As Japan's largest plastics show kicked off Oct. 25, the country's machinery industry faces an uncertain time, with its global production up but companies under pressure to move manufacturing to low-cost spots.
Japanese machinery makers at the International Plastic Fair in Tokyo said they were increasingly setting up or expanding production in China, India and Southeast Asia, in part to escape a strong yen and be more cost-competitive globally.
The show remains a place where the Japanese unveil their latest designs — and their equipment is still some of the world's top plastics technology — but the IPF itself this year is 25 percent smaller, with 750 firms exhibiting compared with almost 1,000 at the last edition, in 2008.
“We have recovered from the Lehman shock [the 2008 financial crisis that began in the United States] but many other problems are emerging, like the exchange-rate problem,” said Hozumi Yoda, chairman of the Tokyo-based Association of Japan Plastics Machinery, which sponsors IPF. “Maybe these problems are much harder for Japanese companies because we can't see the exit.”
Still, total production of injection molding machines will likely rise this year, the plastics machinery group estimates.
Japan's injection molding industry will make about 14,500 presses this year. Most of the growth will come from the country's production in China, which is likely to double to 2,400 machines from 1,200 units last year, said Yoda, who is also president of Nagano-based injection press maker Nissei Plastic Industrial Co. Ltd.
The machinery group's statistics show that Japanese firms produced 9,318 machines in domestic factories through Sept. 30, on pace for 12,000 machines for the full year. That's roughly the same number of machines made in Japan in 2010, when they recovered from a dismal 2009 that saw production plummet to about 5,000 units.
The group does not keep official stats on Chinese production but Yoda estimated that it's growing substantially there, with several firms adding plants in the last year.
Firms also are stepping up investment in other Asian countries, as a hedge against rising costs in China, to avoid too much concentration there and to tap other regional markets.
Sodick Plustech Co. Ltd. opened a Thailand site earlier this year to make a less-expensive version of its general-purpose machines, said Shigeru Fujimaki, executive managing director of the Ishikawa-based firm.
Sodick last year also opened an injection press factory in Xiamen, China, which at the time was its first plastics machinery investment outside of its Japanese base.
The firm in Japan produces high-end machines for markets such as liquid silicone rubber medical manufacturing but sees opportunities leveraging its skills to make a quality, lower-cost machine, Fujimaki said.
“Unfortunately we don't have standard affordable products pricewise — that is why we started production in Thailand and China,” he said.
The serious flooding in Thailand, however, has shut down production at its factory on the outskirts of Bangkok, as parts and workers cannot get in, and it could take several months to restart, Fujimaki said.
Yoda said Nissei, is moving ahead with plans announced late last year to set up a factory in western Asia, possibly in India or surrounding countries, to serve the markets there. He predicted other Japanese firms would now look more seriously at setting up plastic machinery production elsewhere in Asia.
“The production in Japan will move to other countries,” Yoda said. “Maybe Indonesia, Thailand, Malaysia, or India.”
He said there are four main factors hurting the industry now: the March nuclear crisis and its long-term impact of raising electricity prices; the strong yen, up 20 percent against the U.S. dollar in the last two years; tightening of lending in China, whose growth fueled the Japanese industry the last two years; and Japan's generally sluggish economy.
“It should be quite difficult,” Yoda said.