Overview
This lecture analyzes the rapid rise of Japan's steel industry, highlighting its strategies, technological adoption, and unique challenges as a resource-poor nation.
Growth of Japan’s Steel Industry
- Post-WWII, Japan’s steel output rose from almost nothing to 41 million metric tons by 1965.
- By 1965, Japan ranked third globally in steel production, trailing only the US and USSR.
- Japanese per capita steel consumption grew rapidly, with goals to reach current British levels by 1970.
- Export growth is significant, with Japan second only to Germany in steel exports by the mid-1960s.
Industry Organization & Strategy
- Close cooperation between industry and government emphasizes domestic production in Japanese-owned plants.
- Japanese steel firms are often part of large conglomerates combining banking, transport, and commerce.
- The industry sources high-quality raw materials worldwide and invests globally to secure supply.
Raw Materials and Logistics
- In 1965, Japan imported 88% of its iron ore and 64% of its coking coal, mostly from distant countries.
- Average transport distance for ore is about 5,500 miles, driving a focus on efficient shipping and high-quality materials.
- Japanese steel mills are built on deep water for easy access to imports and export markets.
Technological Advancements
- Japan quickly adopted the basic oxygen furnace (BOF), producing over 55% of steel by BOF in 1965.
- Rapid adoption of new technology and regular foreign agreements kept Japan’s industry competitive.
- Use of imported equipment and widespread computerization reduced labor needs and costs.
Export Markets & Competition
- About one-fourth of Japanese steel output in 1965 was exported, with significant sales in the US and Asia-Pacific.
- Japanese steel was often priced 20–40% below comparable US products, aided by lower production costs.
- Rising Japanese wages and dependence on exports make the industry vulnerable to global shifts and competition.
Future Expansion & Challenges
- Major new plants are being built, like Nippon Kokan near Hiroshima and Yawata near Tokyo, with integrated port facilities.
- Increasing affluence, higher wages, and job security may affect future competitiveness.
- Industry success prompts other countries to adopt similar methods, increasing global competition.
Key Terms & Definitions
- Basic Oxygen Furnace (BOF) — A steelmaking process replacing the open-hearth furnace, noted for efficiency and lower costs.
- Coking Coal — Coal used specifically for steel production in blast furnaces.
- Conglomerate — Large business group combining different industries like banking, transport, and manufacturing.
Action Items / Next Steps
- Review the development and structure of the postwar Japanese steel industry.
- Study the impact of technological innovation and logistics on industrial competitiveness.
- Consider how dependence on imported raw materials shapes industrial strategy.