Japanese machinery industry could be on the rebound

By Steve Toloken
News Editor / International

Published: October 22, 2013 1:06 pm ET
Updated: October 22, 2013 1:09 pm ET

Related to this story

Topics Asia Machinery K 2013 Business News & Features
Companies & Associations

DÜSSELDORF, GERMANY — Japan's large plastic machinery industry may be showing early signs of a rebound, with the machinery industry more optimistic because of the Japanese yen's return to more typical levels against the U.S. dollar.

Increasing demand in both North America and the Japanese domestic market are also encouraging signs, a Japanese trade association official said in a presentation at K 2013.

While statistics don't show a big increase, Japanese machinery companies are noticing a pickup after a slow start this year and machinery production is likely to equal or exceed last year's, according to Michio Komatsu, a board member of the Japan Society of Plastics Technology and an industry consultant.

Komatsu spoke on the Japanese machinery industry's outlook at the Oct. 18 Japan Technology Forum.

"Our domestic demand for new technology and machines is increasing," Komatsu said. "For the Asian market supply and the domestic machine supply, both are expanding day by day."

In comments after his speech, he said the Japanese yen's weakening in the last 18 months has helped make Japanese machinery exports more competitive.

The yen traded at about 75 to the dollar in late 2011, near a post-World War II high, but gradually weakened since then. It stood at about 85 yen to the dollar at the beginning of this year, but by May had come back to about 100 yen to the greenback, its normal level in recent years. Japan exports about 60 percent of its plastics machinery, Komatsu said.

"It was a terrible time last year, the yen exchange rate was at least 75 yen to the dollar — it was beyond the borderline, it was terrible," he said.

The falling yen is a "big reason we can restart such kind of business, production and export from Japan," he said.

Japanese companies made 11,500 plastic molding machines in their factories in Japan in 2012, and while this year started slow, it picked up significantly beginning in the summer, he said.

"The demand of Japanese machines in North America is increasing," he said. "Also our domestic demand for renewal of old machines, this is also increasing, because we have the Olympic Games, so government spends a lot of budget for infrastructure."

According to government figures presented by Komatsu, Japan's plastic machinery industry made a little more than 5,300 molding machines in the first half of the year, which would be below last year's pace. But he said that reflects a very slow start to the year.

"In January we did not start so much, but from August to September, October, it was already so much," he said.

Japanese blow molding machinery companies made 335 machines in the first half of the year, compared with 670 in 2012. For extrusion machines, the pace of production fell off in the first half, with Japanese companies making 236 machines, versus 851 last year.

In recent years, Japanese injection molding companies have established factories in China and Southeast Asia as a way to tap domestic demand and lower costs.

While official figures are not available, some industry officials estimate Japanese IMM makers produce more than 2,000 machines in those countries. Those machines are not included in the production figures that Komatsu presented, which represent only machines made in Japan.

He said that Japanese companies are increasingly exporting from their Southeast Asian and Chinese factories to North America.

On the other side, he said that Japanese companies still face long-term domestic challenges, such as high costs and a falling population in Japan.


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Japanese machinery industry could be on the rebound

By Steve Toloken
News Editor / International

Published: October 22, 2013 1:06 pm ET
Updated: October 22, 2013 1:09 pm ET

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