Evolution of Production Facilities and Global Competition : The Case of the Japanese Steel Industry

After World War II, the Japanese steel industry recovered and enhanced its production capacity as a result of the “priority production” scheme and the special focus the industry received under three five-year plans. In the 1960s, large-scale seaside blast furnaces were constructed, and, at once, Japanese steel production technology became the most advanced in the world. However, after the first oil crisis and a subsequent decline in domestic demand and overcapacity, steel exports increased and aggravated trade frictions with the United States. In the 1980s, the frictions were alleviated through technological alliances with steel manufacturers in the United States and the expansion of domestic demand during the bubble economy. After the collapse of the bubble economy, however, the market slumped, causing the steel industry to undergo restructuring: five major blast-furnace companies were effectively consolidated into two groups, and blast furnaces were replaced with a smaller number of large facilities.However, in recent years, global competition has been intensifying, both in terms of securing resources and selling products. China has increased its capacity remarkably and currently accounts for more than half of global steel production. The Japanese steel industry is still producing high-quality steel with the most advanced facilities, in terms of energy efficiency and environmental protection. The Japanese steel industry, which has overcome many difficulties, is expected to remain competitive on the world stage and continue to support many Japanese industries through the supply of high-quality products.