Geography Project Study on Japanese automobile industry Group member: Lam Tsz Wai,Jenny (12) Lau Chun Yat,Sai (13) Lau Chun Yat,Sai (13) Li Yi Lut, Lawrence (15) Li Yi Lut, Lawrence (15) Tsoi Wing Ki, Winnie (22) Tsoi Wing Ki, Winnie (22) Yeung Sze Lok, Delvin (30) Yeung Sze Lok, Delvin (30)

An overview of automobile industry in Japan Japan is the worlds largest automobile manufacturer and exporter by number of vehicles manufactured in a year, and has three of the world's ten largest automobile manufacturers. Japan is the worlds largest automobile manufacturer and exporter by number of vehicles manufactured in a year, and has three of the world's ten largest automobile manufacturers. Currently, 50 million of these high-price products of over 100 million yen are being produced and sold per year worldwide. Currently, 50 million of these high-price products of over 100 million yen are being produced and sold per year worldwide.

A list showing the world automobile production in 2007 According to the list Japan ranked no.1 in the world followed by US (no.2) and PRC (no.3)., showing the importance of Japan to the world automobile industry

A pie chart showing the export percentage of manufacturing products in 2006, Automotive industry accounts for 17.2%, which ranks the FIRST POSITION among all industries

Pie chart showing the export of manufacturing products in Automobile accounts for 22.1%, which is higher than the one in 2006 (17.2%). Reflecting the increasing importance of automobile industry in Japan.

Automobile Industry Spatial distribution Automobile industry tends to cluster along coastal areas as only 17% of the country is flat land Automobile industry tends to cluster along coastal areas as only 17% of the country is flat land Mainly found in SE part of Honshu like Tokyo-Yokohama region, Osaka-Kobe region and Aichi region (the base of Toyota) Mainly found in SE part of Honshu like Tokyo-Yokohama region, Osaka-Kobe region and Aichi region (the base of Toyota) Some are found in northern Kyushu like Oita and Fukuoka Some are found in northern Kyushu like Oita and Fukuoka These locations have the proximity to local market (presence of steel-using industries and large population concentration) These locations have the proximity to local market (presence of steel-using industries and large population concentration) Export of products is also easy with ports Export of products is also easy with ports

Locational advantages of Osaka-Kobe region 1.Availability of extensive flat land as automobile factories are space- demanding 2.Proximity to major cities of the Hanshin region, e.g. Nagoya, Kobe, Osaka 3.Presence of large local market, with population of about 8.3 million, e.g. Osaka is Japans second largest city 4.Well-developed infrastructure, e.g. Toyota is located at junctions of major highways and railways 5.Large cities supply scrap metal 6.Agglomeration of other heavy industries, e.g. iron and steel industry 7.Coastal location facilitates import and export 8.Further expansion is possible by reclamation

Kansai region The largest automobile manufacturer, Toyota, builds most of the manufacturing plants in Nagoya region The largest automobile manufacturer, Toyota, builds most of the manufacturing plants in Nagoya region

Top 3 automobile manufacturers in Japan Toyota Toyota Nissan Nissan Honda Honda

Toyota Toyota is the biggest automobile manufacturing company in the world. Toyota is the biggest automobile manufacturing company in the world. As shown on the next page, the number of cars manufactured by Toyota is the largest. As shown on the next page, the number of cars manufactured by Toyota is the largest.

Toyota has its own production plants on 27 places throughout the world. IMPLICATIONS: Multi-point production + Trend of globalization

Tsutumi Plant (Toyota) Weld Line Tochigi Plant (Nissan)

Characteristics of automobile industry Energy-demanding Energy-demanding Transport-oriented e.g. port location is crucial Transport-oriented e.g. port location is crucial Capital intensive/ Hi-tech industry Capital intensive/ Hi-tech industry Heavy industry Heavy industry Fabricating industry Fabricating industry

Automobile Industry Market Port Transport land Labour Institutional Power

Market as a locational factor Cost-minimization Heavy products (Cars) Heavy products (Cars) i) Distribution cost is lowered High proximity to large cities or High proximity to large cities or towns towns (i.e. Osaka, Amagasaki) ii) Price is lowered further sales

Locations of Toyotas plants in the region of Osaka-Kobei

Collecting information Collecting information Allow close contact with demands and tastes of consumers Allow close contact with demands and tastes of consumers Collection of feedback Collection of feedback + Quick adaptation of Quick adaptation of market changes market changes Market as a locational factor

2.Port Ports along Osaka Bay facilitates i) import of raw materials lower importance of pulling of raw lower importance of pulling of raw materials materials ii) export of manufactured products expansion to new markets expansion to new markets cheaper distribution cost using cheaper distribution cost using shipment shipment

3.Transport Well-developed transport network linking up industries area and large cities (e.g. railway, expressway ) Well-developed transport network linking up industries area and large cities (e.g. railway, expressway ) high accessibility to high accessibility to markets markets

4.Land Space-demanding industries Space-demanding industries Extensive and flat land is required Extensive and flat land is required i.e. Along Osaka Bay, large piece of reclaimed land is available for automobile industries i.e. Along Osaka Bay, large piece of reclaimed land is available for automobile industries Manufacturing Plants

5.Labour Well-educated labour is needed for hi- technology used in production Well-educated labour is needed for hi- technology used in production Highly-skilled scientists, engineers and technicians available i.e. Osaka University nearby Highly-skilled scientists, engineers and technicians available i.e. Osaka University nearby Sectoral spatial division of labour Sectoral spatial division of labour

Automation and capital-intensive production method Automation and capital-intensive production method demand for labour decreases demand for labour decreases only small amount of skilled-labour needed only small amount of skilled-labour needed high mobility of labour high mobility of labour Japan has a lot of universities in other places Japan has a lot of universities in other places (e.g. Kyoto University, Tokyo University) (e.g. Kyoto University, Tokyo University) sources of labour supply sources of labour supply

6.Raw-material Steel used as a raw material of components in the production is heavy and bulky Steel used as a raw material of components in the production is heavy and bulky located neared to Iron &Steel plants which are established along the coastal areas located neared to Iron &Steel plants which are established along the coastal areas procurement costs lowered procurement costs lowered price lowered further sales price lowered further sales

More and More corporations have set up plants in NICs Component parts can be made in Component parts can be made in these plants and shipped back these plants and shipped back to Japan for fabrication to Japan for fabrication factor of port is far more important factor of port is far more important

7.Power Heavy Industry Heavy Industry energy-demanding industry energy-demanding industry

Low availability of power resources in Japan Low availability of power resources in Japan not beneficial to move to such location not beneficial to move to such location Use of electricity Use of electricity flee the industry from the source of power flee the industry from the source of power

8.Institutional Free trade +Lassie-faire policy are promoted Free trade +Lassie-faire policy are promoted Market economy is adopted Market economy is adopted influence of government is small influence of government is small No foreign exchange control+ stable and healthy banking and economic foundation No foreign exchange control+ stable and healthy banking and economic foundation sources of capital is wide sources of capital is wide

Future development Return of plants and factories to Japan Return of plants and factories to Japan More new plants in Japan More new plants in Japan Mainly for designing new types of cars Mainly for designing new types of cars e.g. Honda building factory e.g. Honda building factory Construct a R&D centre in Japan before 2009 Construct a R&D centre in Japan before 2009 Toyota investment in Japan is triple to its investment in Europe and the US Toyota investment in Japan is triple to its investment in Europe and the US

Reasons Affected by locational factor Affected by locational factor labour labour raw material raw material entrepreneur entrepreneur

labour Close to headquarters: Close to headquarters: As car production, processing becoming more As car production, processing becoming more complicated complicated designers and engineers and skilled labors can designers and engineers and skilled labors can be found be found supervise the quality of production easier supervise the quality of production easier Better communication and coordination in designing new types of cars can be provided, Better communication and coordination in designing new types of cars can be provided, e.g. oil-saving and eco-friendly car e.g. oil-saving and eco-friendly car

raw material & entrepreneur Close to raw material supplier so as to reduce cost Close to raw material supplier so as to reduce cost Reduce the risk of spreading commercial secret so as to keep commercial secrets confidentially. Reduce the risk of spreading commercial secret so as to keep commercial secrets confidentially.

Growing automobile production in China However, in 2010,there is a decreasing trend of car production in Japan, but more in China. However, in 2010,there is a decreasing trend of car production in Japan, but more in China. From 10,800,000 to10,000,000 From 10,800,000 to10,000,000 as chinas cost production is cheaper as chinas cost production is cheaper. e.g. labor cost, rental cost. etc /newsid_ / stm /newsid_ / stm /newsid_ / stm /newsid_ / stm