- The term "cast products" is here used to refer to pig iron castings, malleable castings, cast steel products, copper alloy castings, light alloy castings, die castings and precision castings. Pig iron castings account for 70-75% of the total.
- Japan's casting technology, which could be said to form the basis of the machinery industry's competitiveness, is capable of supplying high quality products. Conditions are harsh, however, and companies are moving their production operations offshore to cut production costs, and in addition face skilled labor shortages.
- The industry accepted price cooperation when the yen was strong (US$ = \80). Far from prices bouncing back up when the yen depreciated again, however, they have instead trended downwards. Cheap imports posed a threat when the yen appreciated to trade at \80 to the dollar, but users noted that Japanese products were still superior in terms of quality, and there was a shift away from imports back to domestic products. Competition among makers to cut competition is intensifying, and failure to swallow users' demands for price cuts can result in loss of other orders to competitors.
- Prices are failing to improve despite an increase in orders being received domestically, and the increase in raw and subsidiary material costs means that though producers are busy, profits are practically zero. In the case of pig iron castings, for instance, products are sold not by number but by weight. Because of the trend toward smaller, lighter products, the number of castings produced is increasing but the value of output is not because products are traded by weight. The price per ton in 1993 was \193,840, but \185,882 in 1997.
- Domestic output since 1993 has been as follows:
| Year |
Tons |
Million Yen
|
| 1993 |
5,603,000 |
1,756,500 |
| 1994 |
5,675,000 |
1,757,800 |
| 1995 |
5,939,000 |
1,843,900 |
| 1996 |
5,886,000 |
1,781,900 |
| 1997 |
6,037,000 |
1,840,700 |
| 1998 |
5,548,000 |
1,749,100 |
- The small amounts of exports included in the above have been as follows:
| Year |
Tons |
Million Yen
|
| 1993 |
133,201 |
21,213 |
| 1994 |
101,323 |
18,502 |
| 1995 |
71,626 |
15,578 |
| 1996 |
81,556 |
17,257 |
| 1997 |
86,112 |
19,013 |
| 1998 |
65,467 |
15,747 |
- The main export destinations in value terms in 1997-98 were as follows:
|
1997 |
1998 |
| Kuwait |
2,225 |
963 |
| Singapore |
2,041 |
2,088 |
| Hong Kong |
1,911 |
1,798 |
United States
|
1,540 |
1,902 |
| Germany |
1,515 |
2,111 |
| Indonesia |
852 |
157 |
| Saudi Arabia |
750 |
821 |
| South Korea |
615 |
86 |
| China |
611 |
357 |
| Pakistan |
603 |
394 |
| Thailand |
577 |
416 |
| Vietnam |
501 |
596 |
| Taiwan |
389 |
503 |
| Malaysia |
357 |
91 |
| Brazil |
17 |
23 |
| Egypt |
7 |
399 |
| Others |
4,502 |
3,042 |
| Total |
19,013 |
15,747 |
Unit: million yen
As these figures indicate, the distribution of exports by destination varied considerably over these two years. It appears that products destined for Europe, North America and Asia are imported mainly by Japanese firms that have expanded into these markets.
- Imports since 1993 have been as follows:
| Year |
Tons |
Million Yen
|
| 1993 |
89,659 |
9,672 |
| 1994 |
96,770 |
10,177 |
| 1995 |
107,340 |
12,037 |
| 1996 |
119,901 |
15,540 |
| 1997 |
124,154 |
17,033 |
| 1998 |
113,024 |
17,201 |
Imports were equivalent to only 2.1% of domestic output in terms of weight and 0.9% in terms of value in 1997, and 2.0% and 1.0% respectively in 1998, still relatively low.
- The main sources of imports in value terms in 1997-98 were as follows:
|
1997 |
1998 |
| China |
8,818 |
8,664 |
| South Korea |
1,948 |
2,369 |
| Taiwan |
1,861 |
1,624 |
| Singapore |
1,144 |
1,066 |
United States
|
847 |
1,262 |
| Thailand |
631 |
503 |
| Indonesia |
364 |
369 |
| Brazil |
344 |
97 |
| Germany |
178 |
162 |
| Vietnam |
139 |
142 |
| Malaysia |
101 |
121 |
| Hong Kong |
2 |
2 |
| Others |
656 |
820 |
| Total |
17,033 |
17,201 |
Unit: million yen
Although many Japanese makers have expanded into countries such as China where they have established plants as joint ventures or are sourcing products from companies to which they provide technical guidance, a number of quality-related problems have arisen which make it impossible to import with confidence.
- In particular, foreign countries still lag behind Japan with respect to the technology for producing the metal molds that are fundamental to the production of cast products, and in many cases companies importing from abroad ship out molds produced in Japan.
- Even if using Japanese-made metal molds, mismanagement and poor quality control can still result in uneven quality. Castings may have pinholes or blowholes caused by trapped gas, or suffer distortion or cracking. Runners may also be poor and products unattractive.
- Importers would therefore probably rather wait until the technology improves overseas. Due to the high costs and skilled manpower shortage in Japan, though, simple-shaped, mass-produced products are procured cheaply overseas, while complex-shaped castings produced in diversified small lots are made in Japan. For example, if cast aluminum parts for wheelchairs are made in Japan, the molds cost \1.16 million and the product unit price is \20,000. If made in South Korea, however, the mold costs \460,000 and the product unit price is \6,000.
- With demand in the auto industry, which accounts for over 60% of demand, sluggish and demand in the machinery industry (e.g. for machine tools) also weak because of the current recession, conditions in the casting industry are depressed. In order for the Japanese machinery industry to ensure its competitiveness, structural reform in the casting industry is essential.
- Every company is continuing to strive to produce high quality, reasonably priced products, and this entails the development of new technologies, modernization of plant and equipment, and improvement of business relations. With the overriding goal of achieving even more stable quality levels, companies in the industry are introducing new sand treatment systems and chemical analysis equipment, honing their proprietary technologies aware that firms that fail to develop their own technologies in two to three years go under, specializing in diverse, small-lot production, developing manuals laying down the casting methods for different products, enhancing worker training, and researching sublimation pattern casting methods.
- Overseas production of simple-shaped, mass-produced products will no doubt increase in the future. At the same time, however, Japanese technology will still reign supreme with respect to complex-shaped products produced in small lots, which will continue to be produced domestically.
Source: The Materials Process Technology Center.
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