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Japan The Defense Industry
Dismantled by occupation authorities after World War
II,
armaments production resumed in 1952 when the nation's
manufacturers began repairing and maintaining equipment
for United
States forces operating in Asia. Individual producers
emerged as
affiliates of larger industrial conglomerates, including
the former
zaibatsu (see Glossary)
of Mitsubishi and Sumitomo.
After
1954 the defense industry began to arm the SDF, at first
making
only slight improvements on United States-designed
equipment
manufactured for local use. The Japanese defense industry
received
about US$10 billion worth of advanced technology from the
United
States between 1950 and 1983.
In July 1970, then Defense Agency director general
Nakasone
Yasuhiro established five objectives for the defense
industry: to
maintain Japan's industrial base for national security, to
acquire
equipment from Japan's domestic research and development
and
production efforts, to use civilian industries for
domestic arms
production, to set long-term goals for research and
development and
production, and to introduce competition into defense
production.
By the late 1970s, indigenous suppliers had developed and
produced
an almost complete range of modern equipment, including
aircraft,
tanks, artillery, and major surface and underwater naval
combatants. Certain types of highly sophisticated
weaponry,
including F-15 fighters, P-3C Orion antisubmarine
aircraft, and 8-
inch howitzers, were produced under license. Except for
the most
complex and costly items, such as the E-2C airborne
earlywarning
aircraft, little was purchased complete from foreign
suppliers.
Over 25 percent of the ¥18.4 trillion Mid-Term Defense
Estimate
for FY 1986 through FY 1990 was allocated for equipment
procurement, most of it domestically produced; but the
most
lucrative defense contract was for the FSX. Envisioned as
a
successor to the F-1 support fighter in the ASDF
inventory, the FSX
was expected to take ten years to develop at an estimated
cost of
¥200 billion. In October 1985, the Defense Agency began
considering
three development options for the FSX: domestic
development,
adoption of an existing domestic model, or adoption of a
foreign
model. The agency originally favored domestic development.
But by
late 1986, after consultation and much pressure from the
United
States, it decided to consider a coproduction agreement
with the
United States. And in October 1987, Japanese and United
States
defense officials meeting in Washington decided on a joint
project
to remodel either the F-15 or the F-16. The Defense Agency
selected
the F-16.
Once the agreement was reached, it came under heavy
criticism
from members of the United States Congress concerned about
loss of
key United States technologies and technological
leadership, risks
of Japanese commercialization of technology at United
States
expense, and an insufficient share in the project for
United
States-based firms. As a result of the controversy, in
early 1989
the United States demanded and obtained a review and
revision of
the agreement, restricting technology transfer and
specifying that
United States-based firms would receive 40 percent of the
work. The
controversy left bitterness on both sides, and Japanese
industrialists, convinced that a Japanese-designed and
Japanesedeveloped FSX would be superior to a modified F-16
codeveloped by
Japan and the United States, were irritated at United
States
pressure to renegotiate. They considered the agreement
already
favorable to the United States. Japanese industrialists
and defense
planners seem to be inclined to be self sufficient with
respect to
future weapons research.
In the late 1980s, the defense industry, limited by the
lack of
research and development, inadequate testing equipment,
restricted
exports, and no economies of scale, accounted for only 0.5
percent
of Japan's total industrial output. The Defense Production
Committee of the Federation of Economic Organizations
(Keizai
Dantai Rengokai--Keidanren) was an important element in
defense
production, negotiating with the Defense Agency and
coordinating
activities among defense firms. Keidanren disseminated
defense
information and informally limited competition by
promoting
agreements between companies. Nearly 60 percent of
Japanese defense
contracts were awarded to five large corporations:
Mitsubishi Heavy
Industries, Toshiba Corporation, Mitsubishi Electric
Corporation,
Kawasaki Heavy Industries, and Ishikawajima-Harima Heavy
Industries
Corporation. Competition for contracts nonetheless
intensified in
the 1980s, as larger portions of the defense budget were
allotted
to procurement. But for the Japanese defense industry to
become
efficient, it had to depend on economies of scale that
could only
be achieved through export. Ishikawajima-Harima Heavy
Industries
Corporation indicated an interest in the arms export
market when it
changed its articles of incorporation to include arms in
its list
of products in June 1987 and later asked that weapons
export
restrictions be eased during the early 1990s. A secret
memorandum
circulating among defense contractors in 1988 estimated
that
lifting the export ban (that existed by general
interpretation of
Article 9 of the constitution) would result in Japan's
capturing 45
percent of the world tank and self-propelled artillery
market, 40
percent of military electronic sales, and 60 percent of
naval ship
construction. In 1989 a Keidanren committee headed by
Kanamori
Masao, chairman of Mitsubishi Heavy Industries, called for
increasing defense research and development to 5 percent
of the
total defense budget. The FY 1990 defense budget allotted
approximately 2 percent for this purpose. In the late
1990s,
Japanese corporations might be expected to market mainly
dual-use
electronics subcomponents, vehicles, and transport and
communications equipment offshore or through front
companies and to
provide components for missiles and aircraft produced
overseas,
especially in the United States.
Data as of January 1994
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