opportunity assisted the company not to undergo liquidation. The future of Japan’s motor industry changed in the year 1955, when the industry increased its production of motor vehicles. To create more market for the Japanese cars, the government imposed a ban on any imported cars. The success of the Japan Motor Industry can be credited to the Ministry of International Trade and Industry. Within a span of two years the number of cars produced doubled from 10000 vehicles to 20000 vehicles.
The Japan Motor Industry started to export more vehicles in the 1970s. The Japan vehicles became very popular in the US and Britain. Mitsubishi and Honda were models which were very popular in the U.S while the British preferred the Nissan Model. In the year 1973 there was a global oil crisis; this problem was a blessing to the Japan Motor Industry (JMI). Many people in the world preferred using the Japanese cars since their engines were small; thus it would save on fuel (Cusumano, 2015). The Japanese Cars were gaining popularity in the country and by the 1990s they were a global brand. In the 1990s the cars were characterized by hyper design and hyper equipment making these cars very marketable. The 21st century marked yet another era for the JMI. It was a period of prosperity since Japan becoming a global leader in the manufacture of motor vehicles. Toyota a famous Japan brand overtook the American General Motors to be the leading car manufacturer in the world. The only country ahead of JMI is China. This summary clearly illustrates how JMI has fought through thick and thin to become a global car manufacturer.
Global Treaties affecting the Motor Vehicle Industry
Motor Industry Development Programme (MIDP)
In the year 1995 the South African Government developed policies that ensure that the Automotive Industry would compete internationally. To facilitate this, the government partnered with the Industrial Development Corporation (IDC). The MIPD was introduced to enhance that the industry’s ability to compete in the domestic market; the program was also aimed at lowering the cost of cars manufactured. When the cost was lower citizens would be able to afford to buy the vehicles (Baldwin, 2011). Besides improving the local market of the industry, MIPD was responsible in ensuring the automotive industry was able to compete globally. The initiative was successful in increasing the level of exports. In the year 2013 the ministry of Trade and Industry introduced the Automotive Production Development Programme (APDP) to replace the MIPD; its agenda is to increase the number of cars produced globally. This has reduced the market of Japanese Cars in Africa since many African States located in the South can purchase their vehicles from South Africa.
NAFTA: Free Trade, with Uneven Effects
The 1994 North America Free Trade Agreement (NAFTA) allowed motor vehicle manufacturers and suppliers to operate in a tariff-free area. The tariff-free area comprised of three nations which operated as one trading bloc. This treaty allowed production to take place in Canada, U.S and Mexico. However, in the recent past production has shifted from Canada and U.S to Mexico (Baldwin, 2011). This has caused civil unrest in both countries since many workers have lost their jobs. Since the shift in power Japan Motor Companies are planning to build new plants in Mexico. Companies like Nissan, Honda and Toyota are acquiring land pieces of land in order to build manufacturing plants. This is an opportunity for JMI to expand its influence in the American market.
Trans Pacific Partnership (TPP)
This partnership was aimed at reducing the custom duties paid on imported motor vehicles. The partnership would allow tariff cuts between the borders. TPP tariffs have facilitated the importation of cars between the Mexican, U.S and Canada borders. Besides reduction of tariffs TPP has enabled the region to renegotiate its position on foreign car manufactures. According to Baldwin’s (2011), the Japanese car manufacturer, Toyota should stop its operations in Canada. The Toyota Company should withdraw from investing in Ontario plants. Such a move will reduce the market share of served by the JMI. This is a blow to the industries since its revenues will reduce.
Factors Affecting Globalization in Japan
Technology
The technology level in Japan is very advanced; this leads to massive production of cars. Japan uses the lean production method in the manufacturing of its vehicles. This system was adopted by Toyota to reduce waste in production and enhance on efficiency. The production method has facilitated the growth of Toyota from a small company to a leading producer of motor vehicles. According to Krafcik (2008), the method involves use of tools that help in the identification and minimizing of waste in production. Elimination of waste enables the management to improve on quality. Waste reduction also allows the company to save on time and cost.
Composition of the Labor Force
Japan Industries comprise of different classes of employees. The employees can be; highly skilled, semi-skilled, multi-skilled and unskilled employees. The highly skilled employees are involved in designing the motor vehicles (Sturgeon & Florida, 2014). The multi-skilled employees are engaged in tasks that require them to work in teams. The semi-skilled and the unskilled employees perform the normal production. The semi-skilled and unskilled workers perform the same task repetitively, thus becoming experts of the simple jobs.
Supply of Resources
To allow efficiency in production, the suppliers and the motor companies are located in the same city. This close relationship between manufacturers and suppliers allow the implementation of ‘Just in Time’ method. This method facilitates the large inventories to be store in the assembly facilities. This method saves the amount of time consumed during transportation of inventory (Krafcik, 2008). The method also facilitates convenience in production since there are minimal delays in supply.
Other Factors
The growth of the Japan Automobile Industry has facilitated trade internally and externally. The motor vehicles are exported oversees. Cars are a major export in Japan, thus they earn the country huge revenues. JMI has made Japan to be among the leading exporters of vehicles internationally thus enhancing the country’s trade ties with the international community. JMI has also allowed migration of people in the country and from the country; through mobility of labor (Sturgeon & Florida, 2014). Automobile manufacturing company import skilled labor from Europe and America. This is a form of migration where employees from other countries to work for JMI. Also the manufacture of motor vehicles has influenced people to move from rural areas to urban cities in order to provide labor the JMI. One of the sectors that has benefited greatly from JMI, is the transport industry. JMI provides transport utilities to all sectors in the economy. Due to availability of many transport utilities the cost of transportation is very cheap. Although the manufacture of motor vehicles has improved the economic status of Japan, it is has led to pollution of the countries ozone layer. The manufacturing industries emit poisonous gases to the environment. The industries also release sewage effluents into the water sources. The pollution causes harm to marine life in the water sources.
Impact of JMI to various Stakeholders
The Automobile Industry in Japan has affected different people in different ways. The JMI manufactures tractors that assist the farmers in production of horticulture. The farmers are able to save on time and cost incurred in the production. The JMI has provided employment to large population in Japan, these employment opportunities have improved the living standards of the individuals working in these companies. The JMI trades with other companies in Japan. These companies can be supplies, customers and partners to the JMI; facilitating economic growth in Japan (Sturgeon & Florida, 2014). JMI has provided social amenities to communities living close the industries. The communities enjoy good health care, schools and reaction facilities all sponsored by the Japan Automobile Industry.
- Baldwin, R (2011), “21st century regionalism: Filling the gap between 21st century trade and 20th century trade rules”, CEPR Policy Insight 56.
- Cusumano, M. A. (2015). The Japanese automobile industry: Technology and management at Nissan and Toyota (No. 122). Harvard University Press.
- Krafcik, John F. (2008). “Triumph of the lean production system“. Sloan Management Review. 30 (1): 41–52.
- Sturgeon, T., & Florida, R. (2014). Globalization, deverticalization, and employment in the motor vehicle industry. Locating global advantage: Industry dynamics in the international economy, 52-81.