July 29, 2015      

Nippon resurgence?

The Financial Times recently wrote of Japan that it “suffers from an ageing population, persistent deflation, and knotty structural problems in its labor market and energy supply. Its fiscal position is awe-inspiringly bad. Any country in this state would normally be advised to plan for the worst, and merely hope for the best.”

That’s something that Japan can’t afford to do, and to its credit, it hasn’t.

Almost as silently as its population is aging, Japan’s industries, especially small and midsize enterprises (SMEs), are quietly showing the world how to go about increasing productivity via robot automation. Slowly, it seems to be working, and Japan is the better for it.

An early deadline for robots and automation to produce a solid uptick in Japan’s economy is 2020, the same year that Tokyo is host city for the 2020 Olympics.

Shinzo Abe, Japan’s prime minister, said he wants to showcase Japan’s robotic technology prowess for the Olympics. “We want to make robots a major pillar of our economic growth strategy,” he told Japan’s Jiji Press agency.

Abe also discussed his plans to triple the size of Japan’s robotics industry to a value of about $21.5 billion, which the world’s third largest economy sorely needs right about now.

“We would like to set up a council on making a robotic revolution a reality in order to aid Japan’s growth,” he said.

The groundswell in Saitama Prefecture

If Abe’s grand plan for robotics is to ever become a reality, it?s firmly in the hands of the millions of SMEs to automate one after the other in order to pull it off.

One such SME is Glory Ltd. (6457:Tokyo), a maker of money handling machines and systems located in Saitama Prefecture that has been in business since 1918.

Glory bought 19 Nextage robots from Kawada (approximately $60K each; pictured above) and then integrated them into its human work flow of 370 humans. The main reasons for the purchase were the lack of capable workers allied to a wish for increased growth.

One worker, Satomi Iwata, put any concern about working alongside a co-robot quickly to rest: “They aren’t human, but it’s as if I’m working with colleagues who do their work very well.”

Glory is not alone with its upgrades. Ko Nakayama, head of the Bank of Japan’s economic statistics division, said, “We’re seeing companies spend more to enhance their plants’ productivity or renovate equipment.”

Glory, writes the Japan Times, is in the “vanguard as Japanese firms ramp up spending on robotics and automation, responding at last to Prime Minister Shinzo Abe’s efforts to stimulate the economy and end two decades of stagnation and deflation.”

For Abe’s part, he’s succeeding at haranguing Japan’s very conservative companies to increase their investments in automation.

A Bank of Japan survey backed up this “Abe effect” showing that big companies plan to boost capital expenditures at the fastest pace in a decade this fiscal year.

All of the increased investment is welcome news for the beleaguered Abe government, that started pushing the big companies “to raise wages last year and now wants them to boost capital expenditures; all crucial to the success of ‘Abenomics,’ which is his policy mix of loose money, fiscal stimulus and structural reform.”

Ajinomoto’s food products division is another in a long line of Japanese companies having to change its ways and adapt to the new reality of an unemployment rate of 3.3 percent — an 18-year low.

Ajinomoto’s Akihiko Ebisawa is blunt about it: “We’ve really been having trouble hiring temporary workers in the past two to three years, especially people who can do night shifts or heavy labor. We couldn’t get by any longer without investing to overhaul the company’s 40-year-old assembly lines to streamline packaging of soup stock and sports drinks.”

Abe’s growth strategy doesn’t just talk up the advantages of artificial intelligence and robotics to boost productivity. “It offers subsidies,” reports Japan Today, setting aside $175 million for small and midsize companies to introduce robots to streamline operations.

Robots, robots everywhere

Japan’s robotics industry is legion and legend and its industry-leading robots are world-renowned brands: FANUC, Yaskawa, Kawada, Epson, Panasonic, Honda, Toyota, to name but a few.

Strangely, some of these same brands are the very ones helping China to automate and elevate productivity in its industries. The obvious question begging itself here is can’t these same industry giants do more for their own homeland?

And it’s not money that is the problem.

As the Financial Times aptly points out, Japan is a very well-to-do poor country. “Japan’s decades of exporting prowess have bequeathed it foreign reserves larger than those of Germany, the U.S., and the U.K. combined.”