Japanese Cities in the World Economy (Conflicts in Urban and Regional Development)

JAPANESE CITIES in the

WORLD ECONOMY

Conflicts in Urban and Regional Development, a series edited by John R. Logan and Todd Swanstrom

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into land and land development, the stage was set for an unprecedented struggle for land. In 1979 the locus of land price increases had moved from the urban core into residential and suburban property development (see Map 4.1). In 1986 the new locus was decidedly in the metropolitan core; after displacing residents from the inner city, price inflation then moved to the waterfront and suburbs in the following years.

TRANSNATIONALIZATION: STRATEGIES TO CREATE A WORLD CITY

Large-scale corporations-cum-Iand developers are the principal formulators of strategies to convert Tokyo's built environment. In the 1970s land development was arguably more balanced between residential and economic purposes. The strategies employed at the moment are directed toward the single goal of capturing the core of the city. This task is proving to be a formidable one and is being met with equally formidable uses of power. With headquarters operations and service industries continuing to concentrate in a relatively small area of central Tokyo, demand for office space has become extraordinary. Even before 1986, the office vacancy ratio in Tokyo had fallen to an unbelievable 0.2 percent, and in the Marunouchi finance district waiting times of several years were required to secure leases. 14 In early 1986 the Nomura Research Institute estimated that twenty to fifty more skyscrapers were needed to secure the physical transformation of Tokyo into a world financial center. The stage was thus set for the tremendous price boom of commercial property that was triggered by the revaluation of the Japanese currency at the end of 1985. Commercial property prices more than doubled in 1986, and by the end of 1987 in prime locations in Tokyo they exceeded $20,000 per square foot, almost ten times the average price in New York and twenty times that in Los Angeles. Large-scale real estate developers are now attempting to consolidate purchases of small holdings into sizes sufficient for very tall buildings and multifunctional, international living-working complexes, and they are also attempting to create new land for development. Buying small parcels of adjoining land for consolidation into very large lots has created a new character in Japanese society, the infamous jiageya, or "land price-raising specialist." Invariably an active member of Japan's yakuza underworld, the jiageya was first discovered by the popular press at the beginning of the surge in commercial land prices of 1982. His major role is to overcome the resistance of small house97

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holders, landlords, and tenants against turning their property over to large-scale developers. Given the need to cluster sales into larger plots, even one stubborn landowner or tenant out of ten can bring development schemes to a halt. The jiageya has proven to be both resourceful and varied in the methods he employs, which range from the more innocuous late-night phone calls, loud music and noisy construction projects around targeted property, and pouring of Quick-setting glue into keyholes of the doors of tenant lodgings to the more ominous poisonous snakes put in mailboxes, fires set, trucks driven into shops, houses bulldozed, and death threats made. One jiageya tactic is a clear example of the contradiction between the demands of internationalization and sustenance of community life. This is the purchase of the public bath (sento), one of the remaining institutions of neighborhood life in older parts of Tokyo, as a blockbusting target. Once the bath is gone, it becomes much easier to convince households, many without baths of their own, to sell their land. The results have been astounding. In 1964, Tokyo had 2,650 sento; by the end of 1986, it had only 39 (Obara 1987). Although some portion of this decline reflected the increasing inclusion of baths in private houses, the rate of decrease of one per week in the late 1980s left entire sections of the city without a single public bath. The strong-arm tactics of the jiageya have not kept up with the escalating demand for land. In the face of the tremendous difficulty of dislodging smallholders from their land, the path of least resistance is to create land where none currently exists. Along this path have come the most ambitious steps to the urban future, some of them straight out of science fiction. They include plans to create a sister urban core in Tokyo Bay that would double the current size of central Tokyo and images of a multilevel city arranged in tiers from deep beneath the city to a considerable height above it. The more traditional of the "new land" schemes involve land reclamation around Tokyo Bay. Reclamation has been a part of Tokyo's history since the construction of Edo Castle in the early seventeenth century, but nothing earlier matched the scale of "waterfront fever" beginning in the late 1980s. The targeting of the waterfront reflects the structural change in the economy, which has made anachronistic the heavy industries constructed on new landfill sites in the 1950s and 1960s. It is also the outcome of privatization of public enterprises, such as the Japanese National Railway (JNR) and Nippon Telephone and Telegraph (NIT), both of which own substantial areas of waterfront land. Currently there are at least forty schemes for waterfront develop98

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ment and land reclamation in Tokyo Bay-not including the recent proposal for the creation of a floating office building to be housed in a 35,000-ton ship (Map 4.2). Many of them are linked with redevelopment in other parts of the inner city. The Toyosu Island plan for a twenty-four-hour Information City, for example, calls for the relocation of Tokyo's central business district and the Kasumigaseki central government complex to landfill islands. This plan also proposes to shift the Imperial Palace back to Kyoto. Several of the plans reveal the long-standing competition between central and local governments over land development and management. Six major administrative units cover the Tokyo Bay area, and almost every ministry of the national government has its own harbor management bureau. Various central ministries have favored different local governments in their plans. MITI's Cosmopolis Plan, which was abandoned because of environmentalist protest, called for the construction of four artificial islands covering 70 percent of Tokyo Bay. These islands were to be operated as a "free zone" under the national government and would have allowed special labor laws to bring in foreign workers and a relaxation of building height regulations. By seeking to circumvent local regulatory controls over land use, such plans display a tension between the immediate requirements of capital accumulation and other social objectives. In recognition of the wasted hours and resources now being spent on commuting to work in Tokyo and as a part of new urban design strategies to create multifunctional living-working-playing complexes, most plans have housing as an important component. The Tokyo Teleport project, perhaps the most widely publicized of the government proposals, will provide homes for 60,000 people and offices for 110,000 workers. The Makuhari Messe to be built on 438 hectares of reclaimed Tokyo Bay land will house 26,000 people. Another, the Urban Oasis Center, a restaurant, theater, and activity complex on the 440-hectare landfill Odaibu Island, plans to house about one-sixth of the center's workers and their families. In terms of area and scale, the largest of the Tokyo Bay development proposals is the New Tokyo Plan 2025 encompassing an area of thirty-thousand hectares, or half the size of the existing twenty-three wards of Tokyo. Put forth in 1987 by one of Japan's foremost architects, Kisho Kurakawa, the massive land reclamation scheme would in forty years accommodate a projected 6 million new residents in the metropolitan region. The project, at a cost per cubic meter of 300,000 yen, has become feasible only because of spiraling land prices in Tokyo. 15 Underground area, the "third frontier" after outer space and the 99

PROJECT 1 River City 21 2 Tokyo Teleport 3 Harumi Island 4 Toyosu Island 5 Ariake Harbor City 6 UTban Oasis Center 7 Tokyo Port Bridge 8 Tokyo Bay Expressway 9 Minato Mirai 21 10 New Tokyo Plan 2025 11 Trans-Tokyo-Bay Road 12 TRON City 13 Makuhari Messe

AREA (HA) 9 98 104 95 93

30,000 100 438

MAIN PARTICIPANTS Tokyo metro government! Mitsui Tokyo metro government 32 private companies MITIffokyo Gas & Electric C. Itoh or Mitsui/Mitsubishi Tokyo metro government Tokyo metro government Central government Mitsubishi Group 2025 Central government 130 corporations Government-private sector MAP

COST (x 100 BILLION YEN)

YEAR COMPLETE

1.90

1991

19.00 10.20 >10.00

2000

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LAND RECLAMATION AND DEVELOPMENT PLANS FOR TOKYO BAY

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ocean, has also become the target of development schemes. Underground shopping malls and transportation systems have been a part of the development of cities in Japan for many years, but serious subterranean fires in Osaka and Yokohama put an unofficial moratorium on underground development after 1975. By 1988, however, the central government succumbed to pressure from land developers in Tokyo to allow for a new era of underground development. By permitting ground-level ownership rights to extend fifty meters below the surface, the enabling legislation passed at the end of 1987 opens the way for tunneling and carving out huge caverns of new urban space. 16 The government has been actively involved in underground development plans, including one to create a three-level transportation line composed of a new subway line directly underneath the existing Yamanote Circle line, which, in turn, is to lie beneath the Shuto Expressway for vehicular traffic. Such transportation and communications lines would be the beginning of a Tokyo underground "geogrid" of shopping, living, and working nodes and long connecting passageways complete with strategically placed sunlight points to provide the feeling of a surface-level habitat. Underground development, however, needs to come to terms with two major problems: Tokyo's location in a zone of frequent earthquakes, and ground subsidence caused by underground excavation. 17 Other planners are reaching for the sky to give Tokyo the vertical stature commensurate with world city status. Like underground tunnelers, skyward developers are pushing the government to clear the air of existing property rights; at the same time, they want to remove restrictions on the height of commercial buildings. Both efforts have come together in the form of a proposal by Ohbayashi Kensetsu, one of Japan's largest land development companies, to create a "city in the sky" to be constructed on platforms sitting atop thirty-one meter-high pillars erected like cement trees along the avenues of the existing central business districts. For its part, the Ministry of Construction is also moving toward a multitier urban landscape by proposing to remove restrictions on building offices above or below expressways. And to reverse the current mentality about keeping buildings low, Prime Minister Takeshita suggested during his short term of office that developers should be forced to set minimum rather than maximum building heights. These schemes to transform the sea, sky, and subterranean space of the metropolis claim a mission to remold the drab, jumbled landscape of Tokyo into a high-tech world city in which all citizens will at last realize the promise of the good life commensurate with Japan's economic achievements. They have been so unabashedly extravagant in 101

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physical design that their promised engineering feats have muted questions of who will actually benefit from the future they promise and what social, as well as economic, costs they will incur. Simple mathematics indicates that all of these immense projects together cannot physically accommodate the jobs they plan to generate or the expected increase of 6 million people in the metropolitan region by the first decade of the next century. In the government's Tokyo Teleport case, for example, an average three-member household per worker would require more than five times the planned housing accommodation. At the metropolitan scale, the underlying and largely unchallenged premise of recent proposals is that an increased land supply will cause land prices all around to decline and will, therefore, benefit all citizens. Recent assessments challenge the idea that increased land supply will benefit the middle and lower classes and the urban environment (Maeda 1988). First, as already noted, the majority of the land will be given to large office complexes, not living space. Second, the living space created will be priced at levels affordable only to corporate executives and the wealthy. As larger shares of prime inner-city land move from individual to corporate ownership, the majority of working people can no longer hope to own a house within a two-hour commuting zone from the center of the metropolis. Moreover, to the extent that investment in Tokyo proceeds ahead of investment in the rest of the country, and given Tokyo's already strengthened position in the national economy, the possibility that migration to the metropolis may increase over current projections must be considered. Third, the environmental consequences of the plans have not been adequately addressed, particularly its pressures on energy use and waste production and disposal. Concrete now covers thirty square kilometers of Tokyo Prefecture, more than it covers in New York. A lack of green space is already "desertifying" Tokyo's climate. In the bay, blue tides of pollution have increased, and fisherman claim that the bay's role as spawning ground for many marine species has been severely damaged. In the words of Maeda (1988, 76), Tokyo is undergoing a transformation that is destroying its jukino, its "1iving function." From the viewpoint of residents, this may be the most important aspect of the struggle for place.

CAPITAL, CLASS, AND COMMUNITY: THE STRUGGLE FOR PLACE

The new wave of transnationalization is changing relations between capital and labor and, in turn, social 102

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access to land and place in the Tokyo metropolis. With union membership dropping to under 30 percent of the labor force and endaka raising the relative wage costs of producing in Japan, management has cajoled labor into lowering its demands for more pay and improved working conditions in order to keep Japan competitive in the world economy. Real income for newly formed households has in turn fallen seriously behind the costs of buying land and housing. An increasing share of the labor force is entering into low-wage, part-time work with little or no welfare benefits. Middle-aged women are replacing the cheap labor once supplied by male migrants from rural areas at half the hourly wages of their male counterparts. More than half of all married women in Tokyo are now working, and in 1982 approximately 40 percent of all manufacturing workers in Tokyo were parttimers. The statement by many women that they have begun working in order to help pay increasingly high mortgage payments reveals the running-to-stand-still nature of economic life for middle- and lower-income classes in Tokyo (Takahashi 1983). The fastest rate of growth in the use of part-time labor is among large-scale companies, and Tokyo leads the way in shifting from full-time to part-time employment. Accompanying the trend toward a labor market based on part-time workers has been a slight opening of the domestic labor market to foreign workers. Young males from surrounding Asian countries are entering small-scale manufacturing operations and construction in metropolitan regions, particularly Tokyo. Earning wages that are less than half the going rate for Japan's day laborers, the illegal migrants can be found each morning at pickup points along the waterfront in Yokohama and even at the edge of Shinjuku, where an "ethnic triangle" of Asian students and workers has emerged. 18 Businesses in Tokyo have been petitioning to legalize the use of foreign workers in a wide variety of construction and service occupations. 19 All of these changes counter the popular image of Japan as a uniformly middle-class society. As pointed out by Steven (1983) and others (Murakami, Kishimoto, and Tominaga 1980), class divisions have always been more marked than mainstream literature and annual government surveys imply. 20 Income disparities are specifically related to changing patterns of access to housing and social capital. The term ishokujuclothing (i), food (shoku), and housing (ju)-is commonly used to indicate the quality of life in Japan. In the words of one observer, economic growth of the past decades has given most Japanese i and shoku but not ju (Hasegawa 1988). In confirmation of this observation, a recent government report on the state of the economy concluded that whereas the gap between income classes narrowed in the 1960s and 1970s, it has 103

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widened in recent years "due to the skyrocketing increases in land prices" (EPA 1988, 198). This, in turn, is creating a wider division between homeowners and renters, the new "haves" and "have-nots" of Japanese society. This trend is most marked in Tokyo.21 A small house within ninety minutes' commuting time from the central area costs the equivalent of ten to fifteen years of a white-collar worker's income; if 20 percent of income were spent on housing, that would come to fifty to seventy-five years of payments. 22 Condominium prices, though lower, have also moved beyond the reach of new households. 23 With costs moving up to 70 million yen for a condominium, mortgages based on the standard thirty-year, "two-generation" repayment period have proven to be insufficient to purchase a two-bedroom apartment within ninety minutes' commute from Tokyo, even if the would-be buyers "plan on eating instant ramen (noodles) for the rest of their lives" (Ohmae 1988).24 The increases in congestion and distance to work add substantial costs and stress to millions of daily commuters. The household unit is also experiencing stress. Tokyo is beginning to produce its own latchkey children, who come home to empty houses and must take care of themselves for extended hours. With more than one-fifth of the nation's children under six years now being sent to day care centers, the tradition of children being sheltered with their mother away from society is being reversed (Richardson and Flanagan 1984, 220). Children are spending more time in after-school cram schools designed to help them pass grueling entrance exams for high school and college (Sugimoto 1986; Morishima 1982). Psychological distancing of children from parents is reported to be a growing phenomenon, and the number of children refusing to go to school has been increasing. There is also a new social concern about children bullying others at middle and high schools. Married women must now perform stressful triple duties as homemaker, principal parent, and worker (Imamura 1987). Young mothers living in high-rise apartment buildings find informal sociability difficult. In a study conducted in a public housing project in the suburbs of Tokyo in the mid-1970s, more than half of the women said they had no intimate friends or neighborhood relationships whatsoever (Kiefer 1976, 22). For the ubiquitous salariat, life continues to be filled by demanding six-day work weeks with long hours of overtime in order to move upward in the company. Jokingly referred to as "Sunday papas" or geshukunin papas ('~boarding house" papas), many men never see their homes during daylight hours or visit with their children except on Sundays, when they perform "family service." Reflecting the dominance of the male perspective in Japan, these men live in what are called "bed towns." 104

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Life is becoming particularly stressful for middle-aged white-collar salariats, who, after many years of dedication to work, become depressed about the narrowness of their future and are unable to relieve the constant stress of work. High rates of suicide among this group have gained widespread attention. In addition, karoshi-death from overwork-has been identified by the Ministry of Health as a serious problem, especially among middle managers, and may account for 10 percent of all deaths of working-age men. The elderly are now expected to live more than twenty years beyond the usual retirement age of fifty-five years. Few have pensions or personal sources of income. Their greatest fear is becoming a burden on their children and needing long-term medical care. Most houses are too small to accommodate three generations, and the small supply of special homes for the aged has been aimed at high-income families. Yet the proportion of the total population past the age of sixty-five is rapidly . . Increasing. These trends have led to an increased separation of household members from each other and from their homes and neighborhoods. A recent survey found that most members of urban households have dinner together fewer than three times a week. And at the extended family scale, only half of urban families said they meet with close kin during the New Year holidays and Obon, the two traditional times for family gatherings (Richardson and Flanagan 1984, 219). Before World War II most of the urban population was contained within a fifteen-kilometer radius of the city. By 1975 the metropolis had filled in a thirty-kilometer radius. By the late 1980s the commuting zone had reached as far as fifty to sixty kilometers, with a one-way commuting time of three hours not uncommon. In 1970 an estimated 1.6 million people commuted into the central twenty-three wards of Tokyo. By 1985 the number had increased to 2.6 million people, and another 500,000 left from the inner city for work elsewhere. This is the area in which the density would be more than doubled if the slate of development plans being proposed were to be implemented. Japan's increasing affluence and material wealth has had costs not unlike those incurred by other high-income societies: pollution, toxic wastes contaminating food and water, traffic congestion and accidents, and the substitution of electronic for human relations at the workplace and at home. Spatially, the costs have also been high. To overcome increasing commuting times, higher-income commuters have turned to such strategies as in-town apartments; they return to distant homes and families once or twice a month. These costs have also led to the collapse of the "meaning of social space" (Hashimoto 1989). On a crowded commuter train, travel to and from office and home is an individualized 105

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space-time passage with commuters absorbed in the fantasy worlds of manga (comic books) to fill the monotony and absence of redeeming value in the daily commuting chore. The loss of place-the meaning created in the geographical overlay of the natural, built, and social environments-is reaching down to the smallest social scales in the form of extensive spatial dislocation of the nuclear family. The new Tokyo family, in fact, does not really live in a place at all: it lives at a given distance from a daytime function. The main selling point for homes and apartments in Tokyo is not the neighborhood, but the distance in time from the closest train station linked to central Tokyo. Moving over urban space rather than creating a home and neighborhood is the central feature of life for the new Tokyoite. Although many Tokyo households seem to have accepted the tradeoff between sustained economic growth and a convivial urban habitat, many others have attempted individually or collectively to recapture parts of the habitat, no matter how tiny, for the reconstruction of place. Japanese cities have long been thought of as nested territorial networks with neighborhoods as their basic units (Narumi 1986). Neighborhoods in Japan are integrated by formal and informal networks, but the single most important one is the chonaikai, the neighborhood association. The head of every household is a member, and leadership rotates by popular consent. Chonaikai provide services and "promote a spirit of local sociability and cooperation, elaborate the neighborhood's sense of identity, and maintain its sense of communal autonomy, separate from and not controlled by the actions and policies of the ward government" (Bestor 1989, 126). Neighborhood associations host many activities, including community festivals, relief activities, contact with government agencies on behalf of individual households, consultation and m-ediation between households, providing loan provision, and funeral assistance (Narumi 1986, 63). In past eras of rapid growth, the chonaikai have also played an important role in guiding migrants into the social life of the neighborhood and thus in integrating newcomers into the city. Although sometimes vilified for spying on neighbors, the chonaikai have reportedly played a more positive role in community life in the post-World War II years. Studies of chonaikai in the 1970s concluded that they were not merely administrative branches of larger political divisions of the city, but were cohesive, "socially significant, geographically distinguishable divisions of the neighborhood" and furthermore that the stability of Tokyo was in large part due to the capacity of the chonaikai to insert neighborhood agendas into higher-level decision making (Bestor 1989, 4). A study by White (1982) conducted in the early 1970s found that 20 to 50 percent of all people surveyed in Tokyo had used the 106

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chonaikai to make demands on higher levels of government concerning such issues as building sidewalks for children, clearing television interference created by new building construction, and halting the construction of high-rise train stations. Studies have confirmed, however, that identity with the community and its organizations declines precipitously in areas inhabited largely by renters. Kiefer (1976), in her study of a Japan Housing Corporationconstructed apartment complex (danchi), states that the huge units of such a complex lack the basic elements needed to mobilize households for cooperative efforts. They are constituted without social organizations or members who can draw upon local histories. Because the most talented people move out of them through upward mobility in the company, potential leadership is consistently siphoned out of the area. She concludes that the new Japanese white-collar household is located in a "highly structured social environment remote from the community both in space and in values," one that promotes a politically apathetic community. For the lower classes, however, community organization in apartment complexes has greater appeal. Blue-collar danchi residents often lack the extracommunity involvement that occupies the time and energies of white-collar workers. They also have a greater tendency to consider apartment life a long-term living situation and become more concerned with neighborhood issues (White 1976). Lower down the community participation ladder are the shataku, or apartment complexes constructed by individual companies for their mid- and lower-level white-collar workers. Loyal to specific enterprises rather than to place, households devote considerable energy to progressing up the corporate hierarchy. For this reason, shatakus have been found to detract from a neighborhood's social and political coherence (White 1976, 107). One of the more interesting points of debate is whether the new forces of change will galvanize Japan's urban households into acting on their common concerns or whether the neighborhood in Tokyo has already disintegrated beyond the possibility of collective action. The signs are not clear. In a prophetic note, White warned that the most severe threat to the inner-city chonaikai was population decline, and in view of current trends in that direction, the neighborhood association may be "headed for a slow decline as an entity capable of collective response" (210). Where social mobilization is absent, families and individuals have devised their own means of coping with the changing urban habitat. Recent studies have noted that one means of adjusting to crowding and 107

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loss of conviviality is to withdraw into more solitary lifestyles. Home computers and video cassette players have allowed young and old alike to spend more free time at home alone. Solitude is promoted by the strategy adopted by small landholders of selling off small corners of their property as a means of staying in the metropolis; they are creating a new supply of extremely small apartments and rental units. New businesses in Tokyo have sprung up to cater to depression, stress, and isolation. Salons have opened for customers who sit in tiny "refresh capsules" with wires attached to their heads in order to put their brain waves into a soothing pattern. An anshin saabisu (safety or comfort service) consisting of separate hanashi roomu (rooms for chatting) has opened in Shinjuku, and for 500 yen per thirty minutes a friendly person listens, but is not allowed to give advice, to customers who complain and discuss problems. Many customers are "bachelor husbands" posted in Tokyo away from provincial homes. A similar new business is the Niiki Daikogyo, a diary-writing service that sends copies of daily telephone conversations to customers, most of whom are senior citizens seeking companionship. Finally, there is the Sekomu call-in security assistance business, which tends to have older people and very young latchkey children as its principal customers. For some families, of course, the increase in land prices and restructuring of the city have brought new sources of wealth. Not a few small, inner-city shopowners have been persuaded to sell their land to large-scale developers in exchange for what may seem to be the best of two worlds: guaranteed shop space in the new, multistory commercial buildings and a nice home in the distant suburbs, where land prices are a fraction of those in the central city. 25 A small class of people have parlayed land ownership into bank loans to make further gains in Japan's booming stock market. For them the internationalization of Tokyo has brought new levels of prosperity and conspicuous consumption. Most are independent businessmen and company executives who benefited from snowballing values of stocks and land. These are the people who have weekend houses in the countryside and occasionally-used houses in Hawaii or on Australia's Gold Coast. For these people, Tokyo may well deliver the science fiction dreams of intelligent buildings and commuting to work vertically by elevator. But for most Tokyoites the future is likely to bring bewilderment about the purposes of economic growth and the meaning of their shared space in the city.

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SPACE, PLACE, AND THE STATE

The Japanese state has been presented as a powerful, almost prescient, source of societal guidance. Key indicators used to support this view include the government's national land development plans, the powerful role played by MITI in "coordinating" the private sector's activities, and the proven ability of this resource-poor nation to adjust quickly to international oil crises. 26 At the other extreme, the state has been portrayed as never straying too far from the interests of corporate business and, through various factions of an entrenched bureaucracy and the ruling Liberal Democratic Party (LOP), generating a type of planning that is nothing more than the sum of the lobbying successes of the special interests of the day. 27 The real world is much more complex than either extreme allows, as can be seen in the government's response to urban land issues. According to many land developers in Tokyo, the major cause of the land price spiral is not big business but the cozy relationship between the ruling Liberal Democratic Party and Japan's small farmers, who continue to occupy huge areas of land through government protection and subsidies. 28 Thus the primary obstacle to reducing land prices through increasing the amount of land for urban use is claimed to be the perpetuation of inefficient rice-producing farmers holding land in the plains of Kanto around Tokyo. Another finger of blame is pointed at tax policies that, it is said, encourage inefficient land uses and discourage land development efforts by understating the value of land and penalizing land developers through high capital gains taxes. Low assessed property values also channel wealth into land as a means of limiting inheritance taxes, which can reach 75 percent of the value of assets. To complicate matters more, very high capital gains taxes on land sales can be deferred so long as the money received is used to buy another piece of land at the same or a higher price. Thus landowners in the inner city of Tokyo are encouraged to "export" land inflation to the suburbs by buying land there at high prices in order to avoid paying more than half of their receipts to the state as capital gains tax. Part of the "ripple effect" shown in Map 4. 3 is explained by these tax incentives (Hiramoto 1988). An unfortunate aspect of the current tax debate in Japan is the single-minded focus on economic efficiency. Land is not simply an exchange commodity; it holds deeper social and cultural meanings that can provide the basis for political action. Stories abound in Tokyo of landowners who, with a sense of pride and communal solidarity, choose to

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MAP

4.3

AVERAGE RESIDENTIAL LAND PRICES BY DISTANCE FROM CENTRAL ToKYO,

1980-87 -

National Capital Region - - - Provincial Boundaries Data source: Tokyo Statistical Association, Tokyo Statistical Yearbook 1987 (Tokyo: Tokyo Metropolitan Government), table 166.

use land inefficiently and at very low returns rather than sell it at extraordinary prices. The very existence of the jiageya is evidence that such choices are being made. When it comes to land, the political process in Japan has in fact been compelled to accommodate motives other than economic efficiency. Particularly at local government levels, where political constituencies and place are more obviously linked, policies counter the impact of central legislation designed to change land use patterns. Central gov110

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ernment directives to raise property taxes in the early 1980s, for example, were neutralized by local legislation that lowered tax rates to 5 percent of the normal valuation if landowners declared an intention to grow crops on their land for a minimum of ten years. Examples like these generate complaints about inefficient land uses and the high cost of land in Tokyo. But such complaints are unable to answer the question of how the economics of land is to be translated into meaningful social and cultural uses as Tokyo moves through its tremendous cycles of expansion and restructuring. The central government has proven to be an exceptionally weak counterweight to the land price spiral; in fact, it has arguably been one of the major protagonists. Land prices have soared so high that the government has joined the league of underground developers rather than pay the enormous costs that would accompany its use of eminent domain to obtain new rights-of-way in the city. As Japan's GNP and trade surpluses continue to rise, the government has paradoxically found itself less rather than more capable of performing its stated role of helping to translate economic prosperity into improvements in the quality of urban living.

CONCLUSIONS

Japan has now entered into its second transformation of the twentieth century. The first, largely accomplished by the early 1970s, was a rural-urban transformation driven by urban industrial growth, which brought millions of peasants to major metropolitan regions. The second, which has been accelerating since the mid-1980s, has focused almost exclusively on making Tokyo into a world financial center and command post for transnational systems of production and trade. The term internationalization is a somewhat misleading description of the Japanese economy. In terms of foreign labor, investment, or capital stock, there is as yet very little international participation in the process. 29 The city is not becoming substantially more international in the sense of openness to a diversity of peoples or to deep cultural exchanges. And with the exception of a small nouveau riche stratum of consumers, the majority of Tokyoites have not become noticeably more cosmopolitan as their access to world markets for finished products has widened. Internationalization, as discussed in this paper, emphasizes the social and physical restructuring of Tokyo to create a built environment 111

Mike Douglass

suited to the needs of global capital accumulation by Japanese corporations. On this count, the current cycle of growth is generating far-reaching changes in the daily life and habitat of Tokyo. Animated by large-scale land speculators and developers, the spatial restructuring of Tokyo is legitimated by the following logic: Japan, in order to stay competitive, must shift toward an economy specializing in high technology, high finance, and services. Households and family businesses, some of which have been in the neighborhoods of Tokyo for generations, must yield to the new "bid-rent curve" of efficient land use and remove themselves, or be removed, from their places in the city. With efficient land use and economic output presumed to go hand in hand, the physical restructuring of Tokyo will assist national economic growth and the increase of per capita income. The problems with this logic are manifold. With capital circulating on a global rather than a national scale, equating total value produced with value realized in Japan is not valid. Nor will the proposed use of land for an internationalized Tokyo bring home ownership within reach of much of the population or enhance the capacity of government to provide public goods and manage the environment. Tokyo does not suffer from the worst aspects of the struggle for place found in rich countries like the United States, where homelessness has increased at alarming rates and people hold multiple jobs paying wages that, in real terms, have steadily fallen over the past decade. Nor does Tokyo have huge inner-city slums that expand along with the economy. In many ways Tokyo's capacity to keep the millions of people moving through its commuter corridors without serious breakdowns is a remarkable accomplishment. The city's streets are clean and safe to walk at night. Tokyo has also jumped ahead of many other cities in its modernity. It has become a city where anyone can send a fax from a corner convenience store, where baths can be warmed by a telephone code, and where workers almost universally own cars and will soon travel across the nation by superfast, silent, electromagnetic trains in just a few hours. But in becoming a modern metropolis in perpetual motion, Tokyo is also becoming a habitat where land ownership is increasingly concentrated, where more and more people are renters of apartments of diminishing size, where fathers and their children meet only on Sundays, where neighborhoods h2ve lost their social fabric, and where offices have begun converting desks into nighttime sleeping capsules as a gesture of kindness to workers facing two-to-three hour one-way commuting times. In this milieu, association and communication even among family members are diminishing, and such trends as the demise of the public bath and the inability of government to construct new parks and other 112

"NEW" TOKYO STORY

amenities have led to the "collapse of meaning of public space" (Hashimoto 1989). With Tokyo expected to absorb more than half of the nation's total population growth between now and the year 2000, the new" Tokyo story chronicling the struggle for land, home, and community in a rapidly internationalizing economy is not a tale about a city but a tale about Japan's next generation. tt

NOTES

Acknowledgment: Grateful acknowledgment is made of the Center for Japanese Studies, the University of Hawaii, and the Japan Foundation for their support. Appreciation is also given to Kiyoko Nitz and Tsuyoshi Taira for their assistance in carrying out research for this study.

1. Tokyo had an estimated population of 150,000 in 1615 (RCJ 1957). 2. With 53 percent of all homes destroyed in 1945, approximately 1 million houses were constructed in Tokyo by 1956 (RCJ 1957, 28). 3. As elaborated by Friedmann (1988, 96), life space (which approximates the concept of place used in this chapter) at its most intimate scale encompasses "neighborly spaces," which are the "theaters of life." In the Japanese cultural context, it also expresses a continuity with land that "binds people to . . . the community which provides them with most of their most vital relationships. For the old Tokyo townsman, his land was quite literally the ground of his being. He was lost without it" (Popham 1985, 79). 4. One of the earliest associations between the transnationalization of capital and the formation of world cities was suggested by Hymer (1971), who spoke of "Level I" cities developing as "high-level strategic planning" centers for global capital accumulation. A decade later, Cohen (1981), Friedmann (1982), and Chase-Dunn (1984) elaborated the concept by giving similar stress to the spatial logic of the transnationalization of capital. Rimmer (1985), in discussing Tokyo as a chokokusai toshi (global city), noted that by 1975 approximately 15 percent of its employment was composed of high-level business activities and "transnational elite" occupations tied to transnational corporations. 5. In addition to accounting for more than two-thirds of the country's corporate executives, 85 percent of all employees in foreign banks, and 42 percent of the nati~n's wholesale trade, by 1980 Tokyo increased its share of bank deposits from one-quarter to one-third and bank loans from 35 and 46 percent of the nation's total; it also educated 40 percent of the nation's university students (NLA 1985; Hino 1984). 6. Prime Minister Tanaka's plan to "remodel the Japanese archipelago" was also a major stimulus to nationwide land speculation. Average land prices for the whole country soared 60 percent between 1973 and 1974, the highest jump since the recording of land prices to that time (TMG 1976). 113

Mike Douglass 7. Between 1963 and 1974, land owned by corporations increased 44 percent and individually owned property increased by 13 percent. Eighty percent of land held by corporations was in the hands of one-quarter of the total number of corporations. In the twenty-three wards of inner Tokyo, land owned by individuals decreased by 35 million square meters. Of the one hundred richest individuals identified in Japan in 1974, ninety-seven had made their riches from land speculation. Thirty of them were in Tokyo (TMG 1976; Popham 1985). 8. Figures for the 'United States and Europe indicated that land in a similar location could be purchased in less than one year on an average worker income (TMG 1976, 2). To buy an apartment in the suburbs of Tokyo in 1974 required wage workers to pay half of their income in mortgage payments for thirty-five years, and then only if they could avail themselves of the low-interest rates provided by the government-sponsored Housing Loan Corporation (TMG 1976). 9. A plan adopted in 1968 to create two public parks in Tokyo saw the price of the land to be purchased increase 5. 5 times by the time of implementation. In 1973, 90 percent of the cost of parks was for land acquisition (TMG 1976). In 1980 only 16 percent of roads in Japan were paved (compared to 50 to 96 percent in other OECD countries). 10. The reemergence of oligopolistic competition, had by 1984 resulted in five firms or fewer controlling from two-thirds to all of the Japanese domestic market in each of the following industries: crude steel, televisions, video eq~ipment, computers, typewriters, watches, industrial robots, motorcycles, cars, cosmetics, alcoholic beverages, shipbuilding, and telecommunications. Most of these products have also been Japan's principal exports. Japan's top nine trading houses (sogo shosha) together control 50 percent of all exports and 60 percent of all imports. Their sales in 1981 accounted for 31 percent of Japan's GNP (Douglass 1988). 11. Between 1981 and 1984 the net capital outflow from Japan totaled $90 billion (Takeo 1985). The $50 billion invested in a single year, 1984, was equal to the total cumulative value of Japanese direct foreign investment between 1969 and 1980. Of this amount $10 billion was in production-related direct investment. No other capital-exporting nation in the world was even close to this level at the time. By the end of 1985: Japanese corporations accounted fQr 147 of the Fortune top 500 non-U. S. firms. Seven Japanese corporations had moved into the ranks of the top 20 corporations in the world, and Japanese banks accounted for 5 of the 6 largest banks in the world. 12. By 1987 Japan had become the world's second largest stock and government bond market after New York. Eight of the twenty worldwide securities firms are headquartered in Tokyo (Vogel 1988). 13. With regard to the second point, the fact that 1982 is also the year in which the average floor space of newly constructed rental units began to fall for the first time since the 1950s is thus more than coincidental, for it coincides with a counter trend toward increasingly large offices in the metropolis to suggest that, unlike the 1970s, expansion of commercial property was taking place at the expense of housing.

114

"NEW" TOKYO STORY

14. Average office floor space increased from 1,700 square meters in 1980 to 2,300 square meters in 1985. 15. The entire project would require 8.4 billion cubic meters of landfill, of which only half could be dredged from the southern part of Tokyo Bay; the remainder would come from soil and rock from mountaintops in Chiba Prefecture. The predecessor for both the Cosmopolis Plan and the current New Tokyo 2025 Plan was the 1959 Neo-Tokyo Plan, which called for a landfill island of 200 million square meters in the bay (Samuels 1983, 172). 16. Osono (1988) notes that even the tallest of buildings in Shinjuku are no higher than thirty meters above ground, and most other urban infrastructure, including electricity and transportation networks, are also within a thirty-meter band. Fifty meters above ground thus represents a new frontier. 17. In the past few years many serious ground subsidence accidents in Japan have resulted from the collapse of quarries mined for construction materials. 18. Like such illegal workers in the United States and other high-income countries, they live below acceptable standards with ten or more workers sharing a tiny room without heat or running water. 19. The head of the Japan Electrical Construction Association has requested permission to bring in foreign electricians to work at construction sites in Japan. 20. Wages for workers in firms with fewer than thirty employees, which generally do not offer lifetime employment guarantees or pensions and which constitute more than half of the salaried labor force in Japan, are about half of those of workers in the large-scale "elite" corporations, where lifetime employment prevails (Douglass 1988). 21. In 1983 rent per square meter of floor space in the Tokyo metropolis was approximately twice the level of other regions in Japan, including Osaka and Nagoya (EPA 1988, 212). 22. This compares to 5.6 years' salary elsewhere in Japan and 3 years' salary in the United States. (The Tokyo house would have 60 percent less floor space than an average U.S. house.) 23. A comparison with other major world cities made by the Japanese Association of Real Estate Appraisal found that Tokyo land cost thirty times more than land in London, fifty times the cost in Sydney, and one-hundred times the cost in Los Angeles. 24. In response, Nippon Mortgage Company became the first to offer ninety-nineyear mortgage loans. In requiring several generations to payoff the mortgage, such new, extremely long term mortgages have slowed down the trend of newly married couples to move out of their parents' home. 25. This method was the one reportedly preferred by Taikichiro Mori, who personally owned more than forty high-rise central Tokyo buildings, including Ark Hills complex of offices and residential quarters (Popham 1985, 83). 26. For example, Richardson and Flanagan (1984, 166), in citing the quick response to the 1973 oil crisis, argue that the government is "unusually adept at targeting a problem, planning for future exigencies, and mobilizing mass energies for a concerted attack on it."

115

Mike Douglass

27. van Wolferen (1989, 25) writes that "the legislature does not legislate.... Laws are enforced only if they don't conflict too much with the interests of the powerful; and the Liberal Democratic Party . . . is not really a party and does not in fact rule." 28. The LOP has gerrymandered voting districts to keep its rural power base; a single rural vote is equivalent to as many as four urban votes. 29. Tabb (1988) notes that Tokyo is internationalizing in a one-way outward direction and remains highly resistant to participation in its economy from the outside. In 1985, for exarnple, it had 76 foreign branch banks compared to New York's 405.

REFERENCES Apter, David, and Nagayo Sawa. 1984. Against the State: Politics and Social Protest in Japan. Cambridge, Mass.: Harvard University Press. Bestor, Theodore. 1989. Neighborhood Tokyo. Stanford, Calif.: Stanford University Press. Chase-Dunn, Christopher. 1984. "Urbanization in the World-System: New Directions for Research." In Cities in Transformation: Class, Capital and the State, edited by M. P. Smith, pp. 111-20. Beverly Hills, Calif.: Sage. Cohen, R. B. 1981. "The New International Division of Labor, Multinational Corporations and Urban Hiearchy." In Urbanization and Urban Planning in Capitalist Society, edited by Michael Dear and A. J. Scott, pp. 287- 315. New York: Methuen. Dore, R. P. 1958. City Life in Japan: A Study of a Tokyo Ward. Berkeley: University of California Press. Douglass, Mike. 1988. "The Transnationalization of Urbanization in Japan." International Journal of Urban and Regional Research 12, no. 3 (September): 425-

54. Edgington, David W. 1989. "New Strategies for Technological Development in Japanese Cities and Regions." Department of Geography, University of British Columbia. Mimeo. EPA (Economic Planning Agency, Government of Japan). 1988. Economic Survey of Japan, 1987-1988. Tokyo. Friedmann, John. 1982. ('World City Formation." International Journal of Urban and Regional Research 6, no. 3 (September): 309-44. - - - . 1988. ((Life Space and Economic Space; Contradictions in Regional Planning." In Life Space and Economic Space: Essays in Third World Planning, pp. 93-108. New Brunswick, N. J.: Transaction Books. Gibney, Frank. 1985. Japan the Fragile Superpower. New York: Meridian. GOI (Government of Japan). 1986. White Paper on the Economy. Tokyo. Halliday, Jan. 1975. A Political History of Japanese Capitalism. New York: Monthly Review Press. Hanayama, Yuzuru. 1981. Gendai no tochi shinwa (Contemporary Land Myths). Tokyo: Asahi Shimbun.

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Hasegawa, Tokunoshin. 1988. Jutaku mondai (Housing Problem). Tokyo. Hashimoto, Kazutaka. 1989. t'Toshi Kazoku no Seikatsu yoshiki to 'Life Stage'-teki tokushitsu" (Life Style of the Urban Family). Toshi mondai (Urban Problem), February, 47-61. Hino, Masateru. 1984. "The Location of Head and Branch Offices of Large Enterprises in Japan." Sendai: Science Reports of Tohoku University, Geography Series 34, no. 2. Hiramoto, Kazuo. 1988. Tokyo: Kore kara do naru? (What Happens to Tokyo from Now On?). Tokyo: PHP Kenkyujo. - - . n.d. "Sekai ga kyoyu suru toshi, Tokyo e" (A Tokyo that the World Can Share). Tokyo. Honjo, Masahiko. 1978. "Trends in Development Planning in Japan." In Growth Pole Strategy and Regional Development Policy, edited by F. C. Lo and K. Salih, pp. 3-24. Oxford: Pergamon. Hymer, Stephen. 1971. "The Multinational Corporation and the Law of Uneven Development." Economics and World Order, edited by J. W. Bhawati, pp. 113-40. New York: Macmillan. Imamura, Anne. 1987. Urban Japanese Housewives. Honolulu: University of Hawaii Press. Ito, Tatsuo, and Masafumi Tanifuji. 1982. "The Role of Small and Intermediate Cities in National Development in Japan." In Small Cities and National Development, edited by O. P. Mathur, pp. 71-100. Nagoya: UNCRD. Japan Times. 1983. Japan in the Year 2000. Tokyo. JIL (Japan Institute of Labor). 1985. Japanese Working Life Profile. Tokyo. Kaneko, Hiromichi. 1987. "Land Development: Tokyo Bay in the Year 2050-A Midsummer Night's Dream." Look Japan, August, 7-9. Kiefer, Christie. 1976. "Leadership, Sociability, and Social Change in a WhiteCollar Danchi." In Social Change and Community Politics in Urban Japan, edited by James White and Frank Munger, pp. 15-30. Chapel Hill: University of North Carolina, Institute for Research in Social Sciences. Kuroda, Toshio. 1988. "Urbanization, Migration and Distribution of PopulationJapan's Experience." Population Research Institute, Nihon University, Tokyo. Mimeo. Lebra, Takie Sugiyama. 1984. Japanese Women; Constraints and Fulfillment. Honolulu: University of Hawaii Press. McKean, Margaret. 1976. "Citizens' Movements (shimin undo/jumin undo) in Urban and Rural Japan." In Social Change and Community Politics in Urban Japan, edited by James White and Frank Munger, pp. 61-100. Chapel Hill: University of North Carolina, Institute for Research in Social Sciences. - - - . 1981. Environmental Protest and Citizen Politics in Japan. Berkeley: University of California Press. Maeda, Akihito. 1988. "Chika koto, nani ga mondaika?" (Is There a Problem with the Rise in Land Prices?). In Toshi ni totte tochi to wa nanika? (What Is Land for in the City?), edited by Sachio Otani, pp. 11-62. Tokyo: Chikuma Library. MOC (Ministry of Construction). 1984. White Paper on Construction 1984. Tokyo. 117

Mike Douglass Morishima, Michio. 1982. Why Has Japan "Succeeded"? Western Technology and the Japanese Ethos. Cambridge: Cambridge University Press. Morris, Jonathan, ed. 1991. Japan and the Global Economy. London: Routledge. Motegi, Toshimitsu. 1987. "Tokai no fuman, chiho no fuan: Meiso suru seiken koso no kijiku 0 sagaru" (Urban Discontent and Local Uneasiness). Chuo koron (Public Debate), October~ 67-82. Murakami, Yausuke~ Shigenobu Kishimoto, and Ken~ichi Tominaga. 1980. "The Reality of the New Middle Class." Tokyo: Foreign Press Center. Narumi, Kunihiro. 1986. "Metropolitan Neighborhoods in Japan and the West: Nested Systems versus Axial Systems." SenTi Ethnological Studies, 59-75. NLA (National Land Agency). 1985. Capital Restructuring Plan (in Japanese). Tokyo: Government of Japan. Obara, Shigeo. 1987. "Chika koto, nani ga mondai ka?'~ (Is There a Problem with the Rise in Land Price?). In Kore kara junen odorokubeki Tokyo shinzushikiTokyo kara okiru keizai senso (Ten Years from Now-Economic Warfare in Japan Starts in Tokyo), edited by Shigeo Obara, pp. 11-62. Tokyo: Seishunsha. OECD (Organization for Economic Cooperation and Development). 1986. Urban Policies in Japan. Paris. Ohmae, Kenichi. 1988. "Japanese Rest Investments on Inflated Land." Honolulu Star-Bulletin, November 15. Okuda, Michihiro. 1987. '''Tokyo shuchu~ no toshi shakaigaku-teki bunmyaku" (The Urban Sociological Context of the 'Tokyo-directed~ Concentration). Toshi mondai (Urban Problem), March. Osono, Tomokazu. 1988. "Geofrontier Age Has Begun" (in Japanese). Will, September. Otani, Sachio. 1988. Toshi ni totte tochi to wa nanika (What Is Land for in the City?). Tokyo: Chikuma Library. Popham, Peter. 1985. Tokyo: The City at the End of the World. Tokyo: Kodansha. RCJ (Regional Conference in Japan). 1957. Geography of Tokyo and Its Planning. Tokyo: International Geographical Union. Richardson, Bradley, and Scott Flanagan. 1984. Politics in Japan. Boston: Little, Brown. Rimmer, Peter J. 1985. "Japan's World Cities: Tokyo, Osaka, Nagoya or Tokaido Megalopolis." Human Geography Department, Research School of Pacific Studies, ANU, Canberra. Mimeo. Sakaguchi, Koichi. 1987. "Tokyo shuchu to chiho jichi no kadai" (Concentration in Tokyo and Local Self-Governance). Toshi mondai (Urban Problem), September, 79-84. Samuels, Richard. 1983. The Politics of Regional Policy in Japan. Princeton, N.J.: Princeton University Press. Shukan Toyo Keizai. 1988. Gyoshubetsu kaigai shinshutsu kigyo (Direct Foreign Investment by Industry). Tokyo. Smith, Beverly. 1986. "Democracy Derailed: Citizens' Movements in Historical Perspective." In Democracy in Contemporary Japan, edited by Gavan McCormack and Yoshio Sugimoto, pp. 157-72. New York: M. E. Sharpe.

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Steven, Rob. 1983. Classes in Contemporary lapan. Cambridge: Cambridge University Press. Sugimoto, Yoshio. 1986. "The Manipulative Bases of 'Consensus' in Japan," In Democracy in Contemporary lapan, edited by Gavan McCormack and Yoshio Sugimoto, pp. 65-75. New York: M. E. Sharpe. Tabb, William K. 1988. "World Cities and the Urban Problematic: The Cases of New York and Tokyo. Contrasts in Comparable Agglomeration." Conference on Trends and Challenges of Urban Restructuring, Rio de Janeiro, September

26-30. Takahashi, Hisako. 1983. Kawariyuku fujin rodo: lakunen tanki mikongata kara chu-konen kikon-gate e (Changing Pattern of Female Labor: Younger Unmarried to Older Married Female Workers). Tokyo: Yuhikaku. Tatsuno, Sheridan. 1988. "Building the Japanese Technostate." In Creating the

Technopolis; Linking Technology Commercialization and Economic Development, edited by Raymond Smilor, George Kozmetsky, and David Gibson, pp. 3- 21. Cambridge, Mass.: Ballinger. Tawara, Soichiro. 1989. "Tochi no sokubaku kara no kaiho" (Deregulated Land). Bungei shunju, July, 272-91. TMG (Tokyo Metropolitan Government). 1976. Land in the Tokyo Metropolis in 1974; Aspect and Program. Tokyo. Tsuchiya, Takeo. 1985. "Research Project on Japanese Transnational Enterprises." Tokyo: AMPO. van Wolferen, Karel. 1989. The Enigma of lapanese Power. New York: Alfred A. Knopf. Vogel, David. 1988. "The Future of New York as a Financial Center: A Tale of Three Cities." Berkeley: University of California at Berkeley, School of Business Administration. Waley, Paul. 1984. Tokyo Now and Then. New York: Weatherhill. White, James W. 1976. "Social Change and Community Involvement in Metropolitan Japan." In Social Change and Community Politics in Urban Japan, edited by James W. White and Frank Munger, pp. 101-32. Durham: University of North Carolina, Institute for Research in Social Sciences. - - - . 1982. Migration in Metropolitan lapan. Berkeley: Center for Japanese Studies, University of California. Woronoff, Jon. 1985. lapan's Wasted Workers. Tokyo: Lotus Press. Yazaki, Takeo. 1968. Social Change and the City in lapan; from Earliest Times through the Industrial Revolution. Tokyo: Japan Publications.

119

5 Kanagawa JAPAN'S BRAIN CENTER MamOTU Obayashi

Kanagawa is in the Kanto region, south of central Tokyo. It is one of the prefectures forming greater Tokyo. The Kanto region first became important in the twelfth century. In 1192 a feudal government was established there by the Minamoto family. Its capital, called Kamakura, was located in Kanagawa. Later, in 1603, the Tokugawa dynasty established its capital in Edo, which became present-day Tokyo. Because Edorrokyo has been the capital of Japan since then, the Kanto region has been the center of Japanese economy, politics, and culture. Several historical events brought about significant changes in Kanagawa. In 1853, Commodore Matthew C. Perry's U.S. Navy squadron appeared in Edo Bay to mark the establishment of diplomatic ties between the United States and Japan. In 1854, the two countries signed the Treaty of Kanagawa in the port city Yokohama. Throughout the dynamic Meiji era, Western technology, culture, and even fashioI1s first arrived in Japan through Yokohama. World War II damaged almost all of Kanagawa. But when the Korean War created a large demand for supplies, the Keihin Industrial Zone (Tokyo-Yokohama area) and Kanagawa within it recovered faster than the rest of Japan. Between 1950 and 1965, when the Japanese economy performed the economic miracle, the Kanagawa region always surpassed the nation's overall growth rate. At present, Kanagawa is Japan's largest high-technology development center. Monitoring this area provides insight into the future of the Japanese economy. 120

KANAGAWA

THE PROFILE OF KANAGAWA'S ECONOMY

Oil price hikes in the 1970s damaged the Japanese economy severely. Furthermore, endaka (appreciation of the yen), which accelerated after the Plaza Currency Agreement among the major industrial powers in 1985, affected the export industries greatly. Pollution, oil price hikes, and endaka induced the industrial restructuring of the Japanese economy. Antipollution measures and energy-efficient technologies transformed leading basic industries into assembly and processing industries. Kanagawa survived the recurring restructuring of Japanese industry very smoothly. Once the center of production of basic industries, it restructured as a center of advanced assembly and processing industries. Today, it is perceived as an advanced high-technology industrial area. For example, Kanagawa is number one in the production of semiconductors and VCRs and number two in the production of digital computers (see Table 5.1). The area is now beginning to transform itself into the research and development center of Japan. Kanagawa's Governor Kazuji Nagasu proposed the "brain center" concept as part of a prefectural policy that aims to make Kanagawa the mecca of science and technology. It is important to note that Governor Nagasu proposed this idea in 1978, well before actual economic conditions forced the restructuring of Kanagawa's economy. Policy objectives eventually matched the needs of the private sector. The agglomeration of research, science, technology, and development centers accelerated after endaka. As a result, Kanagawa has more than six hundred research and development institutions (see Table 5.2). The prefecture represents a possible future Japanese economy driven by creativeness through research and development. This region's high-technology industry has a large agglomeration of successful small and medium-sized businesses,

TABLE

5.1

KANAGAWA'S PERCENTAGE OF ELECTRONICS PRODUCTION,

Semiconductors Digital computers Computer peripherals VCRs

1988

KANAGAWA/ JAPAN

JAPAN/

KANAGAWA/

WORLD

WORLD

16

40

7

35 25

17 30 82

6

13

Source: Shishido 1989.

121

7 11

Mamoru Obayashi TABLE

5.2

RESEARCH INSTITUTES IN KANAGAWA,

1988

YOKOHAMA AND KAWASAKI

Public institutes Universities (natural University institutes Private institutes

260

54 23 34 497

309

608

21 11 17

scienc~)

Total

KANAGAWA

Source: Shishido 1989.

which play an important role in the Japanese economy as carriers of flexible specialization. Kawasaki City, located between Tokyo and Yokohama, has been a core of the Keihin Industrial Zone. Industrial restructuring in the 1980s hit Kawasaki hard. Manufacturing companies moved their mass-production plants out of Kawasaki and Kanagawa. Two uses for this supply of vacated land have emerged: research and development and residential communities. Some analysts view increases in residential use as an indicator of the industrial "hollowing out" of Kawasaki and Kanagawa. Yokohama was the gateway through which Japan first opened up to the world. Kanagawa, or more precisely, the port of Yokohama, has kept its image as an international region, although the importance of the port has diminished because of industrial transformation and new transportation demands. In an age of light and compact value-added products distributed by jet planes, the economic situation of Yokohama and Kanagawa may eventually deteriorate because of poor access to an international airport. Kanagawa has almost the same diversity of industries as the national economy. It also has a rich stock of human capital. Better residential conditions and inexpensive housing relative to Tokyo have prompted able workers to move to Kanagawa, despite the concentration of core activities in Tokyo. As a bedroom suburb of Tokyo, Kanagawa attracts high-income earners. In the age of domestic demand-led growth, new products being developed to satisfy the needs of these consumers are expected to be accepted not only by Japanese consumers generally but by consumers in the rest of the world. Kanagawa is becoming a trendsetting place. Kanagawa's economy surpasses that of other regions of Japan, but it has its own problems-among them the concentration of some important economic activities in Tokyo. Kanagawa's lack of economic autonomy is a subject of concern. 122

KANAGAWA

THE RELATIVE ECONOMIC POSITION OF KANAGAWA

Kanagawa makes up the southern part of greater Tokyo; it·is so integrated into Tokyo's metropolitan functions (see Table 5.3) that to discuss it separately may be misleading. The income of the Tokyo metropolitan area accounts for about 30 percent of the income of the entire nation. But the labor force of the metropolitan area is about 25 percent of the national total. The difference between the shares of income and of population means that per capita income in the Tokyo metropolitan area is much higher than that of the rest of Japan (Kanagawa-ken 1988a). Concentration in the manufacturing sector is a distinctive characteristic of Kanagawa's economy; in particular, the machinery industry predominates. Also, firms with more than three-hundred employees are dominant. The machinery industry accounts for about 13 percent of Kanagawa's economy, which is about half of the machine industry in greater Tokyo. On the other hand, Kanagawa's share of the region's wholesale and service industries is small because Tokyo dominates in these sectors. TABLE

5.3

PERCENTAGE OF KANAGAWA'S POPULATION AND MANUFACTURING HELD BY MAJOR CITIES, 1965-85

YOKOHAMA

KAWASAKI

REST OF KANAGAWA

40.4 41.0 40.3

19.3 15.9 14.6

40.3 43.1 45.1

41.3 37.3 35.4

22.5 20.8 19.1

36.2 41.9 45.5

34.0 30.3 28.2

31.2 24.2 20.8

34.8 45.6 51.0

32.5 28.8 24.5

35.4 30.0 27.0

32.1 40.4 48.5

POPULATION

1965 1975 1985 MANUFACTURING FIRMS

1965 1975 1985 MANUFACTURING EMPLOYEES

1965 1975 1985 VALUE OF SHIPPED PRODUCTS

1965 1975 1985 Source: Ishikawa 1988.

123

Mamoru Obayashi

Kanagawa's percentages of retail sales and of advertising are also small because purchasing power leaks to Tokyo. Kanagawa's retail industry would be proportional to its population if the prefecture were autonomous. Kanagawa has a concentration of information service industries. However, they are related to the development and design of computer hardware and software. Manufacturing companies are the main clients for information services firms. In 1986 in Kanagawa, about 20 percent of information services orders originated from parent manufacturing companies. The national figure is only 3 percent. Thus the information service industry in Kanagawa is directly related to the manufacturing sector, often to parent companies headquartered in Tokyo. Kanagawa's research and development service industry focuses on the production function. Information provision and information research services, on the other hand, are still weak in Kanagawa. Kanagawa has a large residential population of commuters who work in Tokyo. The ratio of daytime population to nighttime population has steadily declined (Table 5.4). The daytime population would correspond to the number of jobs in local industries if Kanagawa were an autonomous region. In fact, net outflow of commuters from Kanagawa exceeds 570,000 workers. There is a 3 trillion yen difference between the income earned by commuters working in Tokyo and the income earned by locally employed residents. This means that Kanagawa's economy has two driving forces. One generates employment around locally based manufacturing, and the other generates industrial activities around consumption by residents who work in Tokyo. The relationship between residential and industrial functions of the region remains imbalanced. There is also an imbalance in distribution of administrative authority. Though Kanagawa has prefectural authority, the existence of two TABLE

5.4

RATIO OF DAYTIME TO NIGHTII~1E POPULATION, GREATER TOKYO, 1965-85

Tokyo Saitama Chiba Kanagawa

Yokohama Kawasaki

1965

1975

1985

1. 21 0.82 0.85 0.89 0.89 1.00

1. 41 0.76 0.78 0.85 0.82 0.95

1.53 0.77 0.76 0.84 0.81 0.90

Source: Ishikawa 1988. 124

KANAGAWA

specially designated cities, Kawasaki and Yokohama, makes it difficult to coordinate regional policies. The designated-city system tries to divide up the increasing administrative burden of the prefecture. The prefectural government is supposed to concentrate on the broader region and the city governments on specific areas. Three main operations are delegated to the city government-namely, social welfare, health and environment, and urban planning. However, in practice the delegation of responsibilities is not clear. The result is less than complete autonomy over delegated functions for the city governments. In addition, overlapping administrative work tends to cause inefficiencies at various stages of regional policy formation. Hence three administrations in Kanagawa share vaguely defined authority.

THE DIMENSIONS OF REGIONAL POLICY

Regional policy cannot neglect "the Tokyo problem"-a polarization of economic and other important activities between Tokyo and outlying areas. The Fourth Comprehensive National Development Plan proposed multipolar land use and development, but it still has the flavor of a specific-target development plan, one of the characteristics of Japanese industrial and location policy. As a policy issue, the relocation of factories to prevent pollution and overconcentration remains important. Reconstruction of the Japanese postwar economy started with the U. S. occupation. At that time, a centralized economic policy called the priority production method (Keisha Seisan Hosiki) was implemented. It was a policy that identified the crucial bottleneck of Japanese reconstruction as steel production. To promote the industry, it suggested intensive allocation of resources to the coal industry. The success of this policy foreshadowed the whole history of Japanese industrial policy. It was called targeting policy or target development policy. Industrial location was specified by the central government, and the resources were allocated to industries by policy or indicative planning methods. The problem is obvious. Even if the central government could pick the winner, the dynamics of the world economy force formerly targeted industries in formerly targeted locations to become obsolete. The policy had to include some kind of relief measures for these declining industries or locations. Hence, although macroeconomic industrial policy success was well documented, though sometimes exaggerated, for the region, the policy was not successful. In the 1970s it appeared that the regional economies of Japan would take the lead in the economic development of the nation. The 125

Mamoru Obayashi

urbanization problem seemed to have eased with the reversal in population movement to large cities. Gaps in income levels among regional economies and urban economies were closing. These trends were viewed as presaging an "age of the regional society," but they ended around 1980. Ando's hypothesis explains this phenomenon. Ando (1987) defines development as a sustained improvement of the quality of life in a region and growth as increases in quantitative production figures of a region. Ando characterizes the reversal phenomenon of the regional economy as "growth without development." He means that superficial growth is driven by sources external to the regional economy. The lack of an internal driving force has made the age of the regional society impossible. The phenomenon of "growth without development" resulted from the immaturity of Japanese industry, which still required cheap labor. Heavy industries relocated in order to acquire necessary infrastructure, such as land and water, and created demand for labor in their new locations. The agricultural sector and emerging women's labor offered a potential labor supply, and the relocation of industry proceeded successfully. During the rapid growth of the Japanese economy, fiscal policy was directed toward a wider regional economy for the purpose of easing urban concentration. The government's investment in regional economies exceeded its investment in urban areas in the 1970s and created jobs in related service activities in the region. Summing up these factors, the phenomenon of "growth without development" was supported by both cheap labor in the regions and fiscal stimulus from the central government to the regions. On the income side, these movements induced consumption-led regional economies supported by the transfer of government revenues. The relocation of concentrated industries was directed by national land policy. The process of industrialization along the Pacific Coast induced congestion and pollution. The government tried to relocate factories. However, relocation had to be justified in terms of cost minimization for firms. The coordination of local production operations by national headquarters made it possible to relocate factories and continue to operate in a world-wide competitive market. Since this new production system is monitored by the central office, the relocated factories have lost their regional roots. They also do not require skilled labor. The production system is organized like building blocks. Factories can be moved anywhere by calculating simple cost factors without considering regional characteristics. Paradoxically, in the private sector, the dependency of the regional 126

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economy on the central office in the urban area increased. Hence with successful industrialization the regional economy became more dependent and vulnerable to the "hollowing out" of industry. When consensus was reached about curing trade imbalances by adjusting the exchange rate in 1985, macroeconomic policy sacrificed regional economies by allowing the hollowing out of local industries, in particular in regions where external factors such as the building block production system were operating. In addition, the redistribution of funds ceased on account of the. budget deficit of the central government resulting from the oil crisis. Once these external stimuli were withdrawn, regional economies became depressed because dependent economies lack the internal driving force to sustain themselves. Endaka affected the Japanese economy fundamentally. It accelerated the process of transformation initiated by technological innovation. The revolution in information processing and telecommunications technologies made it possible to serve the sophisticated needs of consumers. Increased domestic demand, together with the increased purchasing power of Japanese consumers, created new opportunities for these technological innovations. Industrial restructuring in Japan is not without problems. There is a fear that decline of the manufacturing sector will hollow out Japanese industry. It is true that goods suitable for mass production are already produced by the newly industrialized economies (NIEs). Japan increased imports of these goods substantially. Whether declining manufacturing will weaken the Japanese industrial base is a difficult question because the long-term trend toward a service economy obscures the statistics. However, it is clear that regional economies dependent on building block factories are affected seriously by both foreign competition and increasing foreign direct investment by Japanese industries due to trade friction. Japanese firms involved in foreign direct investment are moving their factories from Japan abroad, and the effects may be devastating to the domestic regions. Given the high value of the yen, financial businesses and other information-based industries gained comparative advantage in Tokyo. The flow of resources toward Tokyo accelerated. Regional disparities increased. In order to rescue the regional economies, the Ministry of International Trade and Industry (MITI), supported by the Fourth Comprehensive National Development Plan, devised the Technopolis Plan. It is an idea based on American science parks such as Silicon Valley and Route 128. The problem is that the Japanese system of research and development activities made it difficult to emulate American examples. Most 127

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research and development activities in Japan are accomplished by the private sector and not by research universities, as in the United States. Also it is sometimes hard to separate production and research and development activities in Japanese firms. In most cases, Japanese firms try to place their research and development functions close to the central office-that is, in greater 'Tokyo. The Technopolis Plan, which assumed local universities and local research facilities as the driving force of regional economies, does not have much substance. In any case, the plan has many characteristics of the targeting policy that has repeatedly failed in regions and is destined to fail in the future. But this does not mean that the Japanese economy cannot make the technopolis materialize; it has already arrived in a quite different form.

THE NAYEDOKO FUNCTION

Manufacturing industries have moved mass production factories out of greater Tokyo. The main function of manufacturing in greater Tokyo has become customized production of many kinds of products in small quantities. Manufacturing industries have made greater Tokyo their research and development center (see Fig. 5.1). The concentration of manufacturing industry producing many kinds of products in small quantity serves both current customers' needs and pilot projects of research and development centers. The new products developed in the greater Tokyo area, if accepted by consumers, will be produced in regional mass-production factories. Kanagawa is leading the other parts of greater Tokyo in this kind of activity. These new activities stimulate related activities, including production, wholesale and retail sales, and other services. That is, the industrial network in Kanagawa works as a seedbed for new products, a seedbed for the development of the production process, and a seedbed for the development of related service activities. Activities originating in Kanagawa have forward-linkage and backward-linkage effects. Ishikawa called these effects the "nayedoko function." The production of rice in Japan starts from sprouting the seeds in a seedbed called nayedoko (naye means "seedling" and doko means l'bed"). The seedlings are planted in a field. The analogy is straightforward: the seeds of new products or new activities are planted and sprouted in Kanagawa. The successfully developed seedlings are then planted in the production fields-regional or even foreign mass-production plants. 128

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Research and Development Plants: Assembly and Processing Plants

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Research and Development Institutions: KSP and others FIGURE

Highly Specialized Small and Medium-Sized Firms: Pilot Production

5.1

CONCEPTUAL MAP OF GREATER TOKYO

These processes have usually been explained in terms of the development of an industry in a large urban area. But they have spread not only in urban areas but throughout the country and even throughout the world. Kanagawa and the Ota ward in Tokyo, which borders Kanagawa, contain a unique network of industrial organizations, a large concentration of highly specialized small and medium-sized machinery manufacturing firms. Traditionally, the highly specialized small and medium-sized companies in greater Tokyo have produced the pilot products for large corporations. In these industrial areas, the rate of start-ups continues to rise. The productivity of small companies exceeds that of larger ones. Most of these firms manufacture special or pilot products in small quantities. The small firms are often independently run by skilled craftsmen, and their technical level is very high. Larger firms are more likely to be subcontractors of large companies. These small and medium-sized firms take special orders from the research laboratories of large corporations and efficiently manufacture products that require high levels of expertise. Often, they fill orders in very short time. Although most of these companies are independent, they often form informal networks to handle orders. These links lead to the formation of an industrial organization that allows for efficient diffu129

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sion and transfer of technologies and information and production of different items in small volumes to fulfill the needs of producers and eventually consumers around the world. The networks fostering this new competitive dynamism promise the future prosperity of the Japanese economy. New seeds are nurtured in Kanagawa and are turned into seedlings or pilot models. Those that are successful are put into the field or mass-production plants, expanding the production base outside Kanagawa. Land prices and regulations have made it difficult to expand production capacity in greater Tokyo. Thus when new products are developed, Tokyo is not able to accommodate the entire production process. The solution to this problem has been to extend activities outside greater Tokyo. The electronics industry is rapidly expanding. For example, according to Ishikawa (1988), Toshiba has twenty-seven factories in Japan: twelve factories in Tokyo and Kanagawa, and five factories in Kawasaki, in addition to the main office and its research and development center. NEe has six branches in greater Tokyo, and all six branches have research and development functions. Production is done solely by twentythree production companies dispersed across the country. Fujitsu has twelve factories in Japan. It was founded in Kawasaki, where its research and development center is located. The production line extends beyond greater Tokyo. New products and their marketing create backward linkage demands for related industries. This repercussion effect is much broader than the examples presented here indicate, but let us look at the subcontractors of the three electronics companies mentioned above. About 40 percent of the subcontractors of the three major electronics companies are located in Tokyo and Kanagawa. Toshiba has 150 subcontractors out of its 406 in Tokyo and Kanagawa. NEe has 69 out of 154, and Fujitsu has 43 out of 124 there. Adding in the subcontractors located in Yokohama and Kawasaki increases the share in Kanagawa by another 7. 7 percent (see Table 5.5). New firms emerge by backward linkage through increases in the activities of parent companies. They are often subcontractors. Some of them, however, are independent from the beginning, and some of them become independent after successful operation. Nayedoko is important to understand because targeting policies like the Technopolis Plan often disregard the importance of the production network. If regions are to develop sufficiently, it is essential that they organize their own nayedoko function. It is therefore important for Kana-

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TABLE

5.5

SUBSIDIARIES OF MAJOR ELECTRONICS FIRMS

Toshiba NEG

Fujitsu

YOKOHAMA

KAWASAKI

KANAGAWAffOKYO

ALL JAPAN

12 4 2

16 6

150 69

13

43

406 154 124

Source: Ishikawa 1988.

gawa to develop a scheme to reproduce the nayedoko function so that Kanagawa and other regions can share in the nation's economic success.

KANAGAWA'S INDUSTRIAL POLICY

Kanagawa has been proposing comprehensive development plans since 1954. The first plan was called Kanagawa-ken Sogo Kaihatsu Keikaku (Kanagawa Comprehensive Development Plan), and it focused on the location of industries to support the development of postwar Kanagawa. The plan included disaster prevention measures. The second plan, called Comprehensive Plan for Land and Water Resources, was proposed in 1959. The first Kanagawa comprehensive plan did not take into account land and water resource problems, and these problems became crucial in the rapid development of Kanagawa's economy. The revised plan also indicated a vision of development for each region in Kanagawa. The third plan, proposed in 1965, was called Third Comprehensive Plan. It confronted urbanization and pollution issues. This plan assumed a population of Kanagawa of 6 million in 1975 and proposed a well-balanced development of the environment, welfare, and industry. In 1969, a revision of the Third Comprehensive Plan was presented. Although the original plan included policies for urbanization and the environment, these problems became so acute that a revision was required. The New Comprehensive Plan proposed in 1973 supposed 7. 3 million to be the appropriate population for Kanagawa. By restricting the inflow of population, the plan tried to preserve the environment, to enhance the general welfare, to raise educational and cultural standards, to foster well-balanced economic development, and to promote work in-

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centives. This policy had to be revised, however, on account of the first oil crisis. In 1978, the New Kanagawa Plan was proposed. It was a unique plan, because it promoted the participation of residents in policy formation. A total of 2,754 resident viewpoints were presented, and 1,574 of them were incorporated into the plan, according to the prefectural government. This plan consisted of three levels: basic concepts, a basic plan, and an implementation plan. The basic concepts are the vision of the future state of Kanagawa. The basic plan is the blueprint for which the prefectural government has responsibility. The implementation plan, besides carrying out the blueprint, is designed to review policies and take current problems into account. The review process also tries to maintain the continuity of policies. It was in this review process that the "brain center" concept was proposed as prefectural policy in Kanagawa. In 1987, the Second New Kanagawa Plan was proposed. When endaka hit the Japanese economy, it was feared that many export-oriented firms might weaken as they lost international competitiveness, though the economy showed good performance due to strong domestic demand. Kanagawa, however, was facing a hollowing out of regional industrial power. Due to many factors, such as energy problems, international competition, and maturing of existing industries, the industrial strength of Kanagawa was weakening even before endaka hit the Japanese economy. Manufacturing plants were retreating to other locations, including foreign countries. Mass-production plants in Kanagawa were restructuring as research and development plants. In this climate, Kanagawa intended to achieve new industrial strength by promoting "brain" rather than "manual" industries. National land policy tends to focus dichotomously on issues like the problem of greater Tokyo versus other regions. The basic aim behind these policies is well-balanced use of land. The solution is almost always breaking up the functions of greater Tokyo and allocating them to other regions. The Fourth Comprehensive Land Plan addressed several functions that should be diffused from greater Tokyo, including manufacturing, central government offices related to regional affairs, new cultural and research facilities, and some types of corporate offices. A potential conflict between national policy and Kanagawa's policy arises when national policy defines Kanagawa as a part of greater Tokyo. As discussed in the section on nayedoko, it is essential to retain Kanagawa's industrial bases and related functions in order to enhance the region's autonomy. It is also important because the successful development of regional plants depends on the nayedoko function. In particular, the national relocation policy for the manufacturing 132

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industry sometimes includes regulation of renewal investment in existing plants without providing for research and development firms. This policy inhibits the restructuring of existing manufacturing from mass-production to "brain" plants, which Kanagawa expects will induce the balanced use of land. Kanagawa's industrial policy is intended to promote private sector activities through technology intensification, exchange of technological information, appropriate location of industrial activities, and international economic exchange. As a main project, Kanagawa was committed to developing as a site for research and development firms, the incubation of new firms, and a communication network for technological information. The Second New Kanagawa Plan designated two high-tech zones inland. The eastern zone has Kanagawa Science Park (KSP). It is the first project approved by the Law to Promote Private Sector Participation in Public Projects, which is designed to expand domestic demand (Tanaka 1989). It is also a good example of the recent formulation process behind Kanagawa's industrial policy. The main driving force of Kanagawa's economy has been concentrated along the coast, and the distribution of industries within Kanagawa has been uneven. However, the relocation program and high land prices moved the manufacturing plants inward, making the industrial distribution more balanced. Kanagawa is customarily divided into six regions: the YokohamaKawasaki region, the Miura-Hanto region, the Ken'oh region, the Shonan region, the Kensei region, and the Tsukui region. The YokohamaKawasaki region, as the center of the Pacific Industrial Belt, traditionally leads Kanagawa's economy. Recently, there has been development inland, away from the coast, as congestion in Tokyo makes urban functions sprawl beyond the city: The Ken'oh region and Tokyo are connected by main roads and railroads laid radially from Tokyo. Ken'oh already has an agglomeration of processing and assembly industry and sites for research institutes; research and development firms and hightech industries are now developing. Route 246 crosses the YokohamaKawasaki and Ken'oh regions to Tokyo, and its similarity to Route 128 in Massachusetts is apparent There are recreational beaches in the Miura peninsula, which is convenient to Tokyo. This area, known for agriculture and fishery, supplies fresh food to greater Tokyo. There are also recreational beaches in the Shonan region. The Kansei region has hot spas and historical monuments. The Tsukui region is rich in natural resources. The climate in these regions is milder than in Tokyo. Some manufacturing functions have relocated to the inland zone133

Mamoru Obayashi

for example, to the Ken'oh region-including high-tech manufacturing, processing and assembly manufacturing, and research and development. These areas are thus expected to share the burden of Tokyo's metropolitan functions, especially the research activities, which were originally attached to central offices.

THE FORMULATION OF INDUSTRIAL POLICY

Officially, the prefectural assembly legislates industrial policy. However, it is the bureaucrats in prefectural governm~nt who write the acts-for example, the staff in the industrial policy division of the commerce and industry department of the Kanagawa prefectural government. To build a consensus for policy implementation, it is customary to form a committee consisting of experts in various fields. However, it is the nameless young prefectural government bureaucrats who formulate the policy. These bureaucrats select the policy objectives. They collect data and materials for the policy formulation. Then they analyze the issue. If they lack the expertise or resources, they ask a think tank to conduct research. They confer with members of their section and among the sections in the prefectural government to form a consensus at the prefectural level. Of course senior officials must approve the process, but the young prefectural government officials are essential to both the process and the policy. UntiI the late 1970s, no significant prefectural role was played in the formulation of industrial policy because the industrialized regions were at best indifferent to industrialization and were too busy to concern themselves with the location of firms and plants. Industrial policies were the domain of the central government. The importance of industrial policy at the prefectural level increased drastically after the oil crises. The restructuring of Japanese industry and rapid technological innovation made the prefectural government aware of industrial policy designed specifically for the region. Two governors who formulated industrial policy at the regional level became prominent. One is the governor of Kanagawa, Kazuji Nagasu, and the other is the governor of Oita, Morihiko Hiramatsu. Governor Nagasu proposed "the age of the regional society," which represented a society of autonomous and independent regions different from Japan's traditional centralized system centered in Tokyo. Governor Hiramatsu on the other hand promoted the idea of "one product for each village," recommending that each village or city produce a representative product. This would

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exemplify the realization of the age of the regional society. This idea became very popular not only within Japan but in the coastal region of China. The Chinese added this concept to their own development strategIes. Governor Nagasu is also known for the concept of the brain center. A professor of economics at the Yokohama National University, Governor Nagasu after his election asked that research be conducted on the characteristics of the Kanagawa Prefecture to aid in creating a policy agenda. The research concluded that the Kanagawa Prefecture was a center of manufacturing concentrating on goods-producing industries and lacking informational activities like research, software, and design; it would be essential to promote and build networks in the missing areas and then to link these activities to the goods-producing functions already in Kanagawa. Governor Nagasu, on the basis of the study's findings, organized a committee called the Kanagawa Industrial Problem Committee. At the same time, in 1978, he proposed making Kanagawa the brain center of Japan. His proposal emphasized research and development activities in Kanagawa and an industrial policy suitable to the coming information society. The research complex, KSP, in the city of Kawasaki is the result of this reasoning. A key role was also played by Kiyoshi Inoue, founder of Inoue Japax Co., Ltd. In Japan Inoue is unique as an engineer and an entrepreneur because he does not pay much attention to traditional Japanese business practices such as cooperation and consensus. He gained his reputation and success by founding an independent research laboratory during the initial stage of the recent boom in research laboratory construction. A medium-sized firm, it was perhaps the first independent research laboratory in Japan. Inoue's electric discharge manufacturing inventions have gained his laboratory an international reputation. His dream, apart from his own research interests, was to establish a small professional school for entrepreneurial engineers. At first, the idea was not popular. However, it enabled Inoue to become a member of several committees in Kanagawa. In the beginning his idea did not impress committee members. For example, Governor Nagasu, as a former professor of economics, did not believe the Japanese university system could produce engineers with creative minds. The situation changed drastically when several foreigners succeeded in an incubation scheme for high-tech industry. It added a practical side to Inoue's idea, which now could be realized without founding a school. It also fit Nagasu's idea of a brain center. The two ideas con-

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verged, and it became possible to establish the KSP. Although a ((science park," it is quite different from foreign examples because it does not directly depend on universities in the region.

KANAGAWA SCIENCE PARK: AN EXAMPLE

At an early stage of the KSP project, the need for public assistance, in particular financial assistance for emerging new firms, was discussed extensively. But because private banks were beginning to supply venture capital at that time, public financial assistance was not considered further. Discussions also focused on the lack of sites for emerging new firms and the need to supply various services to these firms; examples of manufacturing site development and the need to convey a future vision of Kanagawa's industry; and information creation and the need to organize different operations and research and development activities. One of the concepts proposed in the second new industrial plan (in 1983 and 1984) was a building project to house research and development firms at the start-up stage. The concept, which called for organizations from the United States and other countries to serve as incubators for small research and development businesses, was welcomed by a local networking group of firms called RADOC (research and developmentoriented companies). In July 1984, RADOC organized a conference of research and development-oriented companies in Kanagawa. In the conference communique, they asked the government to promote the research and development sites, the incubator building project, and a science park. In June 1985, Inoue Japax, Tobishima Construction, and seven other private firms proposed the Kanagawa Science Park to the prefectural government, the Kawasaki city government, and MIT!. The Kanagawa prefectural government and the Kawasaki city government endorsed the KSP project because it responded to the RADOC conference communique and the brain center concept. Kanagawa, Kawasaki, the Japan Development Bank, and twenty-three private firms established a research project to appraise the potential of the KSP concept. According to the research findings, KSP could meet the needs of emerging research and development firms and benefit other industries in the region. It would encourage the reorientation of Kanagawa's industries toward research and development and high-value-added industries and meet the need of local communities attempting to sustain environmental quality,

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KANAGAWA

because research and development firms are less polluting than heavy industry. In September 1987, a preparation committee for KSP Company was established,_and in December, MITI approved the KSP project as the first case under the Private Sector Vitality Act. KSP Company, Ltd. was established, with Governor Nagasu as president and Kiyoshi Inoue as vice president. A site was chosen about a thirty-minute ride by train from the central business district of Tokyo, and construction was begun in May 1987 and completed on July 25, 1989. KSP was built by the third-sector method, harnessing private vitality through the Law to Promote Private-Sector Participation in Public Projects. It was also design'ated a research core project by MIT!. KSP consists of three buildings, two of which, called innovation centers, have incubation functions. The third building, the research and development business park building, houses general research and development firms. The innovation centers house promising new small and mediumsized Kanagawa firms who pay about half the going rent. Five applicants were selected in the first attempt to incubate entrepreneurs, and then twenty additional firms were selected. The research and development business park building houses established firms from both Kanagawa and other regions. Thirty-eight tenants have been selected. Most are small or medium-sized firms, but a few, including Fuji Xerox, Dupont Japan, and Koito, are large firms. The occupancy rate is close to 90 percent, and about four thousand people will be housed. The total construction budget was 65 billion yen, that is, about $460 million. The Kanagawa prefectural government prepared three supporting schemes to assist the KSP project: a no-interest five-year loan of 1 billion yen, Kanagawa Kagaku Gijutsu Academy (Kanagawa Science and Technology Academy), and Kanagawa Kodo Gijutsu Sien Zaidan (Kanagawa High-Technology Supporting Foundation). The two institutes offer nonprofit support not only to KSP but also to Kanagawa's science and technology development.

THE BRAIN CENTER AND THE NEXT PLAN

The research and development functions of a firm include basic research, processing research, and product-planning research. Basic research is close to scientific research, whereas processing research requires production functions. The loop

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Mamoru Obayashi

starts with design and proceeds through pilot production to redesign. New products appear out of this loop. Hence the jnteraction between researchers, engineers, and skilled craftsmen is essential. Research and development is demanding, and it is almost impossible to maintain the required resources for it within a single firm. Product-planning research extends the interaction into the marketing department. Because the ultimate test of new products is market feedback, the marketing department is important. Four organizational divisions relate to research and development in a typical firm: research management, a research center, research and development in the factory, and external service. The management division, which supervises research and development, is most likely to be located in the central office in Tokyo. The more important research and development activities become, the more crucial management decisions are to the prospects of the firm. As a result, the management function may stay in Tokyo. On the other hand, the local agglomeration of research centers and research and development plants may proceed further to exploit the nayedoko function. In addition, external service firms, mainly information service industries such as the software industry, are emerging locally and enhancing Kanagawa's economic strength. Although the importance of basic research is acknowledged in Japan, the innovations or seeds were obtained from the research universities and institutes of the world. These institutions do not have to be located close to the firm. A good proof is the successful development of the Japanese economy through borrowed technology and information networks. In Japan, unlike the Silicon Valley in the United States, industrial activities did not stem from research universities or research institutes. The nayedoko function is the source of Japanese industrial vitality. If KSP fails to exploit the nayedoko function, it will become the next case for targeting policy. The nayedoko function is based on the agglomeration of diversified activities within and across industries. Diversity of size of firms is also important. The spatial agglomeration of varieties of production functions makes possible the emergence of new products, new factories, and new firms. If other regions want to accomplish autonomous development, transplanting the nayedoko function is important because agglomeration of research and development institutes in Kanagawa is not the cause of success for Kanagawa's economy; rather, it is the result of that success. A preliminary industrial plan was published by the prefectural government in December 1988 (Kanagawa-ken, 1988b). It supports the Second New Kanagawa Plan. The preliminary plan has four basic objec138

KANAGAWA

tives: development of the "Kanagawa Brain Area." creation of the "Kanagawa Habitation Area," building of the "Kanagawa Communication Area," and new development of regional industries. The first objective is the further development of the brain center concept. The second objective emphasizes residential amenities. The third objective tries to expand the information network of various communication technologies. The last objective aims at realizing the first three objectives by promoting an appropriate location for industries and constructing necessary social infrastructure. CONCLUSION

The rising value of the yen has forced Japanese industries to focus on new economic activities. The main focus is on an economy led by domestic demand. However, lack of natural resources makes Japan dependent on imports of raw materials; thus exports of value-added products remain vital. The brain center concept in Kanagawa is an agenda for a possible new start in the Japanese economy. Japanese firms compete severely to satisfy the world's most demanding consumers. New products accepted by these consumers will be welcomed internationally. To produce these products, new capital goods are required. Kanagawa has the capacity and the expertise to supply these capital goods. New products, factories, and job opportunities created in Kanagawa attract diverse other activities. Thus, the vitality of the Japanese economy sprouts from Kanagawa. Do negative factors mar this rosy picture of Kanagawa? The answer is yes. At this point, firms' investment in Kanagawa is rigidly regulated to ease economic concentration in greater Tokyo. It is almost impossible to increase the capacity of existing factories, even to transform them to research and development plants. This detracts not only from the nayedoko function of Kanagawa but also from the operation of factories outside Kanagawa, as we have seen. Despite the problems, the potential of Kanagawa relative to other parts of Japan is promising. Activities are driven by the internal forces of the private sector. The prefectural government and city governments are encouraging the restructuring. Acknowledgment: Discussions with Mr. Hisao Ishikawa were essential in writing the section on the nayedoko function. Any errors, however, are the author's responsibility.

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Ando, Seiichi. 1987. Chiho no keizaigaku (Regional Economics). Tokyo: Nihon Keizai Shinbun Sha. . Ishikawa, Hajime. 1988. Daitoshi sangyo no shinko hosaku kento chosa hokoku (Report on the Promotion of Urban Industries). Tokyo: Kokumin Keizai Kenkyu Kyoukai. Kanagawa-ken. 1988a. Aratana stage ni susumu Kanagawa keizai (Kanagawa Economic Report). Yokohama: Kanagawa Prefectural Government. - - - . 1988b. Kanagawa shin sangyo plan-soan (New Industrial Plan for Kanagawa-Preliminary). Yokohama: Kanagawa Prefectural Government. Sato, M. 1988. Keihin mega-technopolis no keisei (Keihin Mega-Technopolis). Tokyo: Nihon Hyoron Sha. Shishido, Takashi, edt 1989. Zuno toshi Kanagawa no kenkyukaihatsu senryaku (Technological Strategies for Center of Excellence). Yokohama: Kanagawa Keizai Kenkyujo. Tanaka, Naoki, edt 1989. Shin sangyokozo model sakutei chosa hokokusho (Report on Kanagawa's New Industrial Structure Model). Yokohama: Kanagawa Prefectural Government.

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6 Restructuring Urban-Industrial Links in G reater Tokyo SMALL PRODUCERS' RESPONSES TO CHANGING WORLD MARKETS Tadao Kiyonari

SMALL PRODUCERS IN URBAN INDUSTRIAL RESTRUCTURING

Responding to Market Changes The appreciation of the yen since September 1985 has accelerated the internationalization of the Japanese economy and greatly changed its internal structure. Business enterprises have quickly adapted to new situations brought about by the yen's high value. Companies of all sizes have staked their very survival on cultivating new demand and internationalizing their operations. These corporate initiatives in turn are changing the domestic economic structure. Today, the Japanese economy has entered a new stage of growth pulled by domestic demand. The expansion of the home market is commonly attributed to the strong yen and the government's fiscal policy. The strong yen, in particular, has helped reduce import prices, stabilized consumer prices, and boosted corporate profits. An especially significant outcome has been increased personal consumption. It has to be noted, however, that the realization of latent consumer demand has largely depended on private enterprise. An increase in real income levels pushed by the yen's appreciation did not automatically expand personal consumption. Corporate efforts have helped develop la141

Tadao Kiyonari

tent consumer demand in the domestic market and should not be overlooked. Developing an appropriate marketing strategy to satisfy Japanese consumers requires considerable effort. Export marketing is said to be easier. It is therefore no wonder that, when the yen was so weak that 1 dollar was worth more than 200 yen, Japanese manufacturers emphasized export of standardized mass-produced products and an ever-greater share of the world market. This pattern of corporate behavior was probably one of the factors that contributed to the eventual appreciation of the yen. Export-oriented industries responded to the appreciation of the yen in 1985 by reducing production costs. These reductions triggered an even sharper rise of the yen, however, and as a result corporations shifted priority from exports to the domestic market. Manufacturers began to cultivate new domestic demand and to create new products that could be sold in the domestic market. Today, even export-oriented companies must develop domestic product lines. Consumer needs have diversified, and unique products are in demand. Businesses are required to develop emotionally appealing and functionally superior services that help consumers realize a richer way of life. A wide range of factors can make life richer: housing, furniture, and household items for daily use, in addition to interesting leisure activities. Many companies now claim that they have better and more direct communications with consumers in the marketplace, particularly in big cities. For example, many industries now make full use of computer video displays as a marketing tactic. It is no exaggeration to say that companies and consumers are working together to develop a new life-style or a more sophisticated way of life in Japan. Companies of all sizes are restructuring to meet the new domestic demand. Never before have products diversified or companies changed lines of business as swiftly as today. A number of both mature and growing companies have moved in the direction of sharing managerial resources as business has expanded. Creative application of new technologies has helped diversify business and develop new products, and mergers and acquisitions have increased. Intercorporate relationships are increasingly organized into networks, not only locally but interregionally and internationally. Small businesses have also formed networks to upgrade their entrepreneurship. As a result, economic restructuring is rapidly progressing today in Japan. This chapter examines industrial reorganization among small producers in the regions surrounding greater Tokyo and discusses the

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emerging interregional spatial division of labor and its effects on the international division of labor.

The Case of the City of Tsubame The rapid appreciation of the yen has had a severe impact on all locally based industries. As demonstrated in their capacity to respond to repeated challenges since the so-called Nixon shock in 1971, small regional producers have once again successfully responded to world market changes caused by the strong yen. Export-oriented, small local industries had been cutting production costs to the limit in response to strong competition from exporters in newly industrializing economies (NIEs). They have hardly had room to cut production costs further to overcome the effects of the strong yen. Small industries relying on the domestic market have also been substantially affected by rapidly increasing imports from the NIEs and elsewhere. Local industries could not, therefore, respond to changes in the world market simply by developing any new product and cultivating new domestic demand. They had to develop higher-value-added products. They had to restructure themselves into gilt-edged industries that could be competitive even at relatively higher costs. Thus an international division of labor seems to have been created among small local industries and their competitors in NIEs. It has, of course, been observed that NIEs have already achieved remarkable development in a new breed of local industry. But that these industries in NIEs can outcompete small producers in Japan is questionable. At any rate, local industries in advanced countries needed to develop and market new products to cultivate consumers' latent demands. The history of locally based industries, it has been said, is one of innovation. Local traditional industries made innovation possible by using local human resources. Local industries that have kept renewing themselves over the past ten years or so have been able to cope with recent changes caused by the strong yen. Small producers in the city of Tsubame in Niigata Prefecture are a case in point. The city is well known as the center for flatware production. It accounted for 90 percent of the total value of Western-style flatware production in Japan in 1985. 1 Diverse innovations are today being realized in the city's processing subsector, and new products are being developed. Using accumulated local know-how about metal products, the city

143

Tadao Kiyonari

started producing Western-style tableware at the outbreak of World War I to meet a domestic shortage in imported metal tableware and to export to Western Europe, where metal tableware plants were turned over to war production (Kiyonari 1987). After experiencing production cutbacks in the Great Depression and World War II, the city recovered production through demand generated by the Occupation and the Korean War and from increased exports to the United States. Metal flatware industries developed remarkably in the postwar period, particularly through exports to the United States and the Middle East under the cost advantages of 360 yen to the dollar. However, since exporting was targeted at middle- and lower-level product lines, technology remained relatively low and stagnant until the mid-1970s (Kiyonari 1976). Then repeated import bans and voluntary restrictions imposed by the United States as well as currency changes beginning in 1971 forced the industry to upgrade its technology and products. Furthermore, flatware from the NIEs began to push Japanese metal flatware out of the major international markets. Japanese producers responded to the NIE challenge by automating the production process and thus lowering production costs. As a result, the value of Japanese flatware output has increased with minor annual fluctuations. It reached a peak of more than 40 billion yen in 1984, just before the yen rose sharply (see Table 6.1). In 1987, 128 metal flatware companies employed 4,610 workers. These companies formed the core of the Japan Western-Style Flatware TABLE

6.1

EXPORT OF FLATWARE, TSUBAME CITY, (IN MILLIONS OF YEN)

1978 1979 1980

1981 1982 1983 1984 1985 1986 1987 1988

1978-88

DOMESTIC MARKET

EXPORT

TOTAL OUTPUT

%OF TOTAL OUTPUT FOR EXPORT

8,426 9,426 9,703 9,453 9,396 9,997 9,825 10,230 10,779 10,363 10,677

20,902 20,634 29,692 30;327 24,718 27,416 31,942 27,584 20,211 16,830 16,636

29,328 29,702 39,395 39,780 34,114 37,413 41,767 37,814 30,990 27,193 27,313

71.3 69.5 75.4 76.2 72.5 73.3 76.5 72.9 65.2 61.9 60.9

Source: Japan Western-Style Flatware Cooperative.

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Cooperative in Tsubame. The cooperative consisted of 147 companies, of which 90 percent were located in the city. There were also about three thousand suppliers and subcontractors specialized in more than twenty production processes such as metal polishing, coating, and carvIng. In 1984 the export ratio of flatware made in Tsubame was 88.2 percent in volume and 76.5 percent in value, indicating that Tsubame's flatware had competitive power in the international market. In 1987, however, during the yen's sharp rise, the value of Tsubame's flatware fell to 27.2 billion yen, and its export ratio dropped to 62 percent. The strong yen had caused a 35 percent drop in total output. Tsubame's other major industry is metal housewares, mainly kitchen utensils such as pots, kettles, trays, and barbecuing tools. In 1957, the metal flatware industries founded the Japan Western-Style Flatware Export Trade Association to respond to trade frictions with the United States as the result of a sudden massive export of flatware. This trade association controlled exports and imposed voluntary restrictions on its member companies, but exports to the United States did not decline. Then the United States applied a trade tax of 50 percent to imported products. The trade association responded by imposing a priority allocation to producers with at least two years' experience in the industry. Producers who did not meet the trade association's requirements and those who wanted more than the allotted amount developed new products and changed to new business fields. In this way the metal housewares industry was born and started production in the 1960s. It established its own guild, the Japan Kitchen Tool Cooperative, now called the Japan Metal Housewares Cooperative, in 1964. This cooperative had eighty-six member companies, of which sixtyeight were located in Tsubame in 1987. The companies employed a total work force of 4,300. There were also about 1,300 suppliers and subcontractors, most of whom, while being engaged in specialized production processes were family producers and often part-time farmers. The annual output of housewares had grown throughout the shocks of the dollar's depreciation in 1971 and the oil crises in 1973 and 1978. But as metal housewares from Taiwan and South Korea started to dominate the international market with their cost advantages, annual output began to decline after reaching a peak of 42.7 billion yen in 1980. In 1987 it fell as low as 29.7 billion yen. The export ratio of metal housewares, which were made primarily for domestic consumption, also dropped from the previous level of more than 30 percent to about 20 percent in 1987. Even in the early 1980s, South Korean products occupied 52 percent of the U.S. market, while Japanese products stood at 12 percent. 145

Tadao Kiyonari

The appreciation of the yen completely wiped out the cost advantage of Japanese metal housewares, which were targeted at middle and lower niches in the market. More recently, manufacturers in Tsubame have diversified to new lines of business beyond tableware and housewares. Using both accumulated production know-how and equipment, they have moved into new industrial fields mainly responding to domestic demand. They have tried to make Tsubame the center for processing metal products. 2 A number of companies strongly oriented toward developing new products have emerged in the city. These companies include Twin Bird Industries, which has developed a wide range of lighting and outdoor equipment. The company slogan is "new products for new joy in living." Others include Tsubame Electrical Machinery Works, whose bath-water purifier has attracted considerable consumer interest; Fuji Tableware, which has developed a pot that "speaks"; and Nippon Tsusho, a manufacturer of kitchenware that has also developed a canned gruel made from Koshihikari, a brand-name rice. These companies stimulate the local economy of Tsubame while providing a new entrepreneurial climate. The annual output in this new metal-processing sector amounted to 10 billion yen in 1985 and 35 billion yen in 1987. A remarkable growth was registered when the yen rapidly appreciated. As a result, the total output of manufacturing industries in Tsubame amounted to about 200 billion yen and unemployment was negligible. The population of Tsubame rose slightly in 1988 (see Table 6.2), and total taxable private income and number of taxpayers also increased (Table 6. 3).

TABLE

6.2

POPULATION OF TSUBAME CITY, 1981-88

POPULATION

1981 1982 1983 1984 1985 1986 1987 1988

44,383 44,345 44,370 44,596 44,651 44,442 44,429 44,826

Source: Tsubame City, Tsubame City Survey.

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6.3

TAXPAYERS AND TAXABLE PRIVATE INCOME, TSUBAME CITY, 1981-86

1981 1982 1983 1984 1985 1986

PRIVATE INCOME (x I BILLION YEN)

TAXPAYERS

32.3 34.6 36.0 38.1 38.9 39.0

18,606 19,340 18,929 19,354 19,470 19,533

Source: Tsubame City, Tsubame City Survey.

The city established the Tsubame New Industry Promotion Development Center with cooperatives in the private sector in 1985 to facilitate conversion to new business fields and exchange of ideas and information among different kinds of industries and to attract new industries to the city (Kiyonari 1986). Problems that need to be solved as companies' priorities are shifted to domestic demand include the indispensable development of new products and a change in marketing channels to develop customers. Great risks are involved in shifting from export to domestic production, and a long lead time is needed before a newly developed product can be marketed. Crucial to success are human and financial resources.

Bankruptcies and Closures The intraregion division of labor is changing in the manufacturing sector. The traditional division, based primarily on reduction of production cost, has been replaced by one that aims at faster production of better goods. Accordingly, regional specialization and international sharing of specialized fields with the NIEs are occurring. Under these circumstances, companies lacking adaptability do not survive. The number of companies temporarily suspending production grew gradually, amounting to 10.7 percent of all members of local manufacturers' associations at the end of September 1987. Between early 1986 and the end of September 1987,790 companies went out of business. Bankruptcies, however, were relatively few: 96. Although many companies closed, few went bankrupt. Furthermore, innovations and

147

Tadao Kiyonari

business changes went on constantly. Thus, drastic changes are occurring within local industries. Coincidentally, many companies resorted to offshore production as a way of survival. Desubcontracting Trends

The strong yen dealt a heavy blow to small subcontracting businesses in export-dependent machinery manufacturing. Parent companies demanded cost reductions. But it turned out that minor cost reductions were no longer sufficient to cope with the rapid and tremendous appreciation of the yen. Many small subcontracting companies have attempted to reduce costs through value-engineering activities. They have tried to improve their products, parts, equipment, jigs, tools, processes, and work procedures by analyzing production functions, measuring the costs of these functions, and raising their values. To overcome pressures from the tremendously strengthened yen, the parent and its several subcontractors integrated their value-engineering activities. Such joint efforts often led to a substantial cost reduction. Nonetheless cost reduction turned out to increase further the value of the yen. Large corporations soon began to reorganize according to medium- to long-term perspectives. The ratio of corporate major product to corporate total sales declined from an average of 86.8 percent in 1979 to 80.2 percent in 1986, indicating that business diversification was in progress (see Table 6.4). When subsidiaries are included, the ratio was only 62.1 percent. Small subcontractors diversified their products more drastically and quickly than did their parent companies and played a leading role in their parent companies' diversification. The average number of subsidiaries per parent company was 26. 3, and their contribution to overall sales was as high as 31. 4 percent. Moreover, the proportion of non-main-line sales of both parent and subsidiaries was already more than 50 percent in precision machinery, textile, and nonferrous metal industries. The corresponding proportion in general machinery was more than 40 percent. Diversification of large corporations into new sectors loosened their ties with traditional subcontractors and pushed them to look for subcontracting work in the new sectors. Losing their original functions, associations of subcontractors for large corporations have increasingly disbanded. Thus, business ties in group companies have undergone a considerable liberalization. As subcontractors turn out products of their own, they move away from subcontracting status. This trend has developed through the se148

"'"-

\Q

4;..

TABLE

6.4

76.1

80.2

83.4

Average

59.3

76.6 40.2 47.4 74.5 69.5 65.6 58.5 64.2 61.8 47.4 71.9 58.9 59.2 65.6 32.0 55.1

26.3

24.3 36.8 3.5 16.4 22.4 30.6 31.3 24.2 24.3 28.2 9.3 16.3 70.3 61.7 13.0 7.4

AVERAGE NO. OF SUBSIDIARIES

1979-86

Source: Tokyo Fair Trade Commission, On the Actual Situation of Restructuring (Tokyo, February 1988).

97.0 57.1 68.8 92.5 88.3 84.6 88.5 71.4 78.6 60.8 90.0 73.1 83.6 79.0 37.6 67.4

96.8 60.3 72.8 93.0 100.0 88.7 89.6 76.4 81.8 67.7 90.9 77.9 95.3 77.0 45.1 69.7

96.1 66.3 86.1 86.1 99.9 88.4 90.0 75.6 85.8 89.1 91.5 75.9 93.3 79.4 59.1 71.0

Food Lumber/wood Pulp/paper Publishing/printing Chemical Oil/coal Rubber Ceramics/stone Iron and steel Nonferrous metal Metal General machinery Electrical machinery Transport machinery Precision machinery Other

1986

1986

1984

1979

SECTOR

SUBSIDIARIES INCLUDED

SUBSIDIARIES EXCLUDED

RATIO OF MAIN LINE PRODUCTS TO TOTAL SALES VALUE,

31.4

32.0 42.9 18.8 31.6 31.4 35.9 37.7 25.9 25.1 38.9 28.1 27.0 49.2 21.5 35.9 20.1

RATIO OF SUBSIDIARIES

Tadao Kiyonari

quential phases of component processing, component production, functional component production, production of finished items on an original equipment manufacturing basis, and finally production of finished goods with their own brand labels. In other words, subcontractors reorient themselves to domestic demand by developing their own products. Subcontractors expand the scope of their businesses by supporting other corporations that want to enter new fields. A subcontractor can offer its sophisticated technology in order to win orders from these corporations or it can cooperate in the development of new products. Furthermore, subcontractors can engage in a multisectoral development of highly specialized technology. For example, a subcontractor can lend its own technology of ultra-high-precision processing to several industries and seek orders from them. The higher the subcontractor's technological standards, the more widely it can expand its business. This kind of specialization in processing technology is another way of departing from the status of subcontractor. Intercorporate relations now take the shape of networks. Like big corporations and their subcontractors, specialized companies are linked together in new combinations. In fact, organizers bring subcontracting firms together across established vertical links. Strategic alliances are formed among small businesses and between big and small businesses.

Interregional Spatial Division of Labor Intercorporate relations develop interregionally and internationally. Productive functions in assembling industries have been decentralized from the Keihin (Tokyo-Yokohama) industrial belt to the greater Tokyo metropolitan region of northern Kanto, Koshinetsu, and Tohoku regions (Kiyonari 1988a). The increased importance of research and development since the mid-1970s is reflected in mushrooming research institutes, many of which are located within a 50-kilometer radius of Tokyo-that is, at arm's length from corporate headquarters in Tokyo. Productive functions linked with research institutes are scattered along express highways radiating from Tokyo. Both big and small manufacturers set up plants along the Tohoku, Kanetsu, and Chuo expressways as the land value rose in the Keihin area. Not surprisingly, the number of small producers has grown in these regions. The surrounding regions within a 300-kilometer radius from Tokyo have become a sphere of Tokyo-based productive activities-a vast spatial linkage of industries. Small producers in northern Kanto and Nagano Prefecture in particular do not just receive orders from companies in the Keihin area but have at the same time developed inter150

RESTRUCTURING URBAN-INDUSTRIAL LINKS

regional industrial links. The infrastructure for the interregional spatial division of labor consists of such services as information and high-speed transit and transportation systems (especially door-to-door parcel delivery). International specialization has grown for both parts and finished goods among small regional producers in Japan and producers in NIEs as purchasing parts from overseas and overseas direct investment have increased. Changes due to interregional and international specialization are taking place in the division of labor within the Keihin area. Companies that excel in software functions play an increasingly important role in the region. Plants of small subcontracting companies are closing, although bankruptcies are relatively rare. This tendency is particularly conspicuous in the Keihin area, where land prices are sky high. Subcontractors lacking software capacity tend to close well before they run into a real crisis. The ability to develop, design, and improve software has become vitally important. New businesses rely on such ability.

New Manufacturing New types of manufacturing industries have emerged in response to the strong yen, as seen earlier. Sophisticated manufacturing industries develop today against the background of an affluent society. They make up particular sectors in which advanced nations enjoy a relative advantage and emerge despite the hollowing out of some traditional industrial sectors. Their characteristic features can be summarized as follows: creative production of high-value-added products; customer orientation in offering highly functional and emotionally appealing products; manufacture of a wide variety of products in small quantities by small and medium-sized companies; flexible production with high adaptability to changing circumstances; greater interest in profits than in market share; strong orientation toward customer service, especially in software aspects. This new breed of manufacturing firm is emerging in every industry.

INTERNATIONAL DIVISION OF LABOR: GLOBAL-LocAL LINKS

Responses to Global Market Changes The appreciation of the yen has induced every industry to switch to a new pattern that is neither solely export oriented nor solely import oriented. An industry following the new pattern typically exports economy models, locally produces me151

Tadao Kiyonari

dium- to high-class goods, and imports some luxury items. Accordingly, what can be successfully located in Japan today are new types of industry producing high-value-added products. These industries remain competitive because they have overcome the effects of the strong yen. And they are likely to cultivate domestic demand and to begin exporting again. Goods that meet Japanese consumer standards may find a large market in other advanced countries. These high-value goods will not be exported quickly. Accordingly, they will not lead Japan into trade friction with other nations. Among the new breed of producers are independent small entrepreneurs, small divisions within large corporations, and subsidiaries of big corporations (see Table 6.4). Independent smaller companies and small units of big corporations vie with each other. The strength of independent small companies seems to rest in their energetic entrepreneurship.

Globalization of Small and Medium-Sized Companies Japanese industries remain internationally competitive, and Japan continues to maintain a considerable trade surplus. It has not been able to reduce its trade imbalance with other nations. The yen's continued appreciation has translated into rising costs in Japan's global market around the manufacturing sector. In 1987, Japan had the largest per capita GOP among the seven industrial nations. If Japan's figure were 100, the corresponding figure in 1988 for West Germany would be 94, for the United States 93, for France 81, for Italy 67, and for Britain only 60. These differences indicate the rapidly rising costs of Japanese manufacturing. American manufacturing has strengthened its price competitiveness since 1985, when the dollar started to devalue. This has manifested itself in declining labor costs. Denominated in the dollar and with 1980 set at 100, per unit labor costs of the United States stood at 109 in 1985. This was higher than Japan's 98 and West Germany's 69. In 1987, the figure for the United States was 106, much smaller than Japan's 159 or West Germany's 116. About 80 percent of the decline in labor costs in the United States is accounted for by the decrease in the dollar's value. Against this backdrop of increasing labor costs, Japan has come to accommodate only high-value-added industries. Large corporations as well as small and medium companies have been forced to be creative and to produce highvalue-added products in order to survive competition in the global market. The yen appreciation and the subsequent rise in labor costs have escalated the liberalization of the Japanese economy. On one hand, im152

RESTRUCTURING URBAN-INDUSTRIAL LINKS

ports increased sharply, and on the other, overseas direct investment grew rapidly. In the area of imports, large corporations design and develop new products in Japan and produce them in Asian NIEs or in member countries of the Association of Southeast Asian Nations (ASEAN). These products produced outside Japan are brought back to Japan and sold by retailers. This "develop-and-import scheme" has drastically increased the number of set-up operations overseas and is widely used in the auto and electronics parts sector. This investment pattern has also been implemented to alleviate trade frictions. Consequently, the Japanese economy is undergoing rapid globalization. In summary, stronger Japanese currency meant higher costs for Japanese companies, which increased their reliance on high-value-added industries to protect themselves from rising costs. Japanese firms have taken several steps to deal with this situation, including: development of new products; cost reduction, including rationalization and promotion of an international division of labor, which can be broken down into overseas direct investment and develop-and-import schemes; and finally, conversion and diversification.

Case Studies Twin Bird Kogyo is a plating company established in 1951 in Tsubame. It began manufacturing and selling housewares in 1963. After a period of rather steady expansion, the company recorded a sharp growth after 1985. In 1988, its sales reached nearly 12.7 billion yen. It currently employs 370 workers. A breakdown of the 1988 sales showed that 33 percent were in electric ware, 18 percent in outdoor equipment, 16 percent in timepieces and indoor equipment, 13 percent in light fixtures, 8 percent in kitchenware, and 12 percent in other items. Domestic sales were 11.6 billion yen, while exports amounted to 1. 1 billion yen, or 8. 7 percent of sales. The company recorded 50 percent of its turnover from exports prior to 1985. It has since shifted to a domestic market focus and has experienced remarkable growth. The company emphasizes product development and an internationalization strategy. It produces a diversified range of household furnishings, targeting the young with the slogan "products for living well." It has developed almost two-hundred successful items each year. Its products are primarily compact and convenient to use. Colors and designs are given much attention. The company undertook a tie-in with a Taiwanese company in 1986. Parts and some finished products are manufactured in Taiwan and TWIN BIRD KOGYO IN TSUBAME.

153

Tadao Kiyonari

exported to Japan under the develop-and-import method. The company has benefited from the strong yen because the more the yen appreciated against the dollar, the more costs could be reduced. It also transferred quality-control expertise to Taiwan, thereby omitting the inspection procedure for imported products. A new computerized production management system, called Twinbird Total Control System, directly links production, marketing, and sales. This company was established in 1918 to manufacture and sell silk thread. After World War II, demand for silk thread declined. Then the company began manufacturing precisionmotors for audio equipment in 1960. Ten years later, it developed a background music player and began marketing it. Then came the production of up-market tape decks in 1972. In the following year, it began technical assistance to a Korean company, Seishin, for the production of small precision motors. The company began producing in Los Angeles in 1982, in Hong Kong in 1986, and in Thailand in 1987. It also began providing technical assistance in spinning silk thread to India's Spun ·Silk India Company in 1984. This company's emphasized product changed in response to changes in domestic industrial structure and world markets. Its turnover has grown rapidly since 1983. Although there was a momentary setback in 1986 because of the appreciation of the yen, the company recorded a record-breaking revenue of 28 billion yen in 1988. Shinano Kenshin is currently well known as a specialist in precision motors for office automation equipment and has many loyal clients. Hong Kong is the company's Asian production base for motors. The company has also implemented rigorous rationalization measures in the area of silk thread spinning. It has established an integrated production system that begins with the processing of basic materials and ends with finished products. It also transferred silk thread-spinning technology to Thailand to create a production base there. The silk thread is exported to Italy, Switzerland, West Germany, Britain, the United States, and other places. Shinano Kenshin keeps development and production of highvalue-added goods and high-value-applied products in Nagano Prefecture, where its headquarters and major plants are located. Its Los Angeles office has functions in marketing and sales, and gathers information on the latest products and market demands. Its home and international operations together form a streamlined organization.

THE SHINANO KENSIN COMPANY.

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Conclusion

Japanese companies are building up an international division of labor centering on Asia, which has two aspects. One is a vertical division of labor according to different grades of finished products. Japan imports low-priced goods from Korea and exports high-priced items to Korea. Japan's imports include goods shipped to Japan under the develop-and-import scheme as well as those sent by Japanese companies overseas. The other is a horizontal division of labor whereby different countries produce different parts that are assembled into a final product. The horizontal division of labor is well represented by Nissan, which has created an international division of labor among Asian countries with different technological capabilities and development levels. With Asia now regarded as one of the major production bases in the world, other auto makers and even electronics makers are following suit. Smaller firms have also begun to create an international division of labor but on a much smaller scale and are actively moving into overseas markets. In a 1985 survey by the Small and Medium-Sized Enterprises Agency, 56 percent of smaller firms answered that their overseas operations were successful or somewhat successful. As globalization of the Japanese economy continues, small and medium-sized firms face remarkable changes. They are forced to move into new sectors for survival. Although risks are involved in entering new areas, attempts thus far appear to have been rewarding (Small and Medium-Sized Enterprises Agency, 1988).

NOTES 1. Western-style flatware includes spoons, knives, and forks. The city produced Japanese metal stakes until the beginning of the Meiji era. The technology used to produce metal stakes has since been extended to the production of smoke pipes and metal instruments. 2. Business diversification in Tsubame has included the manufacture of: car handles, carved steel mirrors, steel thermostats, golf equipment, aluminum draft-beer containers, aluminum traffic signs, aluminum auto parts, steel auto parts (moldings, exhaust pipes), steel medical equipment, steel construction parts, steel water-pump parts, steel arm supporters for bullet trains.

155

Tadao Kiyonari REFERENCES

Kiyonari, Tadao. 1976. Gendai chushyo kigyo no shintenkai (New Development of Contemporary Small and Medium-Sized Enterprises). Tokyo. - - - . 1986. Chiho no jidai no keizaigaku (Economics in the Era of the Region). Tokyo. - - - . 1987. "Endaka de yureru jiba sangyo" (Yen Shock and Local Industries in Crisis). Kokumin kinyu koko chosa kiho. - - - . 1988a. "Kumitate sangyo ni okeru sangyo soshiki no henka" (Changing Industrial Organization: The Case of Assembly Industries). Kokumin kinyu koko chosa kiho, no. 5. - - - . 1988b. "Kumitate sangyo ni okeru ricchi no henka" (Location Changes in Assembly Industries). Chiiki kaihatsu, no. 3. Ministry of International Trade and Industry (MITI), Small and Medium-Sized Enterprises Agency. 1988. Seizogyo keiei jittai chosa (A Survey of the Management of Manufacturing Industries). Tokyo.

156

Part III

GLOBAL-LOCAL LINKS

7 Nagoya THE CORE OF JAPAN'S GLOBAL MANUFACTURING INDUSTRIES Yasuo Miyakawa

The Nagoya metropolis is Japan's leading industrial area with about 10 percent of the nation's manufacturing output. Nagoya's remarkable industrial development is the result of outstanding growth in the local automobile industry, promoted mainly by Toyota Motor and Mitsubishi Motor. Its economic growth has also been accelerated by the redevelopment of the aerospace industry, led by Mitsubishi Heavy Industries. The agglomeration economy generated by Nagoya's modern auto and aerospace industries also includes new research and development institutes. The Japan Fine Ceramics Center established in 1987 symbolizes Japan's new industrial revolution. This research center has close links with traditional ceramic-producing areas-Toono, Seto, Tokoname, and Yokkaichi-situated around the central city of Nagoya. Japan's traditional artisans improved upon technologies imported originally from Korea and China. Nagoya's traditional industries also include textiles and wood processing in the northwestern and cotton production in the southeastern metropolitan area, even some gara-bo (Japan's original spinning industry, which produces coarse yarn from discarded clothes). The transfer of technologies that made possible Japan's industrial growth came in three international waves, the first from Asia (India, China, and Korea), the second from Europe (Portugal, Spain, Holland, England, France, and Germany), and the third from the United States and the Soviet Union. In the Nagoya metropolitan area, each wave came at a discernible moment in the region's industrial development. 159

Yasuo Miyakawa THE INDUSTRIAL

Locus

OF THE NAGOYA METROPOLITAN AREA

Japan's three largest metropolitan areas are situated in the center of large plains on large bays. Tokyo is at the head of Tokyo Bay and in the center of the Kanto Plain. Osaka is at the head of Osaka Bay and in the center of the Osaka Plain. Nagoya is at the head of Ise Bay and in the center of the Nobi Plain. These three main bays have old and important international ports: Yokohama on Tokyo Bay, Kobe on Osaka Bay, and Yokkaichi on Ise Bay. Each port is on the western side of the bay. On the eastern side of each bay are large modern industrial complexes: Tokyo's Keiyo coastal industrial complex, Osaka's Sakai-Senppoku coastal industrial complex, and Nagoya's southern coastal industrial complex. After the oil crisis in the early 1970s, new investment favored these eastern areas as loci for the restructuring of the national economy and the growth of international business. New investments included Makuhari Messe (a huge convention hall), Kansai New International Airport (under construction), and Chubu World Airport (in planning). The restructuring of older industrial complexes on the western side of each bay is still in progress, including the Yokohama Minato Mirai project (literally, Yokohama Port Future project), the Kobe New Port Town project, and the Yokkaichi Phoenix plan. Inland in each metropolitan area are academic towns: Tsukuba Academic Town, developed by the government; the Kansai Research and Cultural Town integrating academic institutions in Osaka, Kyoto, and Nara; and the Chubu Academic Town for International Collaboration. These towns are expected to serve as industrial incubators for information-based economic activity. Tokyo was probably the largest city in the world in the early eighteenth century and has been the center of Japan's national administration since Ieyasu Tokugawa established the shogunate at Edo in 1603. Osaka was the administrative center of the earlier political system (15831603) and has been one of the most important trade centers since Osaka Castle was established by General Hideyoshi Toyotomi. Nagoya was developed as a castle town after 1611 by the Tokugawa shogunate (16031868) in order to defend Edo against political opponents in Osaka and Kyoto (1794-1868). Nagoya had 2,116,000 residents in 1985, ranking fourth among Japanese cities, behind Tokyo (8,354,000), Yokohama (2,993,000), and Osaka (2,636,000). Exports from Nagoya's port accounted for 10.6 percent of Japan's total exports, behind Yokohama's 20.3 percent and Kobe's 12.6 percent and ahead of Tokyo's 10.1 percent, Narita's 8.5 percent, and Osaka's 7.2 percent. In imports, Narita was at the top with 160

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9. 3 percent of the total, followed by Chiba, 8.6 percent; Yokohama, 7.8 percent; Kobe, 6.6 percent; and Nagoya, 6.2 percent. The export of automobiles accounted for 44.4 percent of Nagoya's exports, iron and steel for 4.4 percent, and ceramics for 3.0 percent. Toyota Motor has its head office and main factories within the Nagoya metropolitan area. Suzuki Motor has a factory on the eastern fringe, and Honda Motor a factory on the western fringe of the region. Adjacent to the Nagoya port is Aichi Machine Industry, an important subsidiary of Nissan Motor, as well as Mitsubishi Motor's head factory. Toyota, Suzuki, and Honda all originated in the Hamamatsu area, on the periphery of greater Nagoya. Ceramics exports were the main driving force for development of the Nagoya port early in this century. The agglomeration of trade further promoted painting on porcelain as an industry in Nagoya. Nagoya's large modern ceramic makers all spun off from a common company, Morimura Brothers, and now include Noritake, NGK Insulators, and NGK Spark Plug. These three companies are world-famous makers of fine ceramics and have exerted a great influence on the evolution of ceramics production around Nagoya. The Nagoya metropolitan area is also one of the most important iron and steel producing regions in the world. Located on Nagoya's southern coastal industrial estate are Nippon Steel's Nagoya works, Daido Steel, and Aichi Steel Works. Nippon Steel came into being when Fuji Steel merged with Yahata Steel in 1967 in Japan's biggest merger at the time. Nippon Steel forms an integrated iron and steel works planned and carried forward by the Chubu Federation of Economic Associations, Chubu Electric Power, and local governments. Largely owing to the development of the automobile industry in the Nagoya region, the southern industrial complexes became the biggest iron and steel works in the world. The lumber industry, especially plywood, also conditioned the development of automobile and aerospace industries in Nagoya. Lumber was the first industry to develop within the old castle town. Lumber dealers located near the castle together with wood workers, furniture makers, and Buddhist altar and fitting makers. After the Meiji restoration, the lumber industry mechanized and Nagoya gradually became the center of the lumber machine industry as well. Then came the development of plywood and other wood-processing industries, including clock, wagon, coach, freight car, and locomotive makers. Lumber manufacturing eventually stimulated the production of bus bodies and airplane wings in the metropolitan area. However, the floating exchange rate of the yen in 1971 and the depression caused by the first oil crisis in 1973 161

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led plywood manufacturers to relocate gradually from Japan to South Korea, the Philippines, Indonesia, and Malaysia. These underdeveloped countries also stimulated Japanese plywood transplants by putting limits on log exports to accelerate the development of their own lumber, plywood, and other wood-processing industries. Nonetheless, lumber is still an important local Nagoya industry. It is noteworthy that automobile parts still account for 11.0 percent of total exports from Nagoya's port, even though Japanese automobile assembly companies are establishing manufacturing plants in the United States and Europe. In total exports, electric appliances and parts topped all other industries with 37.8 percent of the total, followed by machinery and parts (34.7 percent). Another part of the international trade of the Nagoya metropolitan area is the specialized manufacture of parts used, for example, in woodworking and tie-dyeing. This industry is growing as a result of the new international division of labor. Specialized production seems to be preserving traditional industries within the Nagoya metropolis, as is evidenced by the evolution of the tie-dyeing industry.

THE INTERNATIONAL DIVISION OF LABOR AND THE MUTATION OF THE TIE-DYEING INDUSTRY

Nagoya's tie-dyeing industry is organized in three local areas (Narumi, Arimatsu, and Oodaka) in the Midori Ward of Nagoya City. A guild of tie-dyed fabric makers was formed in 1804. Feudal policies protecting the steady growth of tie-dyed cotton fabrics were abolished after the Meiji restoration. In 1905, the Arimatsu Industry and Trade Association of Tie-dyed Fabric Makers was established and became one of the leading tie-dyeing industrial associations in Japan. After World War II, the Mimatsu Sibori Traders and Artisans Association was reestablished and started several cooperative services, including purchasing cotton fabrics for tie-dyeing production areas outside of Nagoya. Women workers from the agricultural and fishing industries and even children helped with the remarkable redevelopment of the Nagoya tie-dyeing industry and established Nagoya as the center of tiedyed fabric production in Japan. However, in the high economic growth phase it became difficult to retain tie-dyers due to the development of the automobile industry and concomitant urbanization. In the 1960s, Arimatsu and Narumi's traders transferred their industrial arts and skills to new workers in two adjacent textile production

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NAGOYA areas, Mie and Shizuoka. Next, they employed female workers in Aomori Prefecture on the northern tip of Honshu Island. In 1964, a small trader in Arimatsu began producing in Teigu in South Korea. With the development of the Tokaido bullet train (shinkansen) and of highways between Osaka and Tokyo in the 1960s, the tie-dyeing industry in the Nagoya metropolitan area enjoyed improved accessibility to growing markets in Tokyo and Osaka and closer cooperation with the traditional center of tie-dyeing, Kyoto. Arimatsu and Narumi increased their fabric orders from Korea in the 1960s, and began processing imported materials. Container services on ferry boats between the western tip of Honshu Island and the southern tip of the Korean peninsula accelerated this international division of labor, as did cheap and abundant Korean labor with an average price one-fourth that in Japan. South Korean fabric makers began using machines to increase their productivity. In Japan, a shortage of successors made it difficult to maintain the tie-dyeing business. Adjusting their tie-dyeing system to the new international division of labor, Nagoya's traders and artisans devoted their traditional skills and industrial arts to higher-value-added tie-dyed fabrics and artistic designs. They also persuaded the national government to designate Nagoya a traditional industrial arts production area in accordance with the 1974 Law for the Promotion of Traditional Industrial Arts. As a result, the Aichi Prefectural Sibori Association could provide loans for the development of tie-dyeing arts and the construction of new facilities. Pride in industrial artistic skill was also encouraged. In 1976, a contract controlling silk exports between Korea and Japan made it gradually more difficult for Japan to reimport processed tiedyed fabrics from Korea. Rapid economic growth in Korea increased wages in urban areas and in agricultural areas around central cities, causing depressed production in the Korean tie-dyeing industry. The number of Korean tie-dyeing workers decreased from 140,000 in 1976 to 70,000 in 1980. Now Nagoya traders began importing their processing materials from the Nantung and Kwantung areas in China, where wages and the price of cotton fabrics were particularly cheap. In 1982, Nagoya traders signed a contract with the Peking TieDyed Fabrics Corporation to process imported materials. This contract stimulated considerable trade between Nantung and Nagoya. However, most Nagoya traders retained their chief contractors in Korea because of "ecopolitical" difficulties in generating quick service and production from China's socialist system in response to changing market conditions in Japan. Nagoya's small traders have continued to employ highly

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skilled, older workers in Korea who can process high-value-added and small-lot products in a short time even as the main processing area has shifted from Korea to China. Because of a steady domestic market and a sound industrial community, Nagoya's Arimatsu, Narumi, and Oodaka tie-dyeing areas still flourish, with the support of highly skilled, older workers and excellent designers and pattern drawers. These areas have also adopted new industrial policies promoted by the Nagoya municipal government in response to the internationalization of production after the second oil crisis in 1979. To preserve and promote the development of traditional industries and industrial arts, together with other small businesses, the Nagoya municipal government constructed the Nagoya Small Industries Development Promotion Center and the Nagoya Small Business Information Center in 1983. In 1984, it constructed the Nagoya International Center to provide international information to the citizens and industries of Nagoya. To encourage a supportive business climate for high-valueadded industries, the Nagoya Institute of Industrial Technology established an Electronics Technology Center in 1985. The world-famous Japan Fine Ceramics Center was also constructed in that year by Nagoya municipal and Aichi prefectural governments, together with leading local and national enterprises including Toyota Motor, Noritake, NGK, and Toshiba Electrics. Finally, in 1986, the Nagoya municipal government announced the Nagoya Industrial Rehabilitation Project to promote the new industrial revolution. The National Land Agency designated Nagoya to be Japan's Center of Industry and Technology in the 1987 Fourth National Comprehensive Land Development Plan. Through the Nagoya Industrial Rehabilitation Project, the Nagoya municipal government encourages local development of technology and design. A World Design Festival was held in Nagoya in 1989 with exhibitions by artisans of Arimatsu, Narumi, and Shibori. To encourage an artistic climate, the Nagoya municipal government issued an ordinance for the preservation of traditional landscapes. Arimatsu, the center of the traditional tie-dyeing industry, was designated a special area for preservation. Since then, Arimatsu's landscape has gradually changed with the construction of Arimatsu Sibori Hall and the rebuilding of a private railway station with a classical facade. The Urban Landscape Law enacted by the Nagoya municipal government in 1987 accelerated this movement. As a result of these policies, traders along the old Tokaido trunk line between Tokyo and Kyoto opened classically styled retail shops promoting traditional industrial arts. And Sibori artists opened galleries in old warehouses. 164

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EVOLUTION OF THE AUTOMOBILE INDUSTRY AND THE FORMATION OF A NEW CORE

A new core urban area, Toyota City, grew rapidly in the Nagoya metropolitan area after World War II, especially during Japan's high economic growth. In response to the international activities of Toyota Motor Corporation, Toyota City has itself become a sort of world city indispensable to Japan's movement into the international economy. The remarkable growth of Toyota City started in 1937, when Toyoda Automatic Loom Works established Toyota Motor. Toyoda Automatic Loom Works was established in 1923 by Toyoda Spinning and Weaving, originally Toyoda Shoten, a manufacturer and trader of looms. Before beginning automobile operations, Toyoda performed a feasibility study and gathered information on the industrial policy of the Japanese government. It decided in 1933 to build an automobile factory at Koromo (now called Toyota City). Toyota Motor also established a Research and Development Institute for Aircraft in Koromo, in line with the army's industrial policy and began manufacturing trucks for the army as well. The company also created an iron and steel division following the Law for Iron and Steel Production in 1936 and a division of machine tools according to the Law for Machine Tools promulgated in 1938. Koromo was designated an industrial development area by the provincial government in 1942. In this way, it became an important inland industrial area in the Nagoya metropolis. After World War II, Toyota Motor closed its aircraft division and consolidated its research and development operations into Toyota Research and Development Laboratories in Nagoya. It received aid to combat the serious postwar depression from a financial group of twenty-four local banks organized by the manager of Japan Bank. Owing to this financial aid and a relatively shorter strike wave than that experienced by Nissan and Isuzu in the Tokyo metropolitan area, Toyota was well positioned to prosper from the special procurements of the U. S. Army during the Korean War. Toyota Motor was soon challenged to develop domestic passenger cars by policies promoted by the Ministry of Industry and Trade. While other Japanese auto companies turned to foreign firms to fill the technology gap between Japan and Europe (e.g., Nissan-Austin, Hino-Renault, and Isuzu-Roots), Toyota went it alone. In 1952, Toyota Motor Manufacturing adopted proposals generated by research on small machine and metal manufacturers by the Small Business Agency of the Ministry of International Trade and Industry (MITI), including the "just-in-time" 165

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delivery system (kanban-seido). Local subsidies attracted Toyota suppliers and helped them to develop quick delivery and quick service in line with the just-in-time system, as did municipal improvements of roads, housing, and other urban facilities. As a result, the agglomeration of the automobile industry in the Koromo area gradually accelerated. Koromo's mayors maintained close links between corporate expenditure decisions about auto industry agglomeration and public expenditure decisions about construction of infrastructure. Koromo was renamed Toyota City in 1959 with the creation of the first domestically owned factory in Japan specializing solely in the assembly of passenger cars. City officials annexed surrounding localities to create one large administrative unit in which production and daily activities could be integrated into a close-knit life support system, a conception of the region outlined by the Toyota City Comprehensive Urban Planning Committee in accordance with the Local Autonomy Law and the New Regional Plan of Aichi Prefecture. Close links in decision making between Toyota Motor Manufacturing and the Aichi prefectural government are discernible at each phase in the region's development. There was, to take a further example, the tandem establishment of industrial developments to house Toyota's two large assembly factories, Takaoka and Tsutsumi, and housing developments constructed by the prefectural government to lodge Toyota workers. Toyota's main delivery and depository facility, Kamigo Motor Pool, was constructed on a prefectural government's industrial development alongside a national railway. The roads between Toyota and its main subsidiaries were constructed by the government, as were Toyota's shipment yards. A new line of the Japanese National Railway, the Okada line, was opened in 1970 between Okazaki and Toyota City to transport assembled cars. A circle railway connecting the region's communities is maintained by the Aichi prefectural government and four other local governments along the line, together with leading local companies, including Toyota Motor, railway rolling stock makers, and private universities. The oil crisis in 1973 and the Exhaust Control Act in Japan and the Energy Saving Act in the United States in 1975 brought about a metamorphosis in the international structure of the automobile industry. In an effort to diversify its production activities, Toyota Motor Manufacturing established a division for prefabricated houses in 1975. Prior to World War II, Toyota Motor had studied housing and the real estate business. After World War II, Toyota's founder, Kiichiro Toyoda, invented Japan's first prefabricated concrete house in accordance with article 2 of the Toyoda Code: "Do your best to create and invent new prod166

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ucts first, standing aloof from the crowd." In 1967 Toyota Concrete was designated to supply prefabricated houses for Japan's Housing Corporation. In 1969, the Toyota Housing Corporation was established to develop residential areas for Toyota workers. Here Toyota Motor Manufacturing could examine the quality of its newly developed concrete and steel prefabricated houses and promote joint research and development projects with its subsidiary company, Toyota Concrete. Other big Toyota projects for residential development have been promoted in the northeastern mountainous areas of the region. The rapid increase of population in Toyota City and a new government subsidy accelerated the construction of housing. Toyota relocated its research and development laboratory from Nagoya to a point along Green Road, which connects Nagoya and Toyota City in 1980 and established a new university there, Toyota Technical Institute. The new Toyota Automobile Museum opened in 1989 on Green Road. At the eastern end of Green Road the prefectural government constructed a residential area and a new industrial park. Toyota Motor's electronic parts factory joined an Aisan Industry electronic parts factory and a Nippon Sheet and Glass factory as an anchor of a new technology town project and the industrial park. Toyota also has an international village project on the eastern end of Green Road to promote world peace, mutual understanding, and a global culture for economic development. It is closely connected to the United Nations and the World Bank. On the western end of Green Road, the United Nations Center for Regional Development is located in the Nagoya International Center. The western end of Green Road also hosts two international training centers for industry and technology-the Nagoya International Training Center of the Japanese International Cooperation Agency, and the Chubu Kenshu Center of the Association of Overseas Technical Scholarship, which is tied to the United Nations Industrial Development Organization in Vienna. The Nagoya metropolitan area has thus gradually become an important center for the transfer of industrial and regional development technologies. It is closely related to the United Nations and other world agencies. In 1981, Japanese automobile companies adopted voluntary restraints over exports to the United States. Following Honda and Nissan's investment in the United States, Toyota Motor formed a joint venture with the General Motors Corporation in 1984 at Fremont in California. Following this successful experiment, Toyota Motor decided to construct its own factory in Kentucky in 1986, with operations beginning in 1988. It also followed the trajectory of Honda and Nissan Motor to Europe. 167

Yasuo Miyakawa Th~ rapid internationalization of Toyota Motor's industrial system changed its manufacturing operations within Toyota City. Toyota Motor has created new industrial systems for high technologies and has rationalized its production organization. These efforts resulted in the construction of a factory for engineering plastics in 1986 and a factory for electronic parts in 1987. Another important factory is Nippon Sheet Glass, which uses advanced liquid-crystal technology. The Toyota City Corporation for Land Development owned by the Toyota municipal government is constructing the Green Technopolis (290 hectares) on the western fringe of Toyota City. Several companies, including Taiho Kogyo, a high-technology subsidiary of Toyota Motor, have already relocated from the urbanized central area to this site to modernize and rationalize their production systems in the face of keen domestic and foreign competition. Between these two industrial estates, Chukyo University has established a research and development laboratory for artificial intelligence. Thus the "green" area in the northern part of Toyota City has gradually become an indispensable core for promoting the new industrial revolution in Japan. These projects will be accelerated by Aichi Prefecture's industrial policy, Global Technofront Aichi, which is linked to the Human Frontier Technology Development Project of MITI and to the construction of the Techno Area by the municipal government. A national Law for Promoting the Construction of Multi-Core Regions in Japan to disperse facilities and functions from the capital has also stimulated these developments. In an information society, Toyota Motor has developed joint ventures with many telecommunications enterprises including Japan Highway Telecommunications. Toyota Motor develops its own automotive telecommunications systems and new telecommunications transportation systems together with NIT (Nippon Telephone and Telegram) and the municipal government; one example is a new parking system in the central business district. The Toyota municipal government also established the Toyota Industry and Cultural Center in 1985 and the Toyota Information Center for Small Business to promote adaptability to rapid progress in the information industry.

THE AIRCRAFT INDUSTRY AND INTERNATIONAL COLLABORATION

The Nagoya metropolitan area has gradually become the core of Japan's aerospace as well as its automobile industry. Owing to international collaboration, the Nagoya metropolitan 168

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area is also becoming an indispensable core of an international aircraft production system. In Japan, as in Europe, restructuring of the auto and the aerospace industries is interrelated. Japan initially drew upon European aircraft technology. But by the late 1930s, the Japanese aircraft industry was developing its own technologies and was manufacturing world-famous aircraft such as the Zero Fighter. In 1944, the industry registered an annual output of twenty-five thousand aircraft and forty thousand engines produced by twelve airframe manufacturers and seven engine builders. The Nagoya metropolitan area had branches of all Japan's leading aircraft manufacturers and compared favorably in aircraft production with the Tokyo and Osaka metropolitan areas. At the end of World War II, research and production of aircraft were prohibited by the General Headquarters of the Supreme Commander for the Allied Powers (GHQ). For seven years after the war's end, not an airplane was manufactured in Japan. Meanwhile, the world's aircraft industries, especially in the United States, were growing tremendously, shifting from piston engines to jet engines. After the Korean War, owing to a change in GHQ industrial policy, Japanese aircraft manufacturers were able to bridge this technology gap by repairing U. S. military aircraft at American bases in Japan. GHQ was abolished with the signing of the Japan-U.S. Security Treaty in 1951. Thereafter aircraft research and manufacturing were allowed. Orders from Japan's Self-Defense Agency and transfers of technology from U. S. aircraft companies gradually stimulated recovery of Japan's aircraft industry. GHQ orders for the dissolution of fifteen zaibatsu at the end of the war put Japanese aircraft companies out of business. Later, only Mitsubishi Heavy Industry and Kawasaki Heavy Industry were able to reenter the aircraft industry, thanks largely to their shipbuilding business. Mitsubishi and Kawasaki reconstructed their works in the Nagoya metropolitan area in response to an increase in special procurement and repair orders from the U.s. Air Force. In 1956, the New Mitsubishi Heavy Industry began manufacturing the F-86 jet fighter. The development and manufacture of a civilian twin-engine turboprop, the YS-11, was taken up as a national project in 1957. While most aircraft, accessories, and equipment industries were located in the Tokyo metropolitan area, Nagoya aircraft parts and accessories makers also gradually recovered. Mitsubishi Electric is one example. It imported advanced technologies from Westinghouse in the United States in 1923 and then manufactured aircraft electric parts first in Kobe and later in Nagoya. After World War II, Mitsubishi reconstructed its aircraft electric parts division in Nagoya. Many Nagoya aircraft parts 169

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makers, largely supported by the recovery of the automobile industry after the Korean War, also recovered production. Owari Precise Products is a typical example. It was established in 1906 to manufacture clocks. In 1938, Owari constructed its Yada factory in the northern part of Nagoya city to manufacture fasteners for aircraft. After World War II, it returned to the production of fasteners, first for the automobile industry and then for the aircraft industry, largely for Toyota Motor Manufacturing and Mitsubishi Heavy Industry in the Nagoya metropolitan area. In 1959, a decision by the Committee for National Defense led to a joint project for the manufacture of Lockheed's F-I04 jet fighter. Mitsubishi and Kawasaki led the manufacture of the F-I04 in the Nagoya metropolitan area, while the engine was manufactured by Ishikawajima Harima Heavy Industry under a license from General Electric in the Tokyo metropolitan area. The proportion of home-based manufacture amounted to 75 percent of the airframe and 47 percent of the engine. Subsequently, the Nagoya metropolitan area became the center of Japan's aircraft industry, especially in the production of airframes and related parts and equipment. The Science and Technology Agency has also promoted research and development on new aircraft types. For example, a comprehensive study of a low-noise fan-jet STOL plane began in 1972, and the STOL turned out to be a major civil transport aircraft of the 1980s. Since 1977, the National Aerospace Laboratory has been carrying out basic research in the Nagoya area. In 1978, Japan's own MU-300 twin-engine business jet made its first flight in the United States, marking the opening of a new international stage for Japan's aircraft industry. The Japanese government promoted this development through international joint projects; for example, the YX-Boeing 767, under way since 1967 with government assistance, is a cooperative effort between the Civil Transport Development Corporation established by Japan's main aircraft companies, Boeing of the United States, and AerItalia of Italy. For this international collaboration, Mitsubishi Heavy Industry and Kawasaki Heavy Industry constructed factories in the Nagoya West Coastal Industrial Estate adjacent to the Nagoya port to manufacture aircraft sections for shipment overseas to Boeing. Other international joint activities included the twinturbine multipurpose helicopter developed by Kawasaki Heavy Industry and Messerschmitt Bolkow Blom of West Germany in 1979 and the RJ-500 fan-jet project promoted by three Japanese engine makers, RollsRoyce of the United Kingdom, Pratt and Whitney of the United States, MTU of West Germany, and Fiat of Italy in 1983. In competition with Airbus, a new international project for the development of the YXX aircraft has been under way since 1984 by the Japan Aircraft Develop170

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ment Corporation, a venture established by the main aircraft companies in Japan and Boeing in the United States. Fuji Heavy Industry is also developing new materials for aerospace together with Japan Steel. Optoelectronic parts are being developed by Japanese companies in the Nagoya metropolitan area. In the field of software, Mitsubishi Heavy Industry has already established its subsidiary, MHI Aerospace Systems, adjacent to its Nagoya works. Under construction, too, is a space technology park for the future development of aircraft technologies in the Nagoya metropolitan area.

REGIONAL INCUBATOR OF TECHNOLOGY

On the eastern fringe of the Nagoya metropolitan area is one of only two science and technology universities in Japan. The municipal government developed the Regional Corporation Center for Technological Development in 1987 and a science park at a site adjacent to the university in 1988. This area has become an important local center for incubating Japan's most advanced venture businesses, such as Honda Electronics (supersonic waves). Nearby, Hamamatsu is developing a technopolis based on technological expertise at Shizuoka University, Hamamatsu Medical University, and private companies such as Honda Motor, Suzuki Motor, and Yamaha. In rivalry with research and development activities on its metropolitan periphery, the Nagoya municipal government has adopted its own revitalization projects, including an Electronics Technology Center at its Municipal Research and Development Institute for Manufacturing. This has become the center of advanced electronic technology in the region. The city also developed a Technology Exchange Center in 1989 alongside the Nagoya branch office of Technomart (a sort of data base for the transfer of technology and patents). The Nagoya municipal government has promoted Japan Fine Ceramics, a new type of institute whose main activities are basic and applied research, establishment and standardization of testing methods, and promotion of mutual cooperation among universities, government research and development institutes, and private companies in Japan and elsewhere. At present, the Fine Ceramics Institute has sixty researchers, thirty-three employed by the center and twenty-seven by the twenty-one companies that have invested in the center, such as Toyota Motor, Chubu Electric Power, NGK Insulator, Nippon Steel, Kobe Steel, and Toshiba. The chairman is an attorney for Toshiba, and the chief director is president of Toyota Central Research and Development Laboratories, 171

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Inc. The institute also enhances projects for smaller business, especially for its 164 patron member companies, 73 of which are located in Aichi Prefecture. The Japan Fine Ceramics Center started research in 1987 on five main projects. It was the first fine ceramics research and development center in Japan stimulated by government industrial policy. In 1981, MITI adopted a ten-year development project for fine ceramics, and the Fine Ceramics Research Association was established with fifteen member companies. The association gave a strong stimulus to small venture businesses in Nagoya's traditional ceramics production areas such as Yamaju Ceramics, which developed special fine ceramics for the electronics industry. As a result, Yamaju Ceramics was able to revitalize traditional ceramic manufacturing through automated production in competition with Japanese overseas factories and China. The Japan Fine Ceramics Center is also an important incubator of related technologies, including superconductivity. It recently welcomed a branch of the International Superconductivity Research Center (headquartered in Tokyo) to its building as an incubator for future technology.

CONCLUSION

The Nagoya metropolitan area has led Japan in industrial output since 1977 as a result of remarkable growth in the automobile and aerospace industries. The growth in automobile production has been led by the largest automobile company in Japan, Toyota Motor, and by Mitsubishi Motor, Japan's first company to link up with an American company, Chrysler. Both companies were founded in Nagoya and developed there. In response to the development of their international automobile systems, the Nagoya metropolitan area has become an indispensable core for the world automobile industry. The region also has Honda Motor's Suzuka factory, Honda Motor's Hamamatsu factory, Suzuki Motor, and Yamaha. Nagoya City has a subsidiary of the Nissan Motor group, Aichi Machine Industry. These companies have developed high-technology cars and automobile parts and advanced research and development activities as seen in the robot and electronic parts factories of Toyota Motor in Toyota Central Research and Development Laboratories, Inc., and Toyota Technical Institute. The Nagoya metropolitan area still remains the core of the Japanese aerospace industry, led by Mitsubishi Heavy Industry, Kawasaki Heavy Industry, and Fuji Heavy Industry. They are the main airframe makers, final assemblers, and leading companies in advanced aerospace 172

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technologies and metal plastics and processing technology. With the development of international collaboration on such products as the Boeing 767 and 2500 engines, the Nagoya metropolitan area has become one of the most important centers of the international aerospace industry. To adapt to changing phases in the industry, private companies have developed their own research and development facilities and computer software divisions, and local governments have supported the construction of a space technology park in the Nagoya metropolitan area. These leading industries have developed on the foundation of traditional local industries, especially timber and woodworking along the canals of the old Nagoya castle town. From these traditional industries, textiles, ceramics, and industrial machine and tool industries emerged and flourished. Even in traditional local industries, international divisions of labor have been prevalent, as seen in the case of the tie-dyeing and ceramics industries. To reorganize their structure in response to competition, these industries developed excellent designs and advanced technologies by establishing traditional industrial arts museums and high-technology research and development laboratories. The Nagoya metropolitan area is still far behind the Tokyo and Osaka metropolitan areas in research and development activities. Therefore, local governments are constructing the World Academic Town for International Collaboration in the Nagoya metropolitan area, according to the Law for the Development of a Multicore Nation and the fourth National Comprehensive Land Development Plan.

REFERENCES Miyakawa, Yasuo. 1977. Kogyo ricchi ron (The Systematic Location Theory of Industry). Tokyo: Taimeido. - - . 1980a. "The Location of Modern Industry in Japan." In Geography of lapan, edited by the Association of Japanese Geographers, pp. 265-98. Tokyo: Teikokushoin. - - . 1980b. "The Evolution of Regional Systems and Changes in Industrial Policy." In Regional Development Alternatives, edited by A. L. Mabogunji and R. P. Misra, pp. 138-57. Singapore: Maruzen Asia. - - . 1980c. "Evolution of Industrial System and Industrial Community." Science Reports 7, no. 30-1:21-64. - - . 1981a. "Evolution of Japan's Industrial System." Ekistics 48:273-80. - - . 1981b. "Metamorphosis of a Large Metropolitan Area." Paper presented at Nagoya United Nations Center for Regional Development, Nagoya. - - . 1983. "Towards a New Age of Aerospace." International Aerospace Symposium Report, Tokyo.

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Yasuo Miyakawa - - - . 1984. "Nihon jidosha sangyo no kokusaika" (Internationalization of Japanese Automobile Industry). Japanese Geology and Geography 93, no. 3:1537. - - - . 1985. "Rural Industries in Japan." In Rural Industrialization of Third World Countries, edited by R. P. Misra, pp. 193-209. New Delhi: Sterling. - - - . 1987a. "Daitoshi no sangyo ricchi keikaku" (Regional Planning and Planning of Industrial Location in Large Metropolitan Areas). Annals of the Japan Association of Economic Geographers 33, no. 4:64-78. - - - . 1987b. "The Metamorphosis of Japan's Industrial System and Development of International Division of Labor." In International Economic Reconstructuring and the Regional Community, edited by Walter Stohr, pp. 148-64. Averbury, England. - - - . 1987c. "Regional Disequilibrium and Supernational Organization in Japan." In Desequilibrios regionales y organciones supernationales, edited by R. P. Mirsa, pp. 121-35. University of Zaragosa, Spain. - - . 1988. Mutation of Japan's Industry in the World System (in Japanese). Vol. 1. Tokyo: Taimeido. - - . 1989. Mutation of Japan's Industry in the World System (in Japanese). Vol. 2. Tokyo: Taimeido.

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8 Toyota City INDUSTRIAL ORGANIZATION AND THE LOCAL STATE IN JAPAN Kuniko Fujita and Richard Child Hill

Our study of Toyota Motor Corporation and Toyota City focuses on the interplay between local corporatism and urban economic development in Japan. Toyota Motor Corporation is currently the world's most successful car manufacturer. Corporations in every automobile-producing nation are trying to copy the "Toyota system," much as manufacturers patterned themselves after Ford's mass-production techniques in the 1920s and General Motors' administrative structure in the 1950s. Toyota's competitive advantage is often attributed to work organization and sophisticated use of technology (Cusumano 1985). But there is another side to the Toyota success story. Toyota Motor Corporation is lodged in Toyota City, a satellite community on the periphery of Nagoya, Japan. In our view, Toyota's institutional imbeddedness in the region where its plants are located and where its employees live explains as much about the company's postwar capacity to generate productivity, reduce costs, and exert control over its work force as the technical ingredients of its manufacturing system. According to many scholars, corporatism best characterizes the structure and functioning of the Japanese political economy (see Dore 1973; Clark 1979; Pempel and Tsunekawa 1979; Johnson 1982; Pempel 1982). Our study of Toyota City explores the corporatism phenomenon along two underemphasized dimensions. First, most research on relations between business and government in Japan has focused on the connections between large companies and the central state (Johnson 175

Kuniko Fujita and Richard Child Hill

1982; Pempel 1982; Okimoto 1989). While the national level is obviously significant, our study of Toyota City suggests that business-government relations at the local level are also important. I Second, most students of corporatist production relations in Japan have confined their attention to relations between capital and labor within the large firm (Dore 1973; Clark 1979). Our study of Toyota's industrial organization, on the other hand, extends the horizon to the entire production system in which the parent firm is imbedded. Firms become linked into production systems as they develop, manufacture, and market their products. The spatial concentration and growth of operating units knit together in production systems generates urban and regional development (Jacobs 1984). The organization of production systems has taken on heightened interest in advanced industrial societies due to fierce international competition connected to what appears to be an epoch-making transition in regimes of capital accumulation (Reich 1983; Piore and Sabel 1984; Lipietz 1987). Given Toyota's extraordinary success, the Toyota production system has become a model for advanced manufacturing in the "new era" (Womack, Jones, and Roos 1990). In this essay we analyze the social and spatial development of Toyota's production system. In spatial terms, the Toyota production system is distinguished by the degree to which it has been lodged in one locality and region, Toyota City and Aichi Prefecture, where twelve major production plants, most major suppliers, and nearly 90 percent of the company's fifty-seven thousand employees are located. In social terms, the Toyota production system is distinguished by its imbeddedness in corporatist institutional relations governing the city and region where Toyota's plants are located and where the company's employees live. "Toyotaism" creates some explanatory problems for Western theories of industrial development. Neoclassical and neo-Marxian development theories suggest that economic activities "agglomerate" at the birth and early development of an industry due to the pull of market forces: proximity to raw materials, energy, consumers, capital, labor, and means of transportation. However, as an industry matures, it disperses geographically in response to growing firm size, an enhanced organizational capacity for spatial extension, the product cycle, rising labor militancy, and labor costs (see Hurley 1959; Gordon 1978; Markusen 1985; Scott 1988). We think the spatial and social evolution of Toyota's production system confounds this industrial development model in three ways. First, the forces underpinning the initial concentration of Toyota's production system in Toyota- City and Aichi Prefecture were determined as much by 176

TOYOTA CITY

the state as by the market. Here we extend Chalmers Johnson's (1982) ideas about Japan's developmental state to the "local developmental state" by detailing the electoral, bureaucratic, and fiscal mechanisms whereby Toyota City actively facilitated the spatial development of Toyota Motor Corporation's vaunted production system. Second, as Toyota's production system matured, it did not disperse as predicted by Western development theory. In our view, two factors help explain why Toyota's concentrated production system has endured instead of dispersing to lower-cost locales. First, Toyota's welfare corporatism circumvented labor militancy. Second, because Toyota's industrial production system was organized according to flexible rather than routinized manufacturing principles, the company was able to counteract competitive threats from lower-cost producers (Dore 1973). Here we will detail how state responsibility for social investment (the developmental state) coupled with corporate responsibility for social consumption (welfare corporatism) produced a symbiotic relationship between the large company and its work force and a shared-fate cultural outlook that dampened labor militancy and made flexible production arrangements possible. At the same time, profitability and growth were maintained and worker opposition was blunted through a stratified production system in which workers in lower-tier supplier companies were in varying degrees excluded from the corporate welfare system. Paradoxically, Toyota's extraordinarily successful production system looks a lot like a company town-a form of social and industrial organization long considered anachronistic in the United States (Brandes 1970). However, one shouldn't mechanically apply concepts reflecting the U.S. experience to a society with a different developmental history. Toyota's urban industrial organization is better viewed as a historically specific, Japanese approach to organizing institutional relationships among business, labor, and the state than as a latter-day reflection of 1920s U. S. welfare capitalism. The depth and length of the 1930s Depression in the United States discredited welfare capitalism, and workers turned to industrial, mass-production unionism. In Japan, workers struggled successfully to institutionalize corporate welfare services. Once that end was achieved, company unions tended to identify with and become advocates for company interests (Gordon 1988). The significance of Toyotaism for current development efforts and policy debates in the United States is readily perceivable. David Osborne's Laboratories of Democracy (1988) well describes the influence Japan's developmental state and flexible production organization have had on the outlook of U. S. regional development planners. "Modern operating agreements" in the auto industry and Big Three company ex177

Kuniko Fujita and Richard Child Hill

periments with Toyota City-like urban production complexes (e.g., GM's Buick City and Saturn production systems) indicate the influence of Toyotaism as well. Ironically, efforts to replicate Toyota's production system in the United States come at a time when the Japanese model is in flux. Under growing protectionism among nations, a persistently strong yen, and a domestic labor shortage, Toyota Motor Corporation is dispersing its production system at home and abroad. However, should Toyota's decentralization eventually "hollow out" Toyota City's manufacturing base, the forces at work will have had more to do with international politics than with international economics and will thereby pose yet another puzzle for Western theories of urban industrial development.

TOYOTA CITY:

A

PROFILE

Toyota City sits in the middle of Japan's central industrial belt, 150 miles southwest of Tokyo. The route from Tokyo to Toyota City runs midway between the Pacific Ocean and the central spine of mountains that crests in the majestic Mt. Fuji. Along this path, cities sprawl into one another to form the vast Tokaido megalopolis. Factories built low to the ground spread out to the sea and up the mountain slopes. Surrounding the plants are workers' homestiny gray boxes piled one upon another with an occasional splash of color from a blue or rust tiled roof. As one approaches Nagoya, the capital of Aichi Prefecture and Japan's fourth largest city, the terrain becomes even more congested. Industrial corrosion all but effaces the natural landscape. Toyota City is on the eastern edge of Nagoya, about twenty miles from the city's center. To get to Toyota City without a car requires taking a subway to the end of the line and then a train. In contrast to crosscountry travel on Japan's high-speed express trains (shinkansen), the last leg of this journey is grueling because the train makes about thirty local stops before reaching Toyota's secluded city. The community that is called Toyota City today dates back several thousand years and is recorded in Kojiki, Japan's earliest written record. During the Meiji and Taisho eras (mid-nineteenth to early twentieth centuries), Toyota City was called Koromo and was the commercial center of the Mikawa region. Koromo ("clothing" in Japanese) was a famous trading site for raw silk. The silk industry declined in the early 1930s, and the textile industry rose in its stead (Toyota City 1983a, 16). Toyota

178

TOYOTA CITY

Automated Loom Works, Ltd., developed in nearby Kariya City, and became the center of the region's textile industry (Allinson 1975). In 1937, the company created a new subsidiary in Koromo, Toyota Motor Manufacturing (Toyota Motor Manufacturing 1967, 44). As the textile industry declined, the people of Koromo increasingly pinned their hopes for economic regeneration on Toyota Motor Manufacturing. But automobile-led revitalization did not come quickly. Koromo's local economy remained mostly dependent upon textile, glass, and agricultural industries until the late 1950s (Toyota City 1977, 21325). From the 1930s through the 1950s the city's population hardly changed at all, hovering around 100,000 residents (see Table 8.1). Although Koromo was the core of Toyota's emerging production system, the company also located plants in other areas. Three plants, including electrical and auto repair facilities, were located in nearby Kariya City. By 1948, Toyota also had a plant in Nagoya and two in Tokyo (Toyota City 1981, 5). In 1959, after the opening of Toyota's second assembly plant, Motomachi, Toyota City's population began to shoot upward. Between 1960 and 1970, it nearly doubled and the employed labor force grew by 107 percent. The most substantial employment gains were made by male skilled and production workers: between 1960 and 1970, the share of city employment held by blue-collar workers increased from 35 to 54 percent (see Table 8.2). By 1970, Toyota City had become a heavy-industry, blue-collar town. Matomachi's opening also coincided with a City Council decision to change Karoma's name to Toyota City (Toyota City 1981, 366-67). TABLE

8.1

POPULATION GROWTH IN TOYOTA CITY,

1950-90

1950 1960 1970 1980 1990

POPULATIONa

% INCREASE

96,191 104,529 197,193 281,608 324,195

8.7 88.7 42.8 15.4

Sources: Toyota City 1981, 5. Toyota City, Statistical Quarterly 1983, 1986, 1991. alncluding foreigners.

179

Kuniko Fujita and Richard Child Hill TABLE

8.2

OCCUPATIONAL STRUCTURE IN TOYOTA CITY,

Managers Professionals Clerical workers Sales workers Craftsmen and production workers Farmers and othersa Service workers and othersb

1960-85

1960

1970

1980

1985

1.0% 3.8 7.0 6.6 35.0 38.6 8.0

1.9% 4.9 10.2 6.1 54.4 12.2 10.3

2.8% 6.4 13.5 8.2 54.1 4.0 11.0

2.3% 9.2 15.1 7.8 52.0 3.2 10.4

Total percentage

100.0

100.0

100.0

100.0

Total employed

53,995

111,575

136,460

152,375

Source: Japanese Government, Prime Minister's Office, The Population Census 1960, 1970, 1980, 1985. 3Includes lumbermen and fishermen. blncludes miners, transportation and telecommunication workers, safety maintenance workers, and unclassified workers.

The name change was more than symbolic because from that time onward municipal policy in Toyota City was targeted to the social and spatial requirements of Toyota Motor Corporation's production system.

TOYOTA'S PRODUCTION SYSTEM

A production system is a collection of operating units linked by technology and organization into the manufacture of final products (see Hamilton 1981; Holmes 1986). In the auto industry, production systems involve thousands of firms, including parents, subsidiaries, and subcontractors. These firms specialize in the production of a wider or narrower range of parts (some fifteen thousand go into a car) or in a stage of the production process (for example, dashboard subassembly) (Altschuler 1984). A key to Toyota's competitive success is the way the company has organized and tightly controlled its many-layered production system. Toyota concentrated its headquarters, production facilities, principal suppliers, and subcontractors in Toyota City and surrounding Aichi Prefecture in order to synchronize parts making, subassembly, and final

180

TOYOTA CITY

assembly into a finely tuned regional production system (Sheard 1983, 50). Toyota organized its concentrated production system into interlinked layers of firms making products that are incorporated into the final vehicle. The first layer consists of subcontractors engaged in direct transactions with Toyota Motor Corporation, including manufacturers of machinery (robots, jigs, large body panels), subassemblies (engines, seats), and major body parts (brakes, transmissions, and so forth) (see Table 8.3). First-layer firms are parents to second-layer firms, which are subcontractors providing metalworking services, dies, small body parts, and single components like brake lining to first-layer subcontractors. In like fashion, second-layer subcontracting firms are parents to third-layer firms, and so on down the production chain. Parent firms at each level are responsible for checking the quality and coordinating the inflow of parts, materials, and services from the next lower level in a production system organized in its entirety on the model of an extended family tree (Oshima 1986). Through hierarchical specialization among different-sized firms with varying productive capacities, capital intensities, and wage costs, Toyota created a production chain from small workshops through businesses of various sizes and descriptions all the way up to the parent Toyota Company (Keneko 1978, 1982, 1983; MITI 1977). Thus tiered specialization gives rise to a complex system of stratification among firms and among segments of the labor force employed by those firms (see

8.3

TABLE

TOYOTA'S TIERED PRODUCTION SYSTEM

SUPPLIERS

First Tier

Second Tier

Third Tier

25 31 18 18 3 41 31

912 34 609 792 926 27 1,213 924

4,960 352 7,354 6,204 5,936 85 8,221 8,591

Total firms

168

5,437

41,703

% Firms small and medium-sized

20.5

88.5

97.5

PRODUCT SUPPLIED

Engine parts Electrical parts Transmissions Brakes, clutches, and other Parts and components Chassis Auto body Others

SOUTce:

I

Nohara 1980, 91.

181

Kuniko Fujita and Richard Child Hill TABLE

8.4

EMPLOYMENT AND GENDER IN TOYOTA CITY'S AUTOMOBILE-RELATED INDUSTRIES, 1989

PLANTS

EMPLOYMENT

PLANT SIZE

No.

%

No.

%

1-49 persons 50-99 100-299 300-499 500-999 1,000

359 38 3.0 II

77.9 8.2 6.5 2.4 2.6 2.4

4,083 2,628 5,428 4,358 8,772 49,235

Total

461

100.0

74,496

II

12

WOMEN

No.

%

5.5 3.5 7.3 5.8 11.8 66.1

2,192 1,139 2,306 1,007 1,776 3,556

18.3 9.5 19.3 8.4 14.8 29.7

100.0

11,976

100.0

Source: Toyota City, Toyota Shi no Kogyo (Toyota City's Industries) (1991), p. 59.

Table 8.4).2 Most automobile-related plants in Toyota City are small; more than three-quarters employ fewer than fifty workers. Yet most of the automobile-related work force is employed in a handful of very large factories; 67 percent of the workers in Toyota City's automobile-related industries labor in just eight plants, each employing more than one thousand people. And the larger the plant, the lower the percentage of women likely to be working there. Women make up half the labor force of the smallest suppliers but only 9 percent of the work force in Toyota City's largest manufacturing operations. Primary parts suppliers become members of Toyota's "family" of subcontractors. 3 Two .supplier organizations help coordinate the relationship between the Toyota parent and its first-tier subcontractors. Kyohokai, founded in 1943, includes 225 companies that manufacture auto parts and components. Eihokai, founded in 1983, brings together 70 companies that manufacture items like molds, gauges, and jigs as well as well as contractors for plant facilities (Toyota Motor Corporation 1987, 27). Each of these primary suppliers has between two hundred and three hundred of its own second-tier subcontractors, and each of those subcontractors has many smaller third-tier ~uppliers (see Table 8. 5). Toyota's production system is also distinguished by the extent to which it is controlled by a tight network of Toyoda family members in executive posts. The family spreads like branches of a tree throughout the Toyota group-a vast web of textile and automobile related companies with interlocking directorships and extensive cross holdings. 4 The Toyodas are sometimes called Japan's ttother imperial family" because 182

TOYOTA CIlY

TABLE

8.5

ONE STRAND IN THE PRODUCTION CHAIN OF TOYOTA MOTOR CORPORATION

TOYOTA MOTOR CORPORATION

First Tier: Toyota Electrical Works Second Tier: Tokai Rika Suppliers Association (31 Firms) Type of Firm

Metal pressing Assembly Parts and components Plastics Diecasting and welding

Total

No. of Firms

Size of Work Force

1-5 6-10 11-15 16-20 21-25 26-30 31-35 36+

8 9

6 5 3

31

Total

No. of Firms

9 5 7 3 1 4

1 1 31

Source: Oyama 1985, 93.

they control a group of companies that together account for an extraordinary 3 percent of Japan's gross national product (Armstrong 1985). It would be fallacious to view firms in Toyota's auto production system as independent actors engaging in market exchange with a major automaker and its first-tier suppliers. Rather, each firm is a cog in a production system organized around a corporate parent group. In spatial terms, Toyota's auto production system is distinguished by the extent to which the car manufacturer has adapted and amplified the classical Ford conveyor belt system of factory production within plants to a regional production system tying together assembly plants and suppliers. Toyota's "just-in-time" delivery system extends the design of space within the factory to the design of space between factories (Sugimori et al. 1977; Ohno 1978). Parent companies and their subcontractors are interconnected through a finely synchronized flow of parts carried by delivery trucks across a regional transportation network. Although parts production and assembly are physically separate, the work rhythm of the production line is regulated by the assembly line. By requiring subcontractors to make frequent deliveries in small batches, Toyota fostered a continuously self-adjusting order system. The subcontractor, in effect, became a spatial extension of the parent. The order system plus the delivery schedule shift the responsibility and cost of maintaining a 183

Kuniko Fujita and Richard Child Hill

buffer level of stocks on to the subcontractor, and the reduction of overhead adds to the parent company's profits. Just-in-time delivery in small batches requires close contact between parent and subcontractor, thereby promoting spatial concentration of production. Spatial proximity also reduces transportation costs, minimizes disruption or delay in delivery, and allows for quick changes in delivery schedules (Sugimori et al. 1977; Ohno and Monden 1983). Among Toyota's 957 designated "major suppliers," 525 (55 percent) are headquartered within Aichi Prefecture (Toyota Motor Corporation 1986a). Koromo, the city's oldest quarter, is home to Toyota's Honsha and Motomachi assembly plants. Spread between these two factories are 138 additional automobile-related manufacturing operations. Toyota's Takaoka and Tsutsumi assembly plants are located in the city's Takaoka quarter and are surrounded by 141 complementary production facilities. Between them, the Koromo and Takaoka quarters contain more than two-thirds of the plants and almost 90 percent of the automobile-related employment in Toyota City.

TOYOTA CITY'S INDUSTRIAL POLICY

Agglomeration tendencies in the automobile industry have usually been attributed to "natural" market forces (Hurley 1959). But in Toyota's case, industrial concentration also has to be understood as the political outcome of a city's industrial policy. Bent upon growing, and identifying closely with the corporation, Toyota City officials designed policies that were instrumental in Toyota Motor Corporation's decision to locate all of its major production plants in the area. Toyota City's industrial policies helped entice the corporation's principal suppliers and subcontractors to the region and thus enabled Toyota to establish its vaunted just-in-time production system. Toyota City built highways to smooth the flow of goods between Toyota's satellite plants and suppliers and new railroad connections to speed the company's shipments to domestic and international markets. Each time Toyota Motor Corporation decided to build a new plant on the city's periphery, Toyota City annexed the area to ensure a predictable political environment for the company (Toyota City 1977, 255-70). The philosophy of community-company relations that came to inform Toyota City's industrial policy dates back to the 1930s. In 1934, Kiichiro Toyoda, the founder of Toyota Motor Corporation, was looking for land for the company's first (Honsha) plant. Hearing about Kiichiro's 184

TOYOTA CITY

project, Koromo's mayor offered the company a vast tract of land-some 489 acres-for two-thirds the price the city had originally paid for it. The mayor also indicated that more land would be made available for railroad connections and that the city would service and repair the roads converging on the site (Toyota City 1977, 256). In 1954, Koromo officials passed a sequence of industrial plant location laws, known as the "Nineteenth Ordinance," to attract large manufacturing companies to the area. The Nineteenth Ordinance included provision of city land for plant sites, city construction of supporting infrastructure, and tax abatements (Toyota City 1977, 255-57). When Toyota decided to build its second (Motomachi) plant in 1957, the city purchased land and offered the corporation another vast tract consisting of the former Tokai Aerocraft site and surrounding acreage. After that deal was consummated, officials at Toyota Motor Manufacturing, Toyota City, and Aichi Prefecture combined forces to promote the building of an "industrial city." They made a proposal to the Ministry of Agriculture, Forestry, and Fishery to build their city on government land. Gaining permission, they used the public land to extend the Motomachi plant and to make adjoining sites available for Toyota's· major subcontractors, including Nippon Dunlop, Chuo Seiki, Sango, Tokai Rikagaku, and Horie Metal (Toyota City 1981, 380-82). The city also amended its plant location laws to accommodate Toyota's huge Motomachi assembly plant. Tax incentives were now given for plant expansions as well as first-time projects. The duration of tax incentives was lengthened from three to five years, and various site improvements were included. These public benefits were also made available to Toyota subcontractors wishing to build in the city, including Nippon Hatsujo, Takashimaya Nippatsu, and others (Toyota City 1977, 255-57). In 1961, Toyota decided to locate a new engine plant in the outlying town of Kamigo. Just before the plant opened in 1965, Toyota City annexed the area. In 1966, Toyota City annexed Takaoka, the site of Toyota Motor Corporation's nearly completed third assembly plant. Takaoka and Aichi Prefecture had created an industrial park to attract Toyota's new assembly plant and related supplier firms. Takaoka had outbid Toyota City on public appropriations for the plant and had passed these incentives along to Toyota subcontractors-Kojima Press, Aishin Seiki, Topy Kogyo, and San'ei Kogyo. Toyota City kept Takaoka's subsidies intact after the annexation (Toyota City 1977, 258-59). Following Motomachi's opening in 1959, the number of applications for industrial location incentives increased rapidly. 5 Toyota was refining its just-in-time production system and requiring its subcontractors 185

Kuniko Fujita and Richard Child Hill

to syncronize their production lines to the rhythm of the company's plants. To meet Toyota's demands, subcontractors either moved their factories to the city or built warehouses there (warehouses also benefited from the city's location incentives). Toyota City also created two industrial parks designed for small and medium-sized plants: the Iron Industrial Park and the Tokai Electronics Industrial Park. Toyota subcontractors made up a majority of the firms in both parks (Toyota City 1977, 270-74). Toyota City eliminated the plant location ordinances in 1970 and the tax incentives in 1975. By then, Toyota Motor Corporation had benefited from 1. 5 billion yen in public subsidies, and another forty-five companies, mostly Toyota suppliers, had received an additional 42 million yen (Toyota City 1977, 270).

CORPORATIST POLITICS

A local industrial policy so favorable to Toyota Motor Corporation could not have come about without considerable company influence in city hall. Analysis of the 1947, 1951, and 1955 city elections suggests that during the 1950s company supporters gained a working majority on the city council. In 1951, for example, Toyota's council majority (nineteen out of thirty seats) consisted of elected officials from its own managerial staff, its suppliers, and its union. Business people connected to the local Chamber of Commerce and Industry and members of the Liberal Democratic Party (Shinseikai) also supported industrial policies favorable to Toyota; for them, Toyota's growing contribution to the local tax base had become overpowering (Sumiya et al. 1963, 256-57). Significantly, Toyota's union played the pivotal political role in the electoral alliance. The union's identification with the corporation evolved after the 1950 "great dispute" and must be understood in terms of the specific social circumstances of early postwar Japan (Toyota City 1977; 381-84; also see Toyota Motor Company 1956, 1966; Aichi Prefecture 1982-83; Moore 1983). Founded just after World War II, the Toyota Motor Workers Union was initially radical and politically active in the community. In the 1947 city election, five union members won seats on the Koromo City Council. All were members of the Japan Socialist Party (Toyota City 1977, 360-409). The social compact between Toyota Motor Corporation and the Toyota Motor Workers Union followed the events of 1950: massive layoffs and wage cuts, the failure of a protracted union-led 186

TOYOTA CITY

strike, the purging of radical unionists, and the near bankruptcy of the company. When Toyota Motor Corporation engaged in massive layoffs during the depressed conditions of 1950, the Koromo City Council and most of the city demonstrated against the corporation (Toyota City 1977, 382). Not wishing to repeat that experience, Toyota's management bent every effort to gain controlling influence in the city council. In the 1951 election, company supporters won eleven out of thirty seats; among them were eight elected representatives from Toyota's own managerial ranks and three from its subcontractors. The 1951 election, a complete reversal of 1947, was a total defeat for the union, and it coincided nationally with the dissolution of the radical labor federation, Sanbetsu, and the onset of the "Red Purge" (Cusumano 1985, chap. 3). In the aftermath of 1951, Toyota's managers and workers came to believe they were in the same boat and therefore shared the same fate. In exchange for a seniority wage system, profit sharing, and job security, union members committed their loyalty to the company and their labor to a ceaseless effort to advance productivity (Fujita 1986). The shared fate sentiment was well demonstrated in subsequent years. The 1955 election signaled a new relationship between management and labor at Toyota. Purged of its radical Sanbetsu elements, the Toyota Motor Workers Union had become an advocate for the Toyota Motor Corporation. The company sent eight supporters to city hall in the 1955 electoral contest and all eight were from the union (Toyota City 1977, 384). In 1955, company and union went jointly before the Ministry of International Trade and Industry (MITI) and the National Diet to argue for domestic protection of the industry and the initiation of a "national car development program" (Toyota City 1977, 384). In 1959., the union advocated changing Koromo's name to Toyota City. In preparation for trade liberalization in 1962, it ratified a Labor and Management Declaration pledging that company and union would compete as one unit against foreign automakers. After 1962, the union shifted its longtime support for the Japan Socialist Party to the smaller and more conservative Democratic Socialists (Toyota City 1977, 387-88). During the early 1970s, it supported company efforts to initiate various forms of "controlled participation" in the workplace, including quality-control circles, job rotation, and teamwork (Cole 1979, chap. 6). In the 1974 Labor Cooperation Agreement, the union pledged not to strike the company (Yamamoto 1981). In 1973, the union dismantled its community organization, the League of Wage Workers in Toyota City, and created a new organiza187

Kuniko Fujita and Richard Child Hill

tion, Yutakakai, in its stead. Divided into local branches, Yutakakai's principal objective was to mobilize votes for city, prefectural, and national elections. Its mandate was to counteract attempts to undermine city commitment to the growth of Toyota Motor Corporation. Yutakakai has been successful: its candidates have been elected to local, regional, and national office; it has promoted campaigns favorable to Toyota Motor Corporation; and it has sidetracked opposition political forces. 6 The electoral alliance between company and union thus became a prime mechanism through which Toyota Motor Corporation's economic interests were translated into Toyota City's industrial policies.

TOYOTA'S CORPORATE COMMUNITY

City Fortunes The concentration of Toyota's production system in and around Toyota City stimulated extraordinary growth in the city's tax revenues during Japan's high economic growth phase from the late 1950s to the early 1970s. In 1960, Toyota City's per capita tax revenue stood at 4,809 yen. By 1970, the city's revenues had multiplied by 600 percent to 28,671 yen per person. By 1983, city revenues had grown to 140,078 yen per resident-a fivefold increase over 1970 and a 2,900 percent rise from 1960 (see Table 8.6). A large share of Toyota City's tax revenue (59 percent) comes from

TABLE

8.6

TOYOTA CITY TAX REVENUE,

CITY TAX REVENUE (x 1 MILLION YEN)

1960 1970

1983 1991

a

1960-91 RESIDENT TAX REVENUE b (x 1 MILLION YEN)

POPULATION

Total

Per Capita

Total

% of City Tax

105,165 199,171 293,947 329,597

505.7 5,710.5 41,175.6 109,440.0

4,809 28,671 140,078 332,042

343.4 3,125.5 24,137.0 75,629.8

67.9 54.7 58.6 69.1

Sources: Toyota City 1981, 1983; also Toyota City, Toyota City's Budget in 1991. aCity tax revenue is derived from the resident tax, property tax, and taxes on electricity and gas, urban planning, and tobacco consumption. br[he resident tax is levied on individual and corporate capital and income.

188

TOYOTA CITY

TABLE

8.7

TOYOTA MOTOR CORPORATION'S CONTRIBUTION TO RESIDENT AND CITY TAX REVENUE, TOYOTA CITY, 1962-74

RESIDENT TAX REVENUE

CITY TAX REVENUE

80.2% 78.4 71.1 54.7

68.3% 66.2 61.2 46.3

1962 1964 1972 1974

Source: Toyota City 1981, 52-53, and 1977,716-17; Wada 1966.

the resident tax, a levy on individual and corporate income. In 1962, taxes on the Toyota Motor Corporation added up to 80 percent of Toyota City's revenue from the resident tax and 68 percent of the city's total tax income (see Table 8.7). The company's contribution to the city's income declined from more than three-quarters in 1962 to about half in 1974. During that time additional firms were joining Toyota's expanding production system and adding their own weight to Toyota City's tax base.

The Developmental City Chalmers Johnson (1982, 10) has aptly coined the term the developmental state to characterize the evolving relationship between business and government in postwar Japan. Responsibility for social investment and social consumption expenditures, usually considered the province of government in Western nations, is divided between business and the state in Japan. The developmental state emphasizes social investment-the provision of public infrastructure and services that increase private productivity. Responsibilities for social consumption-goods and services that meet the "reproduction" needs of the labor force-has largely been left to private corporations. Toyota City exemplifies the local developmental state. The city has reinvested the bulk of its growing revenue on infrastructure and services to keep Toyota's production system running smoothly. Responsibility for meeting the social consumption needs of city residents, on the other hand, has largely been left to the Toyota group. Between the 1950s and the early 1980s, roughly half of Toyota City's expenditures consistently went into two social investment catego-

SOCIAL INVESTMENT.

189

Kuniko Fujita and Richard Child Hill TABLE

8.8

TOYOTA CITY EXPENDITURES,

1950-91

1950

1970

1983

City council City employees Police and fire Roads and bridges Education Welfare and labor Health Commerce and industry Agriculture and forest Othersa

1.1 % 10.9 14.6 20.8 29.1 5.6 0.4 5.6 7.9 2.9

0.6% 17.4 2.7 24.4 19.1

0.6% 10.2 2.9 22.9 25.0

13.3

13.0 8.8

Total percentage

98.9

Total expenditures, in millions of yen

5.8 4.8 7.6 4.3

100.0

85

9,907

1991

0.5% 9.9

3.8 33.3 21.3

9.3

12.1 7.0 2.6 2.9 6.6

100.0

100.0

61,480

109,440

4.1

3.2

Sources: Toyota City 1981, 1983; also Toyota City, Toyota City's Budget in 1991. Note: Percentages may not add to 100 because of rounding. 3Includes city bonds and natural disaster recovery funds.

ries: transportation (roads and bridges) and education (see Table 8.8). Construction and maintenance of highways and bridges were vital to the operation of Toyota's just-in-time system. And in a city where the sons and daughters of Toyota's employees are also likely to be employed by the corporation, public education has been a social investment in the company's future productivity as well (Armstrong 1985). Social consumption outlays (welfare, labor, health), on the other hand, seldom rose as high as 20 percent of the city's budget. Even more evocative of the developmental character of Japanese corporatism is the symbiotic relationship between company and city bureaucracies. For example, when the company finished constructing the Kamigo and Takaoka plants during a period of labor shortage in the early 1960s, the city sent its representatives all over Japan to recruit young workers. By the time the Miyoshi plant was completed in 1968, city officials had lodged a Labor Policy Section in city hall. Renamed the "Employment Countermeasure Section" in 1970, this city department has since been directly tied to the company's personnel division and in effect has functioned as the Toyota Motor Corporation's employment bureau (Toyota City 1977, 722). 190

TOYOTA CITY

Each time Toyota built a new plant, the city built new roads to intermesh parent and suppliers. When the Kamigo plant was completed, the city built a road to connect it to the Motomachi plant. When the Takaoka plant was completed, the city built a road to connect the new factory to the National Railway's Okazaki Line, which transports 90 percent of Toyota's new cars. When the Tsutsumi plant was completed, the city built a highway connection to the Kinura port, where Toyota's cars are shipped to world markets (Toyota City 1977, 713-22). Urban planning expenditures followed in each case, as city officials redesigned Toyota City to fit the reorganization of Toyota's production system. SOCIAL CONSUMPTION. Social consumption in Toyota City is largely a Toyota Motor Corporation responsibility-so much so that Toyota is imbedded in virtually every facet of its employees' daily existence. Jobs, housing, transportation, shopping, education, medical care, and leisure activities all fall within the company's purview. The Toyota buses that line the Takaoka and Motomachi parking lots take Toyota employees to and from work each day. Toyota's blueand white-collar workers live in the same company-owned housing complexes. The corporation provides subsidized dormitory housing for as many as twenty thousand single workers and apartments for some five thousand married households. Toyota's dormitories perch on the city's hills, while employee apartment blocks, like the company's factories, are spread throughout the town. Apartments for married couples are mostly nondescript, two- and three-story concrete buildings; dormitories look much the same but are four- to six-stories tall. After five years in company housing an employee is required to leave. At that time the worker becomes eligible for a Toyota home purchase loan at a subsidized interest rate. A Toyota division produces housing and markets it through Toyota dealerships all over Japan. The company's subsidized employee mortgage plan thus generates demand for its own product. Most Toyota workers shop at a company store. Toyota runs a cooperative whose central facility is a full-line, four-story department store offering everything from produce to furniture. The cooperative has Ill, 000 members and more than one hundred retail branches located alongside Toyota's factories, dormitories, and housing complexes. It also runs the cafeterias in Toyota's plants. The Toyota Cooperative is financed through employee payroll deductions. Cooperative membership cards also serve as credit cards in the stores. Many Toyota workers have attended a company school. Eleven hundred students are currently enrolled in a three-year technical training program at Toyota High. 7 Some Toyota employees also have degrees

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Kuniko Fujita and Richard Child Hill

from the company's university, the Toyota Technological Institute. Toyota Tech is a richly endowed engineering school with an administration building fronted by a bust of the founding Toyoda father. Its students are all corporate employees judged by their superiors to be ripe for further training. Toyota employees are eligible for medical services at the Toyota Hospital, and their medical care is financed through the company's health insurance association. When Toyota workers need extra money in a time of crisis, they can draw upon the Toyota Family Fund, a joint company-employee effort. For recreation, there is the Toyota Sports Center, a cluster of tennis courts, soccer fields, and a large gymnasium atop a hill. Toyota also sponsors sports festivals five times a year and provides for employee vacation needs with a string of mountain and seaside resorts. When they retire at age sixty, Toyota employees receive a retirement allowance and a welfare annuity from the company and social security from the government (Toyota Motor Corporation 1984).

Segmented Workers, Divided City Union support for company policies in the workplace and in city hall stems from the belief that corporate growth ensures the security and welfare of union members. But not everyone laboring for Toyota's production system or living in Toyota City participates in Toyota's corporate welfare system. Indeed, a comparison of the social wage received by Toyota employees with the benefits accruing to workers in lower-tier supplier companies in the late 1970s revealed a strikingly segmented production system (Oyama 1985, 572) (see Table 8.9). For example, 71 percent of Toyota's single workers lived in company-subsidized dormitories as compared to 28 percent of the workers laboring for Toyota subcontractors. Fifty percent of Toyota's married labor force resided in company-subsidized housing, as compared to 21 percent of married workers at Toyota subcontracting firms. Eighty-three percent of Toyota workers were eligible for a welfare annuity as compared to 19 percent of the workers at Toyota's subcontractors. Leisure, medical, and hospital benefits conformed to the same inequitable pattern. In Toyota City, as in Japan more generally, the class boundaries between capital and labor are much less sharply drawn than are the boundaries between membership and nonmembership in the big-enterprise community.

192

TOYOTA CITY

TABLE

8.9

EMPLOYEE PARTICIPATION IN CORPORATE WELFARE PROGRAMS, TOYOTA MOTOR CORPORATION, COMPARED TO SUPPLIERS AND SUBCONTRACTORS, 1979

EMPLOYEE PARTICIPATION (%) PROGRAM

Toyota Motor Corporation

Suppliers and Subcontractors

70.9 50.8 83.1 91.3 86.2 98.0 88.5 82.4 89.2 89.2

27.9 20.9 18.7 39.5 41.9 34.9 16.3 9.3 79.1 69.8

37.2

23.3 30.2 27.6

Dormitories Housing Welfare annuities Leisu re resorts Sports facilities Co-op stores Hospital Health insurance Safety hats, shoes, work clothes Marriage and funeral benefits Car loans Accident insurance Housing saving system Housing loans

20.3 93.2 68.9

25.9

Source: Oyama 1985.

CONCLUSION

The relationship between Toyota Motor Corporation and Toyota City can be understood within the general framework of Japanese corporatism. According to Leo Panitch, corporatism "is a political structure within advanced capitalism which integrates organized socioeconomic producer groups through a system of representation and cooperative mutual interaction at the leadership level and mobilization and social control at the mass level" (Panitch 1980, 173; also see Schmitter 1979, 13). Corporatism blurs the distinction between economic and political power. In continental European corporatism, the state manages the economy by bringing the major interest groups (principally factions within business and labor) together and encouraging them to conclude a series of bargains about their future behavior that will move the economy along a desired growth path (Shonfeld 1965, 231). The state manages

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this feat of mediation by formulating policies and allocating revenues in ways that support the interests of business (favorable conditions for capital investment) and the interests of labor (an elaborate welfare system). What most distinguishes Japanese corporatism from the European variety is the Japanese corporation's holistic claims to community. According to Ronald Dore (1973, 18), the original prewar version of the "enterprise family" structure of Japanese firms combined corporatism with authoritarianism. The effect of the postwar "social democratic revolution in industry" was to modify the authoritarianism while retaining, indeed strengthening, the corporatist aspects reinforced by the ideology of the firm as community. As the case of Toyota Motor Corporation amply demonstrates, the Japanese corporation often takes responsibility for functions that in Western capitalist societies are performed by the market (e.g., job mobility and wages), the state (e.g., training and social welfare), and the community (e.g., sociability, leisure). Dore uses the term "welfare corporatism," on the analogy of "welfare statism," to describe this feature of Japan's political economy. Because labor's welfare is less a state than a corporate responsibility, corporate growth is the security Japanese workers bank on. The institutional division of labor that puts responsibility for social investment in the state and responsibility for social consumption in the corporation produces a symbiotic relationship between company and union and the sense of belonging workers often feel toward the corporation in Japan. Industrial corporations in the United States have responded to the imperatives of capital accumulation-productivity increases, labor control, and wage cost containment-primarily through deskilling and capital flight (Braverman 1973; Bluestone and Harrison 1982). Japanese corporations like Toyota, on the other hand, have remained profitable through just-in-time manufacturing, automation, flexible work organization, a communal corporate culture, and a segmented production system. Ronald Dore (1973, 364-65), focusing on the internal organization of the firm, has drawn an important distinction between two types of corporatism. The first is Japanese-style "hierarchial corporatism," in which managers are "benevolent guardians of the interest of the company as a whole," workers included. Top officials possess a broader, more experienced, long-term view that legitimates their judgelike role in adjucating decisions among different groups. The second is "democratic corporatism"-a system with the same kind of conciliation process among all main interest groups but in which bargaining is multilateral and reciprocal rather than bilateral and assymetrical.

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Dore asks if it isn't possible for democratic self-management to develop within a corporatist framework, and he makes favorable reference to the writings of Frank Tannenbaum (1964), which depict the whole history of trade unionism as an attempt to recreate the sense of community destroyed by the collapse of feudalism. For Dore, as for Tannenbaum, promise lies in the merging of union and firm in a democratic corporation functioning as a community. Robert Reich, a policy theorist from Harvard, has put forward a like-minded vision of corporate-centered possibilities for the United States. Taking his cue from Japan, Reich (1983, chaps. II, 12) envisions three shifts in political economic relations as America moves toward its "next frontier": a shift from fragmented self-interest to corporatist mediation in relations among business, labor, and government; a shift from deskilling to flexible specialization in the organization of work; and a shift from individual identification with the profession to individual identification with the corporation. In Reich's view, workplaces are replacing geographic communities as centers of social relationships in the United States. 8 In an "era of human capital," government will assist business to modernize in return for company agreements to maintain a lifetime employment system; a large part of the state welfare system will be replaced by government grants to businesses to hire the chronically unemployed; companies will administer public funds for social services; and these programs will be collectively run by worker representatives elected to labor-management councils. In short, corporations will largely replace local (and state?) governments as conduits of public support for economic and human development, and unions will meld with management into flexible enterprises operating as democratic political communities. Our study of Toyota City suggests that neither Dore nor Reich pays sufficient attention to the role of local government in Japanese corporatism. And by abstracting from the broader production system and regional environment in which corporations are imbedded, both authors give a misleading portrait of the egalitarian and democratic possibilities within welfare corporatism. Contrary to Reich's thesis about the declining importance of local jurisdictions, our study suggests policy coordination and social investment by local and regional government were necessary ingredients in Toyota's growth. Moreover, the positive features of production relations at Toyota Motor Corporation-lifetime employment, job enrichment, worker participation, communal sensibility, a beneficent social wagedo not trickle all the way down Toyota's production heirarchy. It would

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Kuniko Fujita and Richard Child Hill

seem that any plan for industrial reorganization that has serious democratic and egalitarian aims would have to extend the powers of local and regional government, not supercede them with corporate welfarism. 9 Whether Japan can sustain its system of welfare corporatism is open to question. Japan's successful development strategy-protecting its domestic market against imports while exporting finished products from a highly efficient, home-based manufacturing system-angered its trading partners, led to many restrictive actions against its exports, and fostered a steep appreciation in the value of the yen in 1985. Tariffs and a strong yen raised Toyota's car and truck prices abroad and severely squeezed the company's profit margins in the late 1980s. Toyota has bounced back with a vengeance since then, bolstered by its own rationalization measures and by a government-stimulated expansion of Japan's domestic economy. In fact, a labor shortage is Toyota's biggest domestic problem today; it is threatening enough that the company is building new plants in the south and north of Japan, where more workers are available. To circumvent export restraints and gain insulation from currency fluctuations, Toyota is also transplanting the higherpriced, export segment of its production system to North America and Western Europe. And the company is setting up export platforms for lower-priced, standardized cars and components in some less developed and newly industrializing countries (Fujita and Hill 1989). Only time will tell how well Toyota's community will withstand the decentralization of Toyota's production system.

NOTES

Acknowledgments: The research reported in this paper is based on discussions, interviews, and documents gathered during field trips to Toyota City in May 1986, December 1989, and June/July 1990. Research support was provided by International Programs and the Asian Studies Center at Michigan State University, and by the state of Michigan. We wish to express our appreciation to Yoshiharu Tateishi, Ryuuzi Muroya, Tooru Kuzuhara, and, especially, Masato Yoshimoto, of the Toyota Motor Corporation, for their generous assistance during our research. The interpretations and conclusions reached in this study are of course our own. 1. Additional support for this position can be found in Allinson 1975; Samuels 1983; and Broadbent 1986. 2. Abundant research on Japanese companies suggests that size of firm is connected to capital possessed, value added, wages and job security achieved, and the gender composition of the labor force (Dore 1973; Clark 1979; McMillan 1985). In general, the higher up the value-added chain, the bigger the firm, the larger the

196

TOYOTA CITY

3.

4.

5.

6.

7. 8.

9.

business profits, the more privileged the conditions of work and pay, and the more male dominated the work force (Oyama 1985, chap. 1). All but 7 percent of the firms in Toyota's largest supplier association have had a relationship with the parent company since the 1950s (Arnesen, Cole, and Krishna 1987). Toyota subcontractors must accept strict conditions and controls with respect to price, quality, delivery, and transaction regulations. For their part, subcontractors seek adoption by a Toyota parent to secure the benefits that go with stable markets, access to investment funds, stable supplies of good-quality raw materials, technical and managerial guidance in plant layout, and so on (Cusumano 1985, chap. 5). Eiji Toyoda, the 74-year-old patriarch of the family, served as president of the company for sixteen years and then chairman of the board. Shoichiro Toyoda is the president of Toyota Motor Corporation. He is Eiji's second cousin, the son of Kiichiro Toyoda, and the grandson of the founder of Toyota Automated Loom Works, Ltd., which gave birth to the Toyota empire. Tatsuro Toyoda, the younger brother of Shoichiro, is president of New United Motor Manufacturing, Inc. (NUMMI)-Toyota's joint venture with General Motors at Fremont, California. Shoichiro and Tatsuro represent the generation now assuming control of the Toyota empire. The youngest generation of sons and sons-in-law, some of whom have been adopted so that they will bear the Toyoda name, currently serve as section chiefs and department heads in various Toyota companies (see Armstrong 1985). Toyota City's industrial policies may seem mild by comparison to today's local incentive schemes. Yet it should be borne in mind that Toyota City's development incentives were formulated in the early 1950s, well in advance of the boom in local public subsidies to private corporations that characterized the 1960s and 1970s in the United States and Japan. For example, when residents living between Toyota City and Kinuura petitioned against the construction of a road connecting the two cities-the intended first leg in Toyota's route to the world market-Yutakakai squelched the opposition movement by collecting a larger number of countersignatures (Oyama 1985, chap. 6). All students are male; women are not admitted. Government tax expenditures underwriting the social benefits corporations provide their employees now equal one-fifth of all government outlays on social services (as compared to one-tenth in 1940). As a percentage of employee compensation, the social wage has risen from 17 percent in 1966 to 28 percent in 1982 and ranges as high as 40 percent in some large U. S. corporations (Reich 1983, chap. 11). On this point see Piore and Sabel (1984, chap. 10).

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Kuniko Fujita and Richard Child Hill Allinson, Gary. 1975. Japanese Urbanism: Industry and Politics. Berkeley: University of California Press. Altshuler, Alan. 1984. The Future of the Automobile. Cambridge, Mass.: MIT Press. Armstrong, Larry. 1985. "The Toyoda Empire." Business Week, November 4. Arnesen, Peter, Robert Cole, and A. Rama Krishna. 1987. Japanese Auto Parts Companies in the and Japan: Implications for Competitors. Ann Arbor: University of Michigan East Asia Business Program. Bluestone, Barry, and Bennett Harrison. 1982. The Deindustrialization of America. New York: Basic Books. Brandes, Stuart. 1970. American Welfare Capitalism. Chicago: University of Chicago Press. Braverman, Harry. 1973. Labor and Monopoly Capital. New York: Monthly Review Press. Broadbent, Jeffrey. 1986. "The Japanese Growth Machine: The Political Economy of Local Industrial Development." Paper presented at the Annual Meetings of the Association for Asian Studies, Chicago, March 21-23. Clark, Rodney. 1979. The Japanese Company. New Haven: Yale University Press. Cole, Robert. 1979. Work, Mobility and Participation. Berkeley: University of California Press. Cusumano, Michael A. 1985. The Japanese Automobile Industry. Cambridge, Mass.: Harvard University Press. Dore, Ronald. 1973. British Factory, Japanese Factory. Berkeley: University of California Press. Fujita, Kuniko. 1986. "Corporatism and Corporate Welfare Programs as the Impact of the Korean War on Toyota Motor Corporation." In Proceedings of the Seventh Occupation Studies Symposium. Norfolk, Va.: MacArthur Memorial Foundation. Fujita, Kuniko, and Richard Child Hill. 1989. "Global Production and Regional 'Hollowing Out' in Japan." Comparative Urban and Community Research

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2:200-230. Gordon, Andrew. 1988. The Evolution of Labor Relations in Japan: Heavy Industry, 1853-1955. Cambridge, Mass.: Harvard University Press. Gordon, David. 1978. "Capitalist Development and the History of American Cities." In Marxism and the Metropolis, edited by William K. Tabb and Larry Sawers, pp. 25-63. New York: Oxford University Press. Hamilton, F. E. Ian. 1981. "Industrial Systems: A Dynamic Force behind International Trade." Professional Geographer 33, no. 1:26-35. Holmes, John. 1986. "The Organization and Locational Structure of Production Subcontracting." In Production, Work, Territory, edited by Allen J. Scott and Michael Storper, pp. 80-106. Boston: Allen & Unwin. Hurley, Neil. 1959. "The Automotive Industry: A Study in Industrial Location." Land Economics 35, no. 1:1-14. Jacobs, Jane. 1984. Cities and the Wealth of Nations. New York: Random House. Johnson, Chalmers. 1982. MITI and the Japanese Miracle. Stanford, Calif.: Stanford University Press.

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Keneko, Yoshio. 1978. "Jidosha kanren chusho kigyo no jittai to mondaiten" (The Reality and Problems in Auto-Related Small and Medium-Sized Industries). Aichi keizai jiho, no. 120. - - - . 1982. "Jidosha kanren chusho kogyo jittai chosa dai 2 ho" (Research on Auto-Related Small and Medium-Sized Industries, Report No.2). Aichi keizai jiho, no. 125. - - - . 1983. "Jidosha kogyo ni okeru shitauke keiretsu kogyo" (The Subcontracting System in the Auto Industry). Shoko kinyu, May/June. Lipietz, Alain. 1987. Mirages and Miracles. London: Verso. McMillan, Charles J. 1985. The Japanese Industrial System. New York: Walter deGruyter. Markusen, Ann. 1985. Profit Cycles, Oligopoly and Regional Development. Cambridge, Mass.: MIT Press. MITI (Ministry of International Trade and Industry). Small and Medium-Sized Enterprises Agency. 1977. Bungyo kozo jittai chosa (Survey of the Division of Labor in the Auto Industry). Tokyo. Moore, Joe. 1983. Japanese Workers and the Struggle for Power, 1945-1947. Madison: University of Wisconsin Press. Murata, Kiyoji, ed. 1980. An Industrial Geography of Japan. New York: St. Martin's Press. Nohara, Hikari. 1980. "Toyota kigyoshudon ni okeru rodosha shihai to mujuntenka" (Structural Relations between Labor Control and Contradictions in Toyota's Corporate Group). Nihon fukushi daigaku kiyo, no. 46. Ohno, Taiichi. 1978. Toyota seisan hoshiki (Toyota's .Production System). Tokyo: Diamond. Ohno, Taiichi, and Yasuhiro Monden. 1983. Toyota seisan hoshiki no shin tenkai (New Developments in Toyota's Production Method). Tokyo: Nihon Noritsu Kyokai. Okimoto, Daniel. 1989. Between MITI and the Market. Stanford, Calif.: Stanford University Press. Okuma, Sakae. 1966. "Toyota jidosha no hatten to Toyota shi" (Development of Toyota Motor Company and Toyota City). Toshi mondai 18, no. 6. Osborne, David. 1988. Laboratories of Democracy. Cambridge, Mass.: Harvard University Press. Oshima, Taku. 1986. Gendai nihon no jidosha buhin kogyo (The Auto Parts Industry in Contemporary Japan). Tokyo: Nihon Keizai Hyoronsha. Oyama, Yochi, ed. 1985. Kyodai kigyo taisei to rodosha: Toyota no jirei (Giant Corporate System and Workers: The Case of Toyota). Tokyo: Ochanomizu Shobo. Panitch, Leo. 1980. "Recent Theorizations of Corporatism: Reflections on a Growth Industry." British Journal of Sociology 31, no. 2 (June): 159-80. Pempel, T. J. 1982. Policy and Politics in Japan: Creative Conservatism. Philadelphia: Temple University Press. Pempel, T. J., and K. Tsunekawa. 1979. "Corporatism without Labor? The Japanese Anomaly." In Trends toward Corporatist Intermediation, edited by Phillipe Schmitter and Gerhard Lehmbruch. Beverly Hills, Calif.: Sage. 199

Kuniko Fujita and Richard Child Hill Piore, Michael J., and Charles Sabel. 1984. The Second Industrial Divide. New York: Basic Books. Reich, Robert. 1983. The Next American Frontier. New York: Times Books. Samuels, Richard. 1983. The Politics of Regional Policy in Japan. Princeton, N. J.: Princeton University Press. Sato, Yoshio. 1982. Small Business in the Japanese Economy. Tokyo: Japan Foundation. Schmitter, Phillipe C. 1979. "Still the Century of Corporatism?" In Trends Toward Corporatist Intermediation, edited by Phillipe C. Schmitter and Gerhard Lehmbruch. Beverly Hills, Calif.: Sage. Scott, Allen. 1988. Metropolis: From the Division of Labor to Urban Form. Berkeley: University of California Press. Sheard, Paul. 1983. "Auto-Production Systems in Japan: Organizational and Locational Features." Australian Geographical Studies 21, no. 1:49-68. Shonfeld, Andrew. 1965. Modern Capitalism. New York: Oxford University Press. Sugimori, Y., et al. 1977. "Toyota Production System and Kanban System-Materialization of Just-in-Time and Respect-for-Human System." Fourth International Conference on Production Research, Tokyo. Preprint 3.12. London: Taylor & Francis. Sumiya, Mikio, et al. 1963. "Toyota jidosha kogyo" (Toyota Motor Manufacturing). In Gijutsu kakushin no shakaiteki eikyo (Social Effects of Technological Innovation), edited by Nihon Jimbun Kagakukai. Tokyo: Tokyo University Press. Tannenbaum, Frank. 1964. The True Society. London: Basil Blackwell. Toyota City. 1977. Toyota shishi (History of Toyota City). Vol. 4. Toyota City. 1981. Toyota shishi (History of Toyota City). Vol. 9. Toyota City. 1983a. Toyota: The City Guide '83. Toyota City. 1983b. Toyota shi no yosan (Toyota City's Budget in 1983). Toyota City. 1984 (1976). Tokeikiho: Tokushu; Toyota shi no kogyo (Statistical Quarterly: Special Issue on Toyota City Industries). Toyota City. - - . 1987. Toyota shi no kogyo (Toyota City's Industries). Toyota City. Toyota Motor Company Labor Union. 1956. Toyota Motor Company's Labor Union. Toyota City. - - - . 1966. Nijunen no ayumi (Twenty Years' Progress). Toyota City. Toyota Motor Corporation. 1984. Labor/Management Relations. Toyota City. - - - . 1986a. Toyota Group no shuyo kyoryoku kojo (Toyota Group's Major Suppliers). Toyota City. - - . 1986b. Toyota. Toyota City. - - . 1987. Outline of Toyota 1987. Toyota City. Toyota Motor Manufacturing. 1967. Toyota jidosha no 20 nen shi (Twenty Years of Toyota Motor Manufacturing). Toyota City. - - - . 1980. Toyota no ayumi (Toyota's Progress). Toyota City. Wada, Yatsuka. 1966. "Kigyo toshi to chiiki keizai" (Corporate City and Local Economy). Toshi mondai 18, no. 6. Womack, James P., Daniel T. Jones, and Daniel Roos. 1990. The Machine That Changed the World. New York: Rawson Associates. Yamamoto, Kiyoshi. 1981. Jidosha kogyo no roshi kankei (Labor-Management Relations in the Auto Industry). Tokyo: Tokyo University Press. 200

Part IV

DECLINING INDUSTRIAL CITIES AND POLICY RESPONSES

9

The Decline and Renaissance of the Steel Town THE CASE OF KAMAISHI Masatoshi Yorimitsu

Postwar Japanese economic development can be divided into three stages: the postwar recovery period, a high-growth period, and a low-growth period. The 1980s, the stage of low growth, have been a major turning point in Japanese society and economy. Changes are in progress at three levels: Japan's position in the world economy, Japan's domestic economic system, and Japan's regional economy. On-going changes at all three levels must be borne in mind when we analyze the particular problems facing cities and towns in Japan today.

JAPAN'S TURNING POINT

A Changing Position in the World Economy Although postwar Japanese economic development has attracted world interest, Japan's position in the world economy in the past ten years has become the major object of attention. Just after World War II, conditions in Japan were very harsh: production facilities and railroads had been destroyed, productivity was below prewar standards, urban buildings had been severely damaged by air raids, and a majority of the Japanese were starving. Today, having recovered from difficult conditions and had a period of high economic 203

Masatoshi Yorimitsu

growth, Japan is a world economic power producing 10 percent of the world's GNP. Various factors are behind Japan's postwar rise to economic power. What is to be particularly emphasized here is that Japanese manufacturers actively introduced foreign technologies, revising them to make them comfortable for the Japanese, and that labor and management worked together to produce better goods at lower cost. As a result, Japanese manufacturing became competitive in the world market. While Japan's trade balance radically improved with the nation's improved manufacturing performance, excessive exports of manufactured products caused frictions with Japan's trade partners. To circumvent these frictions, Japan increased direct foreign investment and became the world's largest creditor nation (Karatsu 1988). As one of the world's economic powers, Japan must playa different role from the one it played as an economically weak nation. Japan is now expected to contribute to the world economy by helping to coordinate economic activities among advanced countries and between advanced and developing countries. Coordinating economic activities from the standpoint of the world economy means not only solving economic problems among countries but also changing the internal structure of the Japanese economy (Economic Planning Agency 1988). Major reorientation of Japan's economic structure has meant, first of all, shifting from export dependency to dependence on domestic demand. Second, as a technologically advanced nation, Japan must actively promote technology transfer to developing nations in order to help to solve North-South problems. Because Japan intends to transfer newly developed industrial technology, Japan must playa leading role in the development of basic research. Japan can thus contribute to the world by diffusing its achievement (MITI 1988).

Changes in the Domestic Economic System The postwar Japanese economy took on a pattern of export dependency. Goods were made from imported raw materials and resources, and expenditures for imports were paid for by exporting finished products. Products such as textiles and steel in the early stage and then television sets, VCRs, cars, and semiconductors later on became highly competitive in the world market. These products, designed for mass production and mass consumption, were made by the assembly and processing industries. Japan was a champion in the mass-production industry (Moritani 1981). However, in advanced countries people's values changed as 204

DECLINE AND RENAISSANCE OF THE STEEL TOWN

living standards improved and the service economy advanced. It became harder and harder to satisfy consumers' needs and demands with standardized, mass-produced goods. The mass production system had reached a limit, and a flexible production system (producing many kinds of products in small amounts) was sought instead. Furthermore, changes in the market promoted the development of information technology, which changed the business environment. The reigning view of the production system changed from an emphasis on planning to an emphasis on the market. Market-hegemonic production is based on customers' orders, and finished products meet customers' needs. Since the production plan changes according to customers' needs, information must be collected and analyzed. The quantity of information required about services and products inevitably increased, and a new phenomenon, informationalization, sprang up worldwide (elM Study Group 1988). The informationalization of industry promotes the industrialization of information while being supported by it. The industrialization of information means that info'rmation-related businesses have developed into an independent industry. A variety of businesses now specialize in collecting, analyzing, and processing information. The quality of information-related businesses has improved through advanced information technology, and the scope of information application has been enlarged. Information costs have been lowered, and the market for informationrelated businesses has penetrated deeply into society (Iinuma, Ohira, and Masuda 1987). Industrial society has been transformed into an information society through the informationalization of industry and the industrialization of information. In an information society industries and technologies fuse in new ways. A typical example is mechatronics, a new industry born out of the links between technologies in general machinery, electrical machinery, precision machinery, electronics, and telecommunications. Furthermore, the network systems among economic actors take a variety of new forms and become more complex (Miyazawa 1988). Japan is rapidly changing into an information society.

Social and Economic Changes in Regions Another major change is in Japan's regional structure. Japan's rural-to-urban migration pattern can be viewed across the three postwar periods referred to earlier. Population flowed from rural to urban areas in the first stage of the postwar recovery and the period of high economic growth. It ceased flowing into urban 205

Masatoshi Yorimitsu

areas in the second half of the period of high economic growth and at the beginning of the 1980s (Yorimitsu 1987). The concentration of population in Japan's three largest metropolitan areas seemed to stop. However, in the third stage, the globalization of Japanese corporations and the trend to informationalization has led people to gravitate again to Tokyo, though not to other large metropolitan areas. Migration from rural to urban areas continued throughout this century, and urbanization has come to characterize all of Japan (see Table 9.1). The largest causes of migration out of rural areas have been greater income and employment opportunities in cities. Migration eventually gave rise to rural exodus and urban density problems. Density in urban areas called for urgent policy responses, as did the social and economic gap between rural and urban areas. Regional industrial policy was developed in the postwar period to respond to these problems. Regional development policy has been based on a national comprehensive land plan, which the central government issued four times in the past and regional and local governments implemented to varying degrees. The goals, methods, and effects of regional policy can be summarized as follows: First, regional development policy in the 1950s was aimed at creating desirable conditions for industry centered around dam development, following the model of the Tennessee Valley Authority in the United States. Toward this goal, public works were devoted to flood protection and the development of water resources. During the postwar recovery process, existing industrial areas became crowded due to rapid growth, and a gap began to appear between

TABLE

9.1

POPULATION CHANGE IN URBAN AND RURAL AREAS, 1920-85

1920 1930 1940 1950 1960 1970 1980 1985

URBAN

RURAL

18.0% 24.0 37.7 37.3 63.3 72.1 76.2 76.7

82.0% 76.0 62.3 62.7 36.7 27.9 23.8 23.3

Source: Population census.

206

DECLINE AND RENAISSANCE OF THE STEEL TOWN

industrial and nonindustrial regions. The growth pole development project was set forward in the First National Comprehensive Development Plan in 1962 to solve problems such as urban density and regional inequality. By creating large industrial complexes in many regions, growth pole development would diffuse economic effects throughout Japan. The plan would also solve the problem of urban density by decentralizing industry from crowded urban areas. Regional living standards would be raised by providing production facilities and sustainable living conditions. Thus, the central government attempted through' this first plan to attack urban density and rural decline at the same time. Ironically, it turned out that industrial concentration actually accelerated in the Pacific Belt centering on basic materials such as steel and chemicals. Although it is well documented that the coastal belt made an enormous contribution to the Japanese economy and made Japan one of the world's great industrial nations (Okita 1967), the belt lagged behind in the provision of sustainable living conditions. The Second National Comprehensive Land Development Plan in 1969 was a policy response to widening regional disparities. This plan proposed large development projects, such as traffic and telecommunications networks nationwide, with the goal of improving living conditions in the regions and thus overcoming regional inequalities. But from the beginning the plan encountered opposition from citizens' environmental movements to protect residential areas from pollution generated by relocated plants. The plan failed before much of it had been realized (Economic Planning Agency 1969a). Surprisingly enough, however, the 1970s saw a narrowing of the gaps between regions. Regional incomes began to converge as expenditure on public works in the regions increased, as labor-intensive plants were decentralized to the regions, and as the service economy grew in the nation as a whole. Even in regions with a dramatic population decline in the 1960s, income levels rose and people tended to stay in their hometowns. The Third National Comprehensive Land Development Plan was projected in 1973 against a background of slowing migration to cities and diminished regional income inequalities. However, as industrial decentralization to the regions slowed, job growth based on industrial relocation from urban areas soon reached its limits. And development of outlying living areas by central government funds did not work smoothly due to a constrained public budget. Income transfer to the regions also declined due to retrenchment in public expenditures. As a result, the per capita income gap among prefectures expanded (National Land Agency 1977; Ando 1987). As the 1980s began, conditions favoring the regions disappeared 207

Masatoshi Yorimitsu

altogether. First, income transfers from urban to rural areas through the public finance mechanism declined further as the debt problem became chronic and public finance reform became a political issue. Second, corporations responded to the appreciating yen through rationalization of production, development of new products, and technological innovation. Corporate restructuring efforts drew upon Tokyo's concentrated urban and international functions, especially sending and receiving information. As the globalization of Japanese corporations accelerated, Tokyo attracted many international financial functions. Population flow into Tokyo resumed. But the regional gap that developed this time did not simply take the traditional form of movement to urban from rural areas. Now it was movement to the Tokyo area from all the rest of Japan (Kiyonari 1987). The Fourth National Comprehensive Land Development Plan in 1987 envisaged Tokyo as a world financial center and projected several decentralized growth poles in the regions so as to meet goals of regional autonomy and development (National Land Agency 1987). There is no reason to believe that the regional gap will be narrowed by regional efforts alone. The declining regional inequality appearing in the 1970s was not produced by regional efforts but by income transfer from the central government and by growth in the supply of part-time jobs, both of which resulted in supplemented household incomes. Because neither factor is operating at present, regional gaps are likely to grow. The changes mentioned so far show that the problems facing regional cities today are structural in nature. The Fourth National Comprehensive Land Development Plan emphasizes regional development through regional efforts. However, regional economies need structural change and an open discussion about it before they can revitalize. Central to the discussion should be decentralizing the public financial structure to favor the regions, which is necessary for regional development.

THE ECONOMIC STRUCTURE OF KAMAISHI

Profile of Kamaishi Kamaishi is located in the northeast of Honshu in Iwate Prefecture. The town spreads out widely-29 kilometers from east to west, and 30 kilometers from north to south. Eightyseven percent of the area is mountainous, and the mountains are close to the coast. The town's shopping area, housing, and plants are all situated in a narrow space between the mountains and the sea. Kamaishi is a 208

DECLINE AND RENAISSANCE OF THE STEEL TOWN

corporate town for Japan Steel's Kamaishi Mill, the town's largest enterprise (Tanozaki 1985). Kamaishi faces the Sanriku Coast and is badly located in relation to traffic networks. While major traffic networks have been built in the inner part of Iwate Prefecture, it takes about two hours to reach the Tohoku highway, the Tohoku express train, and the Hanamaki airport by train or car from Kamaishi. As mentioned earlier, changes in Japan's economic structure are forcing changes in mature industries today. The regions that have been dependent on older industries face job loss, population loss, and economic decline. The government has responded to these problems with various policies targeted at "structurally stagnant industries" (Kato 1984). 1 Kamaishi's major industry, iron and steel, is stagnant. The city must reconstruct its economy by developing new industries and bringing in new corporations. However, its disadvantageous location discourages corporations from building new plants there. And each time the Kamaishi Steel Mill has restructured it has radically reduced its work force and the city has lost population. Japan Steel's latest reorganization plan, issued March 25, 1989, stipulated that the strip mill in the Kamaishi Steel Works would be eliminated and the Kamaishi Steel Mill would specialize in producing wire materials. The rationalization plan also sharply reduced the number of production workers in the mill. Since a cessation of steel production would lower orders for subcontracted work, supplier jobs would also be lost (Iwate nippo 1988). Consequently, the city faces the loss of its largest source of employment. The rationalization plan will have a much different impact than past reorganization plans have had.

Population Changes in Kamaishi Kamaishi has lost 40 percent of its population in the past quarter century. Population reached a peak of 92,123 at the end of March 1964 and has continuously declined since then, to 54,805 in April 1989. Population loss in the town progressed in parallel with job loss at the Kamaishi Steel Mill, clearly demonstrating how dependent on the mill the town has been. Several correlated factors are at work here. First, the steel industry weighed heavily in the town's economy. Second, the work force in the mill consisted primarily of men who were the sole breadwinners for their families. Third, employees of suppliers and subcontractors also worked in the mill; their number almost equaled the mill's regular work force. Fourth, the wage ratio of steel workers to em209

Masatoshi Yorimitsu

ployees of suppliers and subcontractors to workers in local small and medium-sized companies was 100:70:50. Higher wages in the mill pushed up the city's consumption level. One consequence of a reduced work force in the steel mill is that Kamaishi will rapidly lose more population because the mill is the last attraction of the city. The population of Kamaishi is predicted to fall to 45,721 in 1995, and to 35,948 by 2000 (Toyo Keizai Shimposha 1989). These predictions shocked the citizens of Kamaishi as well as people working on the town's revitalization programs. Population loss will be inevitable unless Kamaishi comes up with dramatic countermeasures.

Industrial Structure Kamaishi's employment peaked in 1965 and has declined since then (see Table 9.2). Large job losses have been recorded in agriculture and forestry, manufacturing, and mining. In spite of new jobs in service and in wholesale and retail trade, job growth in the tertiary industry was not significant. The same trend has been observed nationally as Japan moves toward a service economy. In

9.2

TABLE

EMPLOYMENT BY INDUSTRY IN KAMAISHI

INDUSTRY

Agriculture Forestry Fishery Mining T ra nsportation Manufacturing Electric, gas, and water Wholesale and retail trade Finance and insurance Real estate Services Public work Unclassified Total

1955

1965

1975

1980

1985

3,934 1,106 2,237 1,612 1,886 9,340

2,377 336 2,551 1,025 2,985 8,827 158 6,018 4193

914 201 2,029 398 3,599 6,135 203 6,510 638 55 5,613 821

868 159 1,671 332 2,615 5,581 213 5,810 687 66 5,866 888

29,354

26,690

3,217 690

4,941 802 13

1,925 219 2,434 876 3,518 6,613 204 6,240 560 39 5,493 780 156

30,251

32,920

32,621

4,165 1983

Source: Population census. Note: Figures represent employed persons aged fifteen years and older. alncluding real estate.

210

DECLINE AND RENAISSANCE OF THE STEEL TOWN

Kamaishi, growth in service ,jobs can hardly compensate for the drastic job loss in manufacturing. In 1986, the 131 Kamaishi manufacturing companies that employed more than 4 workers employed a total of 5,007 workers (see Table 9.3). Kamaishi's major industries were food processing and steel. The food industry ranked first in the number of companies, while the steel industry ranked first in the number of workers employed. The steel industry far surpasses the food industry in importance to the city, however. Workers in the steel industry-totaling 2,434 in 1986-amounted to about half of the town's industrial work force. The steel industry paid 76.7 percent of the town's total wages and produced 67 percent of its value-added products. This industry was also responsible for 63 percent of the value of all manufactured goods shipped out of Kamaishi (Iwate

TABLE

9.3

KAMAISHI'S MANUFACTURING INDUSTRY IN

INDUSTRY

NO. COMPANIES a

Food Textile Garment Lumber Furniture Printing Chemical Plastics Leather Ceramics Steel M~al

General machinery Electrical machinery Transport machinery Precision instruments Others Total

1986 VALUE OF PRODUCTS b

EMPLOYED PERSONS

1,268 41 121 132 16 171

56 3 5 8 3 9

2 3 1 5

191,551 4,731 16,627 33,454 2,615 36,903

x

x

43

6,468

2,100,868 11,045 33,709 225,146 6,321 99,452 x

25,072

x

x

x

4

70 2,434 82 37 254 104 159

186,910 5,394,846 50,458 24,796 112,934 155,239 23,937

1

x

19,617 1,465,778 15,878 7,878 42,653 27,402 19,608 x

5,007

1,910,696

8,617,670

6 9 3 6 7

131

Source: Iwate Prefecture 1987. Note: x represents an amount that is included in the totals. alncludes all companies employing more than four workers. bFigures represent tens of thousands of yen.

211

x

Masatoshi Yorimitsu

Prefecture 1987a). The only company in town that employed more than one thousand workers was the Kamaishi Steel Mill. The rest employed fewer than one hundred each. The mill is a giant in Kamaishi. It must also be said that the number of jobs and the value of manufactured goods shipped have been growing in Iwate Prefecture since 1984. By contrast, the number of jobs in Kamaishi has declined since 1982, and the total value of shipped manufactured goods since 1984 (Iwate Prefecture 1987a). Kamaishi's decline is explained by the stagnation and rationalization of the steel industry.

Employment Trends in Kamaishi Kamaishi's economic stagnation can also be seen in data provided by the city's office of employment security. The ratio of jobs to job seekers has been much lower in Kamaishi than in the nation as a whole (see Table 9.4). Since 1980 available jobs in Kamaishi have been fewer than half the job seekers. Job seekers steadily increased between 1980 and 1987, reaching six thousand in 1987. Available jobs fluctuated from one year to another and increased by only one thousand during the period. Only 12 to 13 percent of job seekers were able to find employment. What is problematic is not so much that the ratio of jobs to job

TABLE

9.4

RATIO OF AVAILABLE JOBS TO JOB SEEKERS,

1975 1976 1977 1978 1979 1980

1981 1982 1983 1984 1985 1986 1987

1975-87

NATION

IWATE PREFECTURE

KAMAISHI

0.59 0.64 0.54 0.59 0.74 0.73 0.67 0.60 0.61 0.66 0.67 0.62 0.76

0.53 0.63 0.56 0.60 0.74 0.64 0.48 0.48 0.48 0.57 0.57 0.52 0.65

0.63 0.52 0.53 0.47 0.65 0.52 0.44 0.38 0.37 0.40 0.50 0.34 0.49

Source: Kamaishi Employment Security Office 1987.

212

DECLINE AND RENAISSANCE OF THE STEEL TOWN

seekers has been low as that only a quarter of job seekers were able to find employment. The low reemployment rate is due to mismatching between jobs and workers (see Table 9.5). First, there is a mismatching by age. Job seekers were overwhelmingly middle-aged and older, but few jobs were offered to this age group. Second, there is a mismatching by occupation. Clerical jobs were few in number but were sought by a great number of people. On the other hand few women wanted the many available production jobs for semiskilled women. It is also important to look at the employment trends of high school graduates in Kamaishi (see Table 9.6).2 Only 20 percent of high school graduates found jobs in the local labor market. The young have not found staying in the city attractive and are looking for employment elsewhere. Situations like this become worse if they are left unresolved. A viable revitalization plan must make a city attractive enough for the

9.5

TABLE

AVAILABLE JOBS AND JOB SEEKERS BY OCCUPATION AND ACE GROUP IN KAMAISHI, 1987

AVAILABLE JOBS

JOB SEEKERS

Male

Female

Total

Male

Female

Total

16 5 44 35 15 103 35 253

11 23 18 21 0 226 7 306

27 28 62 56 15 329 42 559

15 89 46 18 65 215 101 549

23 131 51 26 1 45 49 326

38 220 97 44 66 260 150 875

102 72 39 22 16 2 253

134 105 42 17 8 0 306

236 177 81 39 24 2 559

99 71 77 243 58 1 549

132 62 53 49 30 0 326

231 133 130 292 88 1 875

OCCUPATION

Professional and managerial Clerical Sales Service T ra nsportation Semiskilled Laborers Total AGE GROUP

18-29 30-44 45-54 55-59 60-64 65 and older Total

SouTce: Kamaishi Employment Security Office 1987.

213

Masatoshi Yorimitsu TABLE

9.6

EMPLOYMENT TRENDS FOR HIGH SCHOOL GRADUATES, KAMAISHI,

Graduates Employed Kamaishi Iwate Outside Iwate

1983-88

1983

1984

1985

1986

1987

1988

1,829 934 202 210 522

1,728 967 202 229 536

1,573 935 173 209 553

1,807 1,065 221 149 695

1,668 954 186 141 627

1,541 857 200 125 532

Source: Kamaishi Employment Security Office.

young to want and be able to stay there. The plan must also make use of the vitality of middle-aged and older people. Such a scheme for revitalization requires all public and private bodies in the city to pull together and offer their ideas for open discussion.

KAMAISHI AND THE STEEL INDUSTRY

The History of Kamaishi's Steel Industry The relation between Kamaishi and the steel industry began before the Meiji era. The Western method of steel production was introduced at the end of the Tokugawa era. When the Meiji government expanded manufacturing as the nation's economic foundation (Kobayashi 1977), it built and ran factories for the purpose of transplanting European and American industrial technology to Japan. In 1874 the Meiji government established a state-run steel mill in Kamaishi, using resources from state-run mining nearby (Iida, Ohashi, and Kuroiwa 1969). The second high-blast furnace was completed in 1878; and a railroad was built between the Kamaishi Steel Mill and the mines nearby. These facilities were imported largely from Britain, and British engineers came to direct the work. The mill succeeded in producing iron in 1880 but had to cease operation in 1883 because of fuel shortages and technical problems. All facilities were sold to private parties. Chobei Tanaka, known as the "iron merchant," bought some of the mining operations. Kyutaro Yokoyama, manager for Chobei Tanaka, began experimenting with a Japanese pattern of small high-blast furnaces and the Oshimastyle high-blast furnace. He tried and failed repeatedly but made innovations after each failure. Finally, after countless failures and innovations, 214

DECLINE AND RENAISSANCE OF THE STEEL TOWN

success came in 1886. In the following year, Chobei Tanaka bought the remaining mines and all of the steel mill machinery. He established Tanaka's Kamaishi Mining and Iron Works, the forerunner of the present Kamaishi Steel Mill. Tanaka's Kamaishi Mining and Iron Works expanded its facilities and innovated steel production technology. It successfully produced coke and made remarkable achievements in refining steel from start to finish. However, the iron works faced a business downturn just before World War I and had to negotiate the transfer of management rights with Mitsui Mining Company. The war terminated these negotiations. The iron works were reorganized and named Tanaka's Kamaishi Mining Company in 1917. But Tanaka Mining Company was hard hit by the 1923 great earthquake in Kanto. It was sold to Mitsui Mining Company and thus came under the umbrella of the Mitsui Zaibatsu. With financial support from the Mitsui Zaibatsu, the Kamaishi works underwent a thorough modernization of facilities and reorganization. In 1934 the wartime government reorganized all iron and steel companies into one big steel company, Japan Steel. Kamaishi Mining Company became Japan Steel Kamaishi Steel Mill. In July and August 1945 just before the war ended, Kamaishi was twice severely damaged by fleet bombing. Production capacity was reduced almost to zero. In 1948, Japan Steel was divided into several steel companies under the U.S. Army's General Headquarters policy of economic decentralization. The Kamaishi Steel Mill became Fuji Steel's Kamaishi Steel Mill. In the 1970s, the (New) Japan Steel Corporation was established through a merger of Fuji and Yawata, and the Kamaishi Steel Mill became Nippon Steel's Kamaishi Steel Mill. 3 The Kamaishi Steel Mill, in spite of successive changes in its management, laid the foundation for Japan's modern steel industry and has been a leader in steel production technology. It set records in the production of strip iron, using coke for the first time in Japan. It was also the first private mill to adopt a complete system of steel production from start to finish. Finally, it adopted continuous strip mill facilities earlier than any other steel company. The Kamaishi Steel Mill eventually lost its dominant position in the industry to Yawata and other steel-producing centers. In the postwar era, the Kamaishi Steel Mill, then part of Fuji Steel, applied part of its skilled work force to the construction of giant steel mills all over Japan. As these new huge steel companies started up production, the Kamaishi Steel Mill's historic role diminished. A small-scale steel mill no longer 215

Masatoshi Yorimitsu

had any advantage. With structural change in the Japanese economy and Japan Steel's reorganization policy, the Kamaishi Steel Mill must now extinguish the light under its high-blast furnace.

The Community and the Steel Mill The nature of the relation between the community and the steel mill in Kamaishi is a debated issue. One position has it that the steel mill did more for the community than a privately owned corporation had to do, making an investment not only in the production facilities of the mill, which required a vast amount of money, but also in schools and other facilities required to create a living environment for its work force. Proponents of this view say that the steel mill made a great contribution to the surrounding community and took its social responsibility seriously. Others hold that the steel mill dominated the community in order to make use of local resources and thereby controlled the local economy and kept the community from pursuing its own path to development (Suzuki 1977). Common to these opposing views is an understanding that the community where the mill is located has inevitably developed a dependency on the mill. This dependency has prevented Kamaishi from getting out of the business of iron and has had negative effects on the city's revitalization. As mentioned in the first half of this essay, the economics of the steel industry worsened at the beginning of the 1980s. Should Kamaishi have sought policies to get out of steel at that point? Production of coarse steel, 40 million tons in 1973, slowed down and eventually fell to 31 million tons in 1987. In 1978,. a reorganization plan closed down large coke-blasting and -peeling plants. In 1984 the closing of one of Kamaishi's two high-blast furnaces was announced; the mill was to run with just "one lung." The city's response to this announcement was to repeatedly petition Nippon Steel not to implement the rationalization plan, arguing that it would have deleterious effects on the community. A citizens movement also organized to protest one-lung production. However, even when one-lung production was instituted, the city remained devoted to the integrated start-to-finish steel production system. The community movement was defensive. The mayor and citizens of Kamaishi tried to keep the city's economic loss to a minimum by petitioning the corporation, which had already planned to scale down. Their actions were not attempts to advance the city's economy. Only

216

DECLINE AND RENAISSANCE OF THE STEEL TOWN

with the announced closing of the high-blast furnace did the city begin to think about getting out of steel. It is important to make clear what "getting out of steel" means for regional revitalization. First, the Kamaishi Steel Mill is only one of many companies in the city. Second, the mill nevertheless has an accumulated wealth of excellent technology and human resources. Third, the corporation's headquarters in Tokyo runs the steel mills, which are spread across several regions of Japan, according to the total corporate interest, which is not always compatible with the interests of every community.4 In February 1987 Nippon Steel proposed concentrating coarse steel production in a few newly built plants and reducing production capacity from 34 million tons to 10 million tons by closing five high-blast furnaces and cutting 19,000 workers (Tekkokai 1987). Nippon Steel proposed eliminating the one high-blast furnace left in the Kamaishi Steel Mill and switcl].ing to specialized production of wire materials under a new company name. It is predicted that this latest rationalization plan will cause a serious unemployment problem in the city. 5 The Kamaishi Steel Mill has relations with many local subcontractors. In 1988 these included eleven companies for production work, nine companies for engineering work, and ninety companies for transactions in related products and materials. Workers in these subcontracting companies numbered about 3,200. Closing the high-blast furnace and terminating the production of steel will generate a surplus of workers in the subcontracting sector as well. The 1978 rationalization plan had already pushed nine hundred subcontracting employees out of work. On the average, these workers were in their late forties and will have difficulty finding new employment in the subcontracting sector. Furthermore, the scale-down of the Kamaishi Steel Mill means a reduction of orders to the mill's independent suppliers and will indirectly affect their employment. Work force reduction in the steel mill will directly reduce the city's total income and indirectly lead to community economic stagnation. In short, the termination of the high-blast furnace will cause unprecedented damage to the city. To keep the effects to a minimum, the mill has started to develop new businesses ranging, by the end of 1988, from information services to mushroom growing, and more than two hundred skilled workers and managerial workers had been transferred to them. These businesses also employed 165 part-time workers outside of the steel mill. 6 The city of Kamaishi has also developed several revitalization projects in cooperation with the steel mill. But the number of new com-

217

Masatoshi Yorimitsu

panies making investments in the city is small, and the scale of employment cannot be expected to be great. It is painfully apparent that jobs created by these companies can hardly compensate for the job loss in the steel mill.' It is crucial at this stage of development to layout a grand design for the city's revitalization.

TowARD

A RENAISSANCE OF KAMAISHI

Development Projects Various development projects are in progress in Kamaishi. Some are still in the initial stage, while others are being realized. Each of these projects is a response to the mill's scaledown and to the city's need for a new economic future. The projects fall into three categories: marine development projects that utilize agencies of the central government; tourist and resort development projects; and projects that promote industry and induce new corporate investment. The marine development project seems to be one of the most promising. This project first appeared in the Kamaishi City Government Basic Development Plan, part of the city's third comprehensive plan issued in 1986. It is also supported by a "marine town" project of the Ministry of Transportation, a "marinopolis" plan of the Ministry of International Trade and Industry, and a "marinovation" plan of the Ministry of Agriculture, Forestry, and Fishery. The Engineering Promotion Association has also done feasibility research on an industrial complex in Kamaishi related to marine development. A world-class basic research institute for marine biotechnology, the Kamaishi Research Center, has been constructed on 20,000 square meters of Japan Steel's reclaimed land (Iwate Prefecture 1987c). The Kamaishi Research Center is funded by public and private money. The largest public-sector contribution included 7 billion yen from the New Energy and Industrial Technology Comprehensive Development Agency (MITI's outside organ), 1 billion yen from Iwate Prefecture, 1 billion yen from Shizuoka Prefecture, . 5 million yen from the city of Kamaishi, and . 5 million yen from the city of Shimizu. Private-sector contributors included twenty-four corporations, among them Japan Steel, Kyowa Hakko Kogyo, and Suntory, for a total of 7 billion yen. The center is equipped with facilities for testing and desalinating sea water, for an Aquatron, and for DNA research. It is open to foreign and domestic research institutes and corporations. Its staff is made up of researchers from contributing corporations. Research projects include the manufac218

DECLINE AND RENAISSANCE OF THE STEEL TOWN

ture of products based on marine biological resources, applied technology for marine biology, and supporting systems for marine biology. Research funds are to come from projects commissioned by the Academy of Industrial Technology and from the private sector (Iwate tokai 1989). Kamaishi is looking to marine development for its future. While more research and development facilities and industrial facilities are expected to be established in Kamaishi in the future, a question worth raising is whether research results from these facilities and marine industrial activities can help upgrade the local fishing industry, the fish-processing industry, and manufacturing in the city. The city has thus far lacked the energy to work on marine development. And marine biotechnology research has little linkage with the local fishing and fishprocessing industry. It is therefore strongly recommended that both sides make efforts to link their interests. Regional resources would otherwise be used only for the benefit of outside interests and would not enhance the city's future. Indeed, in all revitalization projects, technological research must be linked to the needs of local industry. If new facilities have nothing to do with local people, they cannot be used for regional revitalization. Regional revitalization will be brought about only by local people voluntarily working to "make their own community."

The Kamaishi Comprehensive Development Plan Kamaishi completed its overall development plan in March 1989. The plan consists of a basic plan, an implementation plan, and a conceptualization. Completed first, the conceptualization includes suggestions and guidelines for organizing the basic plan and the implementation plan. It is the layout of the city's new grand design. Kamaishi has drawn up a comprehensive development plan three times in the past. These plans centered around the steel mill, which the new plan no longer assumes to be the center of Kamaishi. The conceptualization took into consideration the serious social and economic problems facing the city today. It proposed five interrelated projects for remaking the city for the twenty-first century: building highways, organizing youth, creating jobs, forming policies for the aged, and educating and training human resources. These projects will be realized if the citizens of Kamaishi participate vigorously in making their own new city, but the voluntary involvement of citizens will not happen spontaneously. Dependence on the steel mill has deeply penetrated the city during the last one hundred years. It will not be easy to shake off. 219

Masatoshi Yorimitsu NOTES

1. The central government enacted a Temporary Measure for Job Losers in Designated Stagnant Industries in 1977. Designated stagnant industries covered twenty-seven kinds of industries, including three kinds in marine processing, nine kinds in textiles, five kinds in flat and electric furnaces, and two kinds each in aluminum, synthesized metals, shipbuilding, and carbon paper. Workers who lost jobs in these industries were given an extension in unemployment benefits. Local employment was expanded, and wage subsidies were paid to employers who hired unemployed workers from these industries. In the following year, a Temporary Measure Stabilizing Designated Stagnant Industries covered four aluminum and synthetic fiber industries. This was the beginning of the state's direct intervention in the industrial structure. Then a Temporary Measure for Unemployed Workers in Designated Depressed Areas, enacted in the same year, provided various kinds of assistance to depressed areas, such as job training, employer subsidies, extension of unemployment benefits, and employment in public projects. At the same time, a Temporary Measure for Small Businesses in Designated Depressed Areas also made it possible for government-related financial agencies to give priority to small businesses in depressed areas in allocating funds and public work projects. The central government streamlined all these acts in 1983, expanding measures for the prevention of unemployment and the promotion of reemployment and strengthening measures helping unemployed workers in small businesses in the depressed areas. Finally, a Regional Employment Promotion Act enacted in 1987 provided special subsidies to employers who contributed to employment expansion in the depressed areas (Hosei University 1979, 1980, 1984, 1988; Chuo University 1980). 2'. The figures in Table 9.6 include neighboring towns and villages such as Toono, Ozuchi, and Miyamori. As these are basically farming towns and fishing villages, they are included in the economic area centered in Kamaishi. 3. The newly established company is called New Japan Steel (Shin Nittetsu) in Japan, but because it is commonly called Nippon Steel in English, it is so called in this text. 4. Other steel corporations' restructuring plans in the late 1980s include: Nippon Kokan's work force reduction of 6,000 by closing a high-blast furnace and steel pipe facilities in Keihin; Kawasaki Steel's work force reduction of 5,300 by closing of a thick steel sheet plant and steel mill in Chiba; Sumitomo Metal's work force reduction of 6,000 by closing of a high-blast furnace and thick steel sheet plant in Wakayama and a steel pipe facility in Amagasaki; and Kobe Steel's plan to reduce its work force by 6,000 by closing a high-blast furnace in Amagasaki (Tekkokai, 1988). This does not mean, however, that all steel cities and towns are depressed because of the decline in the steel industry. Steel makers have a clear strategy of closing old mills and concentrating high-blast furnaces in newly built plants while downsizing old integrated mills to simple processing plants producing particular products. Cities and towns with new steel plants and research and development facilities are not declining. Furthermore, the economic decline of cities and towns due to steel plant closings varies according to the degree of the city's depen-

220

DECLINE AND RENAISSANCE OF THE STEEL TOWN

dence on steel production and to steel makers' strategies. It is not possible to generalize from the case of a depressed steel town like Kamaishi. 5. Interviews at the Kamaishi Steel Mill. 6. Ibid.

REFERENCES Ando, Seiichi. 1986. Chiho no keizaigaku (Economics of the Regions). Tokyo: Toyo Keizai Shimposha. Chuo University, Economic Research Institute. 1980. Kozo hensenka no Nihon keizai (The Japanese Economy under Structural Changes). Tokyo: Chuo University Press. Chusho Kigyo Jigyodan (Small and Medium-Sized Enterprises Corporation), ed. 1988. Kamaishishi tokutei chiiki kigyo yuchi chosa jigyo hokokusho (Report on Research Project on Kamaishi's Special Area for Industrial Inducement). Tokyo. CIM Study Group, ed. 1988. Seisan kakumei-CIM kochiku no approach (Production Revolution: An Approach to Establish CIM). Tokyo: Kogyo Chosakai. Economic Planning Agency. 1969a. Shin zenkoku sogo kaihatsu kaikaku (New National Comprehensive Development Plan). Tokyo: Ministry of Finance Printing Bureau. - - - . 1969b. Sekai keizai kokka Nihon e (Toward a Japan of World Economic Power). Tokyo: Ministry of Finance Printing Bureau. - - - . 1987. Endaka 0 norikoe aratana hatten 0 mezasu chiiki keizai (Regional Economy toward New Development beyond Yen Appreciation). Tokyo: Ministry of Finance Printing Bureau. - - - . 1988. Sekai to tomo ni ikiru Nihon-Keizai unei 5 ka nen keikaku (Japan to Co-Exist in the World: 5-Year Economic Management). Tokyo: Ministry of Finance Printing Bureau. Engineering Development Association. 1988. Kaiyo kaihatsu kanren sangyo nado

complex keisei no tame no waterfront seibi ni kansuru chosa kenkyu hokokusho (Research Report on the Adjustment of Waterfront to Build a Marine-Development-Related Industrial Complex). Tokyo: Engineering Shinko Kyokai. Hosei University, Ohara Social Problem Institute, ed. 1979, 1980, 1984, 1986, 1987, and 1988. Nihon rodo nenkan (Annual Report on Japanese Labor). Tokyo: Rodo Junposha. lida, Kenichi. 1960. "Yoshiki karo no ishoku to Kamaishi tetsuzan" (Transplantation of the Western Pattern of High Blast and Kamaishi Iron Mining). In N ihon sangyoshi taikei 3: Tohoku chiho (Japanese Industrial History 3: The Tohoku Region), edited by Chihoshi Kenkyu Kyogikai (Local History Research Group). Tokyo: Tokyo University Press. Iida, Kenichi, Shuji Ohashi, and Toshiro Kuroiwa, eds. 1969. Gendai Nihon sangyo hattatsushi IV: Tekko (Modern Japanese- Industrial Development History IV: Iron and Steel). Tokyo: Kojunsha.

221

Masatoshi Yorimitsu Iinuma, Mitsuo, Gosei Ohira, and Yuji Masuda. 1987. 'oho keizairon (Theory of Information Economics). Tokyo: Yuhikaku. Iwate nippo. 1988. November 29. Iwate Prefecture. 1987a. Iwate ken no kogyo (The Industry in Iwate Prefecture). - - - . 1987b. Showa 60 nendo Iwate ken no shichoson shotoku (Iwate Prefecture's Incomes by City, Town, and Village in 1985). Iwate Prefecture, Division of Industry. 1987c. "Data on Kamaishi Research Center. n Iwate Prefecture, City of Kamaishi Transportation Economy Research Center. 1988. Kamaishiko Marine Town project chosa hokokusho (Research Report on Kamaishi Marine Town Project). Kamaishi. Iwate tokai (Shimbun). 1989. March 27, April 13, and April 14. Japan Steel Corporation, Kamaishi Steel Mill. 1986. Tetsu to tomo ni hyakunen (100 Years with Iron). Kamaishi. Kamaishi City Government. 1988. Showa 63 nen ban Kamaishi shisei yoran (Kamaishi's City Guide for 1988). Kamaishi. Kamaishi Employment Security Office. 1987. Gyomu gaiyo (Office Summary). Kamaishi. Karatsu, Hajime. 1988. Seisan taikoku Nippon no chosen (Japan's Challenge as Producer Nation). Tokyo: Jitsugyo no Nihonsha. Kato, Takashi, ed. 1984. Aratana jidai no chiiki koyo kaihatsu (Local Employment Development in the New Era). Tokyo: Nihon Rodo Kyokai. Kiyonari, Tadao. 1986. Chiiki sangyo shinko (Regional Economic Development). Tokyo: Tokyo University Press. - - - . 1987. Chiiki saisei no vision (Vision for Regional Renaissance). Tokyo: Toyo Keizai Shimposha. Kobayashi, Masaaki. 1977. Nihon kogyoka to kane; haraisage (Industrialization of Japan and Selling of State Industries). Tokyo: Toyo Keizai Shimposha. MITI (Ministry of International Trade and Industry). 1988. Sangyo gijuttsu no doko to kadai (Trends and Future Tasks in Industrial Technology). Tokyo. Miyazawa, Kenichi. 1988. Gyosaika to jyohoka (Industrialization of Information and Informationalization of Industries). Tokyo: Yuhikaku. Moritani, Masanori. 1981. Nichibei gi;uttsu kaihatsu senso (The War on Technological Development between Japan and the United States). Tokyo: Toyo Keizai Shimposha. National Land Agency. 1977. Dai san;i zenkoku sogo kaihatsu keikaku (The Third National Comprehensive Development Plan). Tokyo: Ministry of Finance Printing B u r e a u . ' - - - . 1987. Dai yonji zenkoku sogo kaihatsu keikaku (The Fourth National Comprehensive Development Plan). Tokyo: Ministry of Finance Printing Bureau. Nihon Kaiyo Kaihatsu Sangyo Kyokai (Japan Marine Development Industrial Association). 1988. Kamaishi chiiku Marine Community Polis koso chosa hokokusho (Feasibility Research Report on Kamaishi Marine Community Polis Project). Okita, Saburo. 1967. Chiiki kaihatsu no keizaigaku (Economics of Regional Development). Tokyo: Chikuma Shabo. Sangyo Kiban Seibi Kikin. 1988. Sangyo okoshi project koso suishin chosa hokokusho:

222

DECLINE AND RENAISSANCE OF THE STEEL TOWN

Kamaishi Chiiki (Research Report on Industrial Development Project Promotion: Kamaishi). Tokyo. Suzuki, Tomin. 1977. Am machi no kogai monogatari (The Pollution Story of a City). Tokyo: Toyo Keizai Shimposha. Tanozaki, Akio. 1985. Kigyo gorika to chiho toshi (Corporate Rationalization and Regional Cities). Tokyo: Tokyo University Press. Tekkokai. 1987-88. Vol. 37, no. 3; vol. 38, no. 5. Toyo Keizai Shimposha. 1989. Chiiki keizai soron (A General View on Regional Economy). Tokyo. Y orimitsu, Masatoshi. 1987. "A Review of Recent Population Changes in Japan." Hitotsubashi Journal of Social Studies 19, no. 1.

223

10 Steel Town to Space Worid RESTRUCTURING AND ADJUSTMENT IN KITAKYUSHU CITY Philip Shapira

Heavy industries such as steel, chemicals, shipbuilding, and other forms of metal fabrication played a critical role in propelling economic growth in Japan between the 1950s and 1970s (Kosai 1986). Annual steel production, for example, grew from 10 million metric tons in 1955 to 120 million tons in 1973, while the gross tonnage of ships built jumped from 829,000 to 15.7 million over the same period. I As domestic and export demand for the products of Japan's heavy industries expanded in the immediate postwar decades, there was massive investment in new plant and equipment. Government (especially MITI-the Ministry for International Trade and Industry) was closely involved in the reconstruction, development, and expansion of these industries (Johnson 1982). However, heavy industries in Japan have now undergone, or are undergoing, fundamental restructuring. In steel, shipbuilding, aluminum, and chemicals, a first wave of adjustment began in the 1970s in response to higher energy prices, the emergence of competition from developing countries, and the general slowdown of economic growth in Japan (Saxonhouse 1979). Heavy industries experienced excess capacity and declining profits, leading to transfers of existing employees to other companies, reductions in new hires, and cutbacks in temporary workers. In the 1980s, further phases of adjustment occurred. Protectionism in export markets grew, domestic demand patterns shifted, and competition from other Asian countries intensified. The sharp increase in the value 224

STEEL TOWN TO SPACE WORLD

of the yen in 1986 (endaka) further compounded the problems facing heavy industries, raising the relative costs of production in Japan vis-a.-vis other countries. Throughout Japan, areas of heavy industry have experienced plant rationalizations and employment reductions. One of the areas most affected by heavy industry restructuring is Kitakyushu, an industrial city of just over 1 million people located in northern Kyushu (the most western of the four main islands of Japan). Kitakyushu City was formed in 1963 through the merger of five smaller cities: Moji, a port city and one-time gateway to the island of Kyushu; the former castle town of Kokura, founded around 1600; the industrial city of Yawata; the coal port of Wakamatsu; and the industrial city and port of Tabata. Kitakyushu is home to the huge Yawata Steel Works, originally built by the Japanese government at the turn of the century and now owned by Nippon Steel, the world's largest steel company. Other material-processing and resource-intensive industries in the city include chemicals, cement, glass, ceramics, and fabricated metals (Table 10.1). Kitakyushu's boundaries extend 32.5 kilometers east to west and 33.5 kilometers north to south, but much of the southern part of the city is taken up by low, undeveloped mountain ranges. To the north and east are flatlands facing the sea. Heavy industrial and port facilities have been developed in the northern coastal zone, often on reclaimed land (see Map 10.1). The residential sector lies between the coastal industrial zone and the mountains to the rear, stretching in a narrow east-to-west line. Kokura is the main commercial hub; smaller commercial districts are found in the cores of the four other formerly independent cities and in the newer suburbs that have developed in the south and west. Kitakyushu and its surrounding region is known as the North Kyushu Industrial Zone and is one of Japan's four major industrial districts, the others being Keihin (Tokyo-Yokohama), Hanshin (Osaka-Kobe), and Chukyo (Nagoya) (Noh and Kimura 1989). In recent years, the North Kyushu Industrial Zone has declined in importance due to the faster growth of industrial areas elsewhere in Japan, including other cities and "greenfield" technology centers in Kyushu. A generation ago, Kitakyushu was the largest employment and population center in Kyushu. But over the last two decades, the prefectural capital of Fukuoka City, about fifty kilometers to the southwest, has gained a greater share of the region's new jobs in light manufacturing industries, business services, and administration and now easily surpasses Kitakyushu in population. 2 Kitakyushu has developed diversified general machinery, electrical machinery, and food-processing industries, and has attracted a few hightechnology electronics and robotics factories. But the city still largely 225

N N

0\

TABLE

10.1

87,478

129,604

Total

80,945

18,550 11,897 8,715 7,273 6,330 6,297 5,954 4,319 3,815 1,418 6,377

1988

-48,659

- 28,713 1,524 3,554 - 5,511 -4,315 343 - 5,280 - 5,602 -4,630 -1,802 1,773

1965-88

6,533

- 3,443 -1,493 360 412 633 - 824 - 385 -1,087 8 - 369 - 345

1985-88

CHANGE

1965-88

Source: Kamaishi City, Economic Affairs Bureau, data for establishments with three or more employees.

21,993 13,390 8,355 6,861 5,697 7,121 6,339 5,406 3,807 1,787 6,722

47,263 10,373 5,161 12,784 10,645 5,954 11,234 9,921 8,445 3,220 4,604

1985

Iron and steel General machinery Electrical machinery Fabricated metal products Food processing Printing/publication Chemicals Ceramics/cement Lumber, paper, and furniture I nstrumen ts Other industries

1965

BY INDUSTRY

KITAKYUSHU CITY MANUFACTURING EMPLOYMENT,

-2.0

-4.0 0.6 2.3 -2.4 -2.2 0.2 -2.7 -3.6 -3.4 - 3.5 1.4

1965-88

-2.6

- 5.5 -3.9 1.4 2.0 3.6 -4.0 -2.1 -7.2 0.1 -7.4 -1.7

1985-88

AVERAGE ANNUAL % CHANGE

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New Kitakyushu Airport (under Construction)

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Philip Shapira

depends on its traditional heavy-industrial and materials base. As heavy industries have undergone restructuring and reductions in labor force, Kitakyushu's employment foundation and economic position have been weakened (Shimodaira 1989). Kitakyushu's largest employment declines have occurred in the old, heavy-industrial core districts of Yawata, Moji, Tobata, and Wakamatsu (Table 10.2). By far the largest industrial employer in Kitakyushu-and the source of the city's greatest loss of jobs-is Nippon Steel. The company's Yawata Works, which include the original Yawata plant, the newer and nearby Tobata plant, and accompanying processing, storage, and dock

TABLE

10.2

EMPLOYMENT CHANGE IN KITAKYUSHU AND FUKUOKA DISTRICTS, FUKUOKA PREFECTURE, AND JAPAN, 1974-87

EMPLOYMENT

CHANGE

No.

%

1974

1987

Yawata KokuTa Moji Tobata Wakamatsu

116,735 104,211 31,077 22,803 20,483

97,794 108,405 32,734 16,402 15,742

-18,941 4,194 1,657 -6,401 -4,741

-16.2 4.0 5.3 -28.1 -23.1

Kitakyushu City

295,309

271,077

- 24,232

-8.2

17,739

27,661

9,922

55.9

313,048

298,738

-14,310

-4.6

Fukuoka City

324,434

400,844

76,410

23.6

Total district

355,582

463,228

107,646

30.3

FUKUOKA PREFECTURE

900,663

994,583

93,920

10.4

52,370,000

59,110,000

6,740,000

12.9

KITAKYUSHU DISTRICT

Yukuhashi Total district FUKUOKA DISTRICT

JAPAN

Source: Data for Kitakyushu and Fukuoka districts and for Fukuoka prefecture are for workers under employment insurance, by public employment security office (from Shimodaira 1989). Data for Japan for employed persons are from Annual Report on the Labor Force Survey, Tokyo, Statistics Bureau, Management and Coordination Agency, various years.

228

STEEL TOWN TO SPACE WORLD

facilities, dominates the center of the city (Map 10.1). An extensive network of smaller companies and contractors in Kitakyushu support, and rely on, Nippon Steel. This essay explores Nippon Steel's restructuring strategies and their effects on the Yawata Works, its work force, suppliers, and the city. Five major topics are discussed: the development of the Yawata Works; subcontracting at Yawata; Nippon Steel's restructuring strategies; work force and supplier adjustment; and implications for the Yawata Works, Kitakyushu City, and local economic development. Nippon Steel is pursuing a mix of restructuring strategies, including the'rationalization of capacity, reinvestment in new technologies, and diversification into new areas of business. These strategies have resulted in cutbacks in employment at the Yawata Works and among suppliers, as part of an overall corporate reduction of the labor force. While unionized workers have been spared involuntary redundancies, they have experienced early retirement and transfers to other companies and locations. Nonunion and subcontract workers have had far less protection. Unemployment has increased in Kitakyushu, although joblessness has not reached anything like the massive levels seen in similar cities in the United States or Europe (e.g., Pittsburgh or Sheffield) during the restructuring of their heavy industries in the early 1980s. Kitakyushu's experience suggests that the worst fears in the period immediately following endaka about the demise of Japanese basic industry and the "hollowing out" of the economy have not been realized. But older, peripheral heavy-industrial areas such as Kitakyushu have been disproportionately affected by industrial restructuring. There continue to be serious concerns about the economic and social consequences of industrial change in Kitakyushu, and it is by no means clear that central, local, and private economic strategies are succeeding in developing good new jobs to replace lost industrial employment.

DEVELOPMENT OF THE YAWATA WORKS

The Yawata Steel Works in what is now Kitakyushu was Japan's first integrated iron and steel plant. It was initially built and operated by the Japanese government, opening in 1901 with a capacity of 60,000 tons. Yawata's coastal location was convenient for using coal from the nearby Chikuho mines and iron ore shipped from China. By 1913, the Yawata Works was making 85 percent of Japan's steel. In 1934, the government merged the Yawata Works with six other private companies to form the Japan Iron and Steel Company.

229

Philip Shapira

Production at Yawata reached a World War II peak of 2.45 million tons during the early 1940s, but slumped to 0.15 million tons in 1945 after heavy bomb damage. The plant was quickly restored after the war. In 1950, under the occupation government's effort to break up the zaibatsu (large combines), the Japan Steel Company was dissolved into four private companies-of which the two largest were Yawata Iron and Steel and Fuji Iron and Steel. In the 1950s and 1960s, as Japan entered its high-growth period, both of these companies embarked upon large plant expansions. In 1957, Yawata Steel began constructing a new integrated steel works on a reclaimed coastal site in Tobata, six kilometers from the Yawata works and linked to it by private railway. In the 1960s, Yawata Steel also built new "greenfield" works at Sakai and Kimitsu, while Fuji Steel built Nagoya Works and began constructing Gita Works. In 1970, Yawata and Fuji merged into Nippon Steel, effectively recreating a private version of the old Japan Iron and Steel Company. Nippon Steel is now the world's largest steelmaker. Production at the Yawata Works grew steadily through the postwar period, reaching 9.2 million tons in 1967 (Fig. 10.1). In 1969, a master plan was drawn up to rationalize and modernize the old Yawata Works and to expand production capacity at the combined Yawata and Tabata sites to 10 million tons (Kimura n. d.). At that time, there were nine blast furnaces and five steelmaking plants at the two sites. The plan concentrated raw materials handling, iron- and steelmaking, and mass produc-

Employment (thousands)

Production (millions of tons)

10 .............................................................................................................. -

50

Steel production

8

40

6

30

4

20

2

.

10

o I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I '0 1955 1958 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 FIGURE

10.1

YAWATA STEEL WORKS PRODUCTION AND EMPLOYMENT,

Source: Nippon Steel. 230

1955-89

STEEL TOWN TO SPACE WORLD

tion of coil and sheet products at Tobata and high-grade steel rolling at Yawata. Six blast furnaces at the Yawata site were closed, along with associated plants, converters, and casters. By the mid-1970s, three smaller blast furnaces at Tobata had been replaced by two state-of-the-art large furnaces. The continuous casting ratio at the plant, which had been under 10 percent in 1970 was increased to 70 percent by 1980 (it is almost 100 percent today). A series of older rolling mills, strip mills, and coil and sheet lines (dating from the 1940s and 1950s) were completely replaced. However, structural changes in steel demand in the mid-1970s led to the shelving of plans to build a third large-blast furnace at Tobata, and the works capacity was decreased to 7.5 million tons. Actual production after 1976 never reached this level, and by 1984, at the end of the fifteen-year restructuring plan, production was just over 5.8 million tons. The modernization and restructuring of the Yawata Works resulted in energy savings and improvements in quality-and also allowed a large reduction in labor. The regular work force, which had peaked at 43,700 in 1963 and had stood at 30,000 at the start of the master plan, was reduced to 14, 700 by 1984. In 1988, with steel production falling to 4.6 million tons, regular employment at the Yawata Works declined to about 12,300. However, Yawata's regular work force supplies only part of the picture of the employment structure-and employment declines-associated with the works. The Yawata plant, like other Japanese steel plants and other large manufacturers, has a complex structure of suppliers and subcontractors who provide materials, equipment, specialized technologies, and labor.

SUBCONTRACTING AT YAWATA

Prior to World War II, the Yawata Works-then owned by the Japanese government-made extensive use of workers supplied by rodo-geshuku, or laborers' boarding houses. The owners of these houses would greet young workers at the railway station, offering to provide them work and a place to stay. The boarding house owners would then sell the workers' labor to Yawata Steel. The company provided a place of work, tools, equipment, and materials. The rodogeshuku supplied only labor. Rodo-geshuku workers received a lower rate of pay than regular Yawata Steel workers (the boarding house owners would also make deductions for their accommodation and food). Once in the boarding house, workers found it hard to escape; violence was sometimes threatened if they left (Saito 1983). The legacy of the rodo-geshuku system is seen today in the exten231

Philip Shapira

Affiliated suppliers and susbsidiaries

Nippon Steel

Nonaffiliated first-tier suppliers

Nonaffiliated small subcontractors FIGURE

10.2

NIPPON STEEL: STRUCTURE OF SUPPLIERS AND SUBCONTRACTORS (SCHEMATIC)

sive structure of subcontracting associated with the Yawata Works (Fig. 10.2). Subcontracting is not unique to the Japanese system. However, the subcontracting infrastructure associated with Yawata is more extensive and systematic than that typically found in the North American and European steel industries. Yawata's suppliers and subcontractors are organized in a series of tiers. 3 In the first tier are several smaller companies in which Nippon Steel occupies an ownership position and a larger number of companies with long-standing relationships with the Yawata Works, though Nippon Steel is not an owner. Regular workers in the first tier of companies are usually unionized, although they do not belong to the same union as regular Nippon Steel workers (unionization in Japan is generally company based). The workers in further tiers of suppliers and subcontractors are usually not unionized and are paid lower wage levels than workers in the first tier of suppliers (who in turn have lower wages than regular Nippon Steel workers). Some workers in these lower tiers are regarded as regular workers, some are temporary, and some are provided by other contractors. In many cases suppliers and subcontractors work inside the Yawata works, alongside regular Nippon Steel workers, sometimes taking responsibility for co~plete sections of 232

STEEL TOWN TO SPACE WORLD

the production process. This structure of subcontracting and employment at Yawata is similar to that described by Chalmers (1989) in her analysis of labor market segmentation and peripheral workers in Japan (Table 10.3).4 The first tier of Yawata's subcontractors are usually technologically sophisticated, although they are also quite dependent on Nippon Steel. They may supply and install equipment or provide workers to continuously operate or maintain equipment at the works. The fact that a large proportion of their business is supplied by Nippon Steel limits the technologies they can sell to competing steelmakers. At the same time, Nippon Steel has an interest in ensuring that these subcontractors continue to develop technologies. Former Nippon steel executives sometimes assume management positions in this tier of subcontract firms. In some cases, first-tier subcontractors have been aligned with Nippon Steel and the Yawata Works for more than seventy years and enjoy very close relationships with the parent organization even though there are no legal or ownership ties. In the 1960s, when regular employment at the Yawata Works exceeded 40,000 workers, approximately as many workers were employed by associated subcontractors. Today, with about 12,000 regular workers at Yawata, one estimate of the plant's subcontracting work force puts it at around 12,000. 5 The Japanese steel industry as a whole had 116,000 subcontract workers in 1987, compared with 118,000 regular workers. 6 In other words, both at Yawata and elsewhere in the industry, the subcontracting work force in steel has been reduced at roughly the same rate as the regular work force. During the restructuring of the 1980s, Japanese steel companies neither disproportionately slashed their subcontracting work force to save jobs of regular workers nor unevenly

TABLE

10.3

SEGMENTATION OF EMPLOYMENT STRUCTURE IN JAPAN

REGULAR WORKERS LARGE ENTERPRISES

Core workers

SMALL AND MEDIUM-SIZED ENTERPRISES

Core workers in dependent or subcontract firms

Source: Chalmers 1989.

233

NONREGULAR WORKERS

Temporary and day labor Contract labor Temporary and day labor Contract labor Family workers Self-employed workers

Philip Shapira

shifted from regular workers to subcontractors to reduce costs. Rather, each part of the work force was reduced in parallel. However, parent companies like Nippon Steel have shifted regular workers to suppliers, effectively shunting the brunt of employment reduction down to the lowest tiers of the subcontracting chain and to temporary and other nonregular workers with little job security. Specific details about how Nippon Steel has dealt with employment reduction among its regular and subcontracting work forces are discussed later in this chapter.

NIPPON STEEL'S RESTRUCTURING STRATEGIES

Japan's era of "high-speed growth" began in the 1950s after the initial wartime recovery and ended in the oil crisis decade of the 1970s (Kosai 1986). During this remarkable period, economic growth rates of 10 percent a year were consistently achieved, with dramatic expansions in steel-consuming industries such as shipbuilding and automobile production, in domestic steel use for construction, and in steel exports. In 1973, the Japanese steel industry reached peak production, with an output of 120 million tons (Fig. 10.3). But, over the next two years, steel demand slumped, production fell by 15

140

Production (millions of tons) -

120

Production

I·····

····

Employment (thousands)

.

·········· ······

700

"'

·········

······· ············

··········600

- - Employment

.

100

.

80 60

:w"

......... ..........Jr.... .

""

~

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""

~

·················· ······· ······

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",r......................

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···············

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300

40

200

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oI

1

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I

.,r

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.

I

I

1

1

100

I

I

1

I

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I

I

1

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I

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1

I

1

I

I

1

I

I

I

I

I

I

1

I

10

1955 1958 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988

FIGURE

10.3

STEEL PRODUCTION AND EMPLOYMENT IN JAPAN,

Source: Japan Historical Statistics. 7.i4

1955-89

STEEL TOWN TO SPACE WORLD

percent to 102 million tons, and almost one-third of capacity was unused. For a while, Japanese steelmakers believed the downturn was temporary. Officials predicted that steel demand would recover to exceed 150 million tons and encouraged steel companies to proceed with new plant investment. 7 However, the anticipated demand never materialized, and by the end of the 1970s both government and steelmakers were taking measures to rationalize the industry.8 Nippon Steel's response, beginning in 1978, was to initiate the first of three restructuring plans to reduce capacity and improve energy efficiency.9 By the end of the company's third restructuring plan in the mid-1980s, Nippon Steel's crude steel production capacity had been reduced to 34 million tons from an annual capacity of 47 million tons in 1978. Operations at several strip mills were terminated and four blast furnaces were closed. Employment in the company's steelmaking divisions was reduced by 18,000-from 64,000 in 1978 to 46,000 in 1987. The steel industry reached an eleven-year low in 1982, as steel production declined to 96 million tons and Nippon Steel's share fell to 27 million tons (Fig. 10.4). There was a brief upturn in 1984, but in 1986-with the beginning of endaka-production again fell back to 96 million tons. Japan's steel exports fell from 33 million tons to 23 million tons between 1985 and 1988 as the yen appreciated, trade barriers increased (especially in the United States and Europe), and new steel plants came on line in industrializing economies such as Korea and China. lO At the same time, despite Japan's aversion to importing, the high value of the yen and the availability of cheap commodity steel from the industrializing economies boosted iron and steel imports, which grew from 4 million tons in 1985 to II million tons in 1988 (Statistics Bureau 1989). Between 1985 and 1986, Nippon Steel's sales slumped by almost one-fifth, and in 1986 the company went into the red for the first time, losing 12.6 billion yen ($90 million at 140 yen to the dollar). Nippon Steel addressed this situation by asking its company planners, in October 1985, to define a corporate restructuring strategy. The planners sought to grapple with three critical trends. First, Japan's industrial structure was changing, with growth in tertiary business and in personal service and advanced technology industries such as electronics, medical products, and new materials. The likely outcome was a Japanese economy that would consume less steel in the future. Second, new steelmaking countries, including Korea, China, Brazil, and Taiwan with large, modern, low-labor-cost facilities, would make it increasingiy difficult for Japan to maintain all of its current steel capacity despite its strong cost competitiveness. II Third, the yen's high value would lead not 235

Philip Shapira

50

Production (millions of tons) -

Employment (thousands) _. 100

Steel production

40

- - Regular employment

30

........................................................................... /

20

.

· · · · · · · · · · · · · · · · · · · · · · · 80

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1955 1958 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988

FIGURE

10.4

NIPPON STEEL PRODUCTION AND EMPLOYMENT,

1955-89

Source: Nippon Steel.

only to lost direct steel export markets, but also fewer indirect exports as Japan's steel-using companies (such as car or machine makers) reduced exports from Japan and increased offshore production. 12 Nippon Steel feared that the combined effect of these factors would lower Japan's steel production to 90 million tons by 1990. Nippon Steel announced its restructuring strategy (known as its medium-term restructuring plan) in February 1987. 13 This was the company's fourth-and farthest reaching-restructuring strategy. It involved three major elements: rationalization of the basic steel business, reduction of the steelmaking labor force, and diversification into new manufacturing and service businesses. The company planned to cut output to 24 million tons by 1990, yet at the same time to produce at near 100 percent utilization rate "so as to maintain competitiveness with Korea," noted a company official. This meant the company had to scrap nearly one-third (10 million tons) of its current capacity. A series of related works (such as energy facilities, coke ovens, converters, casters, and rolling mills) are also redundant. In total, the company plans to reduce its work force by 19,000 through to 1993, leaving its steelmaking work force at 27,000, compared with 46,000 in 1987 (Fig. 10.5). Since publication of the company's medium-term restructuring strategy, Japanese industry has done better than originally expected in overcoming the effects of endaka. After an initial decline, exports of 236

STEEL TOWN TO SPACE WORLD

steel-using products have recovered and the government has encouraged expansion of domestic consumption. As Japan enters the 1990s, steel production is running at 107 million tons annually, rather than the expected 90 million tons. However, regardless of the business upturn, Nippon Steel does not intend to depart from its basic restructuring strategy. The most important part of the strategy is the centralization of production in four works. Additional investments at Kimitsu, Nagoya, and Yawata will upgrade capacity from 24 million to 28 million tons (Map 10.2). But the work force will continue to decline, with no change in plans to cut the steel work force to 27, 000 by 1993 or to stop production at other works. The company believes that the long-term future of steel production in Japan will still be one of decline. At the same time, Nippon Steel's steadfast determination to reduce employment and concentrate production gives the company a highly productive base for steelmaking into the 1990s. It has the capability to produce almost as much steel in the 1990s as it did in the 1980s (27 million to 30 million tons) but with half the regular work force. 14 As part of its restructuring strategy, Nippon Steel is also pursuing an ambitious long-term diversification. The company has long operated nonsteel divisions using by-products and skills derived from its basic steel business. Its chemical division makes chemicals from coal tar and crude Steel production

t 1970

1985

I

I

1993 I projected

I I

200

150

100

50

0

Steel Employment (thousands)

FIGURE

10

20

30

Metric tons (millions)

10.5

NIPPON STEEL: STEEL-MAKING EMPLOYMENT AND PRODUCTION, 1970-93 (PROJECTED)

Source: Nippon Steel.

237

40

Philip Shapira

Muroran

• Blast furnaces •

To be clo.ed·

o

Working

~

To be reopened

Yawata

Kamalahl

•

0 • Hlrohata

Olta

0 0

Nagoya

•

DO

MAP

Klmltau OO~

10.2

NIPPON STEEL'S RESTRUCTURING STRATEGY

Source: Hasegawa 1987.

light oil recovered from coke gas generated by coke ovens. Similarly, Nippon Steel's engineering division makes industrial machines, steelmaking equipment, and marine pipes and structures and provides engineering services based on Nippon Steel's own experience in building and operating huge integrated steel works. The company now aims to develop other new businesses from expertise gained through steelmaking. Nippon Steel has been an extensive user of computer technologies and has more than three thousand electronics engineers and software developers on staff. The company wants to capitalize on its capability in automation, software development, instrumentation, and systems technologies to develop new hardware and software businesses in electronics and information technologies. Nippon Steel also plans to use its accumulated chemical and materials know-how to produce new metallic and nonmetallic advanced materials including fine ceramics, superconducting ceramics, and carbon fibers. The company has established a biotechnology division that builds on its expertise in chemicals and process control. Finally, Nippon Steel is moving into urban development and the provision of community services, constructing new apartment buildings, de238

STEEL TOWN TO SPACE WORLD

veloping large leisure and sports facilities, providing "silver homes" and medical services for the elderly, and offering training courses and conference management services. Again, the company believes that its proficiency in building and operating huge industrial plants, work force training, and managing worker housing and welfare can be transferred to new development and service businesses. These diversification plans, if successful, will transform the company. Today, about 80 percent of Nippon Steel's sales are from steel, and the other 20 percent from engineering and chemicals. In 1995, Nippon Steel projects that its steel business will constitute less than 50 percent of sales. Electronics and information technologies are expected to contribute 20 percent, urban development and community services 10 percent, chemicals and advanced materials 10 percent, engineering services 10 percent, and biotechnology less than 1 percent (Fig. 10.6). Whether Nippon Steel can achieve its diversification goals remains to be seen. The company says it is identifying new business areas that build on existing areas of expertise. But in some cases the claimed link

Business areas as a percent of total sales

100% -

Biotechnology 0.3'110 Community services and urban development 10.0'110

Engineering 11.2'110 New materials .2'110 Chemicala 9.3'110

Electronica and information technologiea 20.0'110

75% -

Engineering 10.0'110 Chemicals and advanced materiala 10'110

50% Steel 79.2'110

Steel 50.0'110

25% -

0% -

1985

1995 (projected) FIGURE

10.6

NIPPON STEEL'S RESTRUCTURING STRATEGY: DIVERSIFICATION, 1985-95 (PROJECTED)

SouTce: Nippon Steel.

239

Philip Shapira

between steelmaking and the new business is tenuous. For instance, Nippon Steel has sponsored mushroom growing at the closed Kamaishi Steel Works (see Chapter 9 in this volume) and flower growing at Yawata-arguing that such products basically require temperature and process control, just like steel. In the United States, steel companies such as U. S. Steel (now USX) and National Steel diversified into new but tenuously linked business (e. g., oil and banking) with frequently miserable results. One of Nippon Steel's new businesses-a mail-order operation-has already fdiled. Analysts have also expressed skepticism about the c~mpany's internal efforts to design, produce, and sell upscale notebook computers and thus to enter a market with already intense competition (Klamann 1990b). However, a critical difference between Nippon Steel and most of its U. S. counterparts is that the Japanese company has continuously upgraded its products, processes, and plant and has a good basic technology base from which to diversify. Compared with the American steel industry, Japanese steelmakers spend three times as much on research and development. In 1987, research and development expenditures as a percentage of sales averaged 1.5 percent in Japanese steel companies against .51 percent in the United States. Nippon Steel's annual $200 million research budget by itself exceeds the research expenditures of the entire U. S. steel industry (Hicks 1989). Additionally, Nippon Steel's considerable financial resources are being used to supplement the company's own skills through a series of joint ventures, acquisitions, and other market-entry strategies. For example, the company has recently signed joint ventures with Concurrent Computer Corporation (United States) to build superminicomputers, GTX Corporation (United States) to develop computer-aided design systems, Calgene (United States) to produce genetically engineered agricultural plants, and Phillips (Netherlands) to create functional ceramics. Nippon Steel has also bought equity positions in small electronics industry start-ups such as Soliton and Tau Engineering (data transmission), developed a value-added agreement to use Nippon Steel applications software with SUN Microsystems workstations, and headhunted high-level biotechnology researchers from other corporate laboratories. Nonetheless, Nippon Steel is likely to face considerable difficulties in managing this array of joint ventures and new businesses. In competing against established companies in semiconductors, computing, and other areas, Nippon Steel has to transform its management structure from one that has traditionally produced steel for long-standing customers to one that can manage a variety of different and rapidly evolving

240

STEEL TOWN TO SPACE WORLD

technologies and markets. Currently, Nippon Steel has the ability to bankroll its fledgling new business, but a recession in its basic steelmaking business might curtail this. Equally important, Japan's other major steelmakers are following similar strategies. NKK, Sumitomo Metals, and Kawasaki Steel are also diversifying into electronics, software, advanced materials (especially ceramics), biotechnology, urban development, and leisure (Isojima 1989). There has been something of a ((follow-my-leader" approach, based in part on MITI's advocacy that companies should enter these new areas. With numerous companies trying to squeeze into the same areas of new technology, the likelihood of failure for some is high, although the pace of technological development may be hastened to the benefit of the eventual survivors.

WORK FORCE AND SUPPLIER ADJUSTMENT

One of the major elements of Nippon Steel's medium-term restructuring strategy has been to reduce its steelmaking labor force. In earlier rounds of restructuring in the 1970s, the company devoted much effort to reducing variable costs, especially the cost per ton of raw materials and energy. However, the phase of restructuring after endaka has focused largely on reducing fixed costs, which in Japan (although not in the United States) means reducing labor costs. As already noted, Nippon Steel intends to cut 19,000 workers from its regular steel labor force by 1993. Dealing with this redundant work force is a major concern for the company. In reducing its work force, Nippon Steel has to take account of the distinctive set of employment practices that structure labor relations in large Japanese companies. First, blue-collar workers in large Japanese firms are treated more like salaried employees in the United States or Europe. Male regular workers in Japan usually stay with a single company throughout their career; in return, the company makes a commitment to job security. l'his applies both t9 white-collar and bluecollar workers. Second, a seniority wage system largely determines basic monthly wages. In a large company, a worker's basic wage rises steadily with each additional year, reinforcing the worker's commitment to the company (in addition, there are twice-yearly bonuses based on company profitability and the employee's performance). Third, large companies provide an array of nonwage benefits such as housing, health insurance, and leisure facilities, which further strengthen ties between workers and the company. Finally, the union (which usually organizes both white-

241

Philip Shapira

and blue-collar workers) operates on an enterprise basis and therefore usually identifies with the company and seeks long-term company stability (Gordon 1988). These employment practices are in no way "traditional" in Japan, having been established in the 1950s as the result of management strategies to stabilize labor relations and productivity and union efforts to improve working conditions and the status of workers in industry (Gordon 1988). One effect has been to make it hard to layoff regular workers directly. Usually, managers do not suggest direct layoffs because to do so would disrupt labor relations. Although unions are enterprise based, they are not unassertive. For the union, maintaining the commitment to employment security is an absolute bottom line. However, as far as both the company and the union are concerned, employment security does not necessarily mean employment in the same job. Workers can be shifted to different jobs, locations, divisions, and companies. For example, as employees approach retirement age in large companies, they may go on shukko-or secondment. These outplacements may be with suppliers or unrelated companies. The shukko worker continues to receive seniority wages and benefits as if still employed at the parent company. Since the rate for the job in the outplacement company is usually lower (the outplacement company is smaller and the worker has no seniority there), the parent company makes up the difference. By increasing the number of workers on shukko, a manager at a large company can decrease the direct work force. Similarly, workers not near the age of retirement but in a business that needs to be cut back can be transferred to other divisions in the company or to a separate company. At Nippon Steel, the company expects that about eleven thousand workers will leave by 1993 as a result of normal reductions. Only a small share of this number consists of natural turnover. About two hundred to three hundred workers a year leave the company voluntarily. Most of the normal reduction will come from workers retiring at the age of retirement (now fifty-nine years). As a result of hiring increases in the 1950s and 1960s, the company now has many older workers reaching the age of retirement. To accelerate retirement from its work force, the company offers financial incentives for early retirement for workers past fifty years of age. But very few workers accept early retirement because seniority wages make it more beneficial for them to stay with the company. Hence, the company temporarily suspends workers at age fifty-eight. These workers take training and educational courses designed to help them get other jobs when they leave the company. This program is expected to reduce the work force by two thousand. 242

STEEL TOWN TO SPACE WORLD

Lastly, the company plans to absorb another six thousand steel workers in other parts of existing businesses, in new company-owned nonsteel businesses, through shukko, and in transfers outside of Nippon Steel. Although the company has retrained a handful of production workers to become computer programmers, most of the workers shifted to other businesses have been white-collar workers. Nippon Steel also intends to reduce its subcontracting work force, which in 1987 numbered twenty thousand. By 1993, the- company expects to halve that number. In addition, it has asked some of its suppliers to accept transfers of Nippon Steel workers. Some of the larger first-tier suppliers are unionized and try to avoid layoffs of regular workers. These suppliers typically develop their own diversification strategies to reduce their dependence on Nippon Steel and develop new lines of business reemploying regular workers. But temporary workers at suppliers and smaller labor contractors have no employment security. For example, in 1980, Kurosaki Refractories, a Yawata-based affiliate of Nippon Steel and manufacturer of ceramic refractory bricks, employed 2,800 regular workers and 1,500 subcontract workers (who worked at Kurosaki). Today, the company has 1,750 regular workers and 1,000 subcontract workers. A number of the regular workers retired at retirement age; others volunteered for early retirement and were helped to find other jobs. About one-third of the regular reductions were transferred to affiliates and suppliers of Kurosaki. The subcontract workers were let go at the end of their contracts. 15

IMPLICATIONS FOR YAWATA WORKS, KITAKYUSHU CITY, AND LOCAL ECONOMIC DEVELOPMENT

At the Yawata Works, the cumulative effects of Nippon Steel's restructuring strategies have been severe. Although Yawata is one of the four works to survive restructuring, its role has been downgraded. Yawata was once the most important and most advanced plant in the company. But this role has now been assumed by the Kimitsu Works, which is not only newer but close to Tokyo. One of the two remaining blast furnaces at Yawata was closed in December 1988, affecting 650 regular workers (many of whom were transferred to Kimitsu, where a third blast furnace is to reopen). Yawata's research and development facility, employing 500 researchers, will shortly be moved to Kimitsu. r-rhe Yawata Works now has many vacant buildings and much unused land. The union branch at the Yawata Works has cooperated fully in 243

Philip Shapira

restructuring. In February 1987, the national union was informed of the company's restructuring plans. The union was concerned to maintain employment and develop procedures for work force adjustment. From February to May, there were seventeen meetings between the company and the union. The blast furnace did not close until December 1988. Thus, the union felt there was a satisfactory period of notice. There have been no direct layoffs at Yawata. Workers have been transferred elsewhere in Nippon Steel, sent to new enterprises, sent to work at supplier or customer plants, or retired one year early (on temporary suspension). The way work force adjustment has occurred for the Yawata local union has been quite different from the experience of American local unions. In the United States, the closure of a large unionized plant usually means employment loss for both the local union and the local community. In many instances, local labor-community coalitions have fought closures and job loss, such as the Tri-State Conference on Steel in Pennsylvania, Ohio, and Pittsburgh (Lynd 1982; Bensman and Lynch 1987). U. S. community-labor coalitions have adopted adversarial positions toward management, and at times toward the national union, in their efforts to save jobs. However, at Yawata and other cases of job loss in Nippon Steel, once the union had secured employment protection for regular workers, its interests and those of the local community (including the city government and smaller local subcontractors) quickly diverged. Although union officials naturally wished plants not close, the company's commitment to employment security for regular union workers and the enterprise focus of the union minimized the possibility of local coalitions between community interests and the union. Nippon Steel has located branches of some of its new businesses at Yawata, but by far the biggest diversification project in the works is Space World-a 20-hectare theme park modeled on a similar space theme park in Huntsville, Alabama. First announced in 1988, Yawata's Space World opened to much fanfare, and after extensive construction, in April 1990 (Klamann 1990b). Space World contains a large-scale amusement park with a space theme and an overnight space camp for children. Nippon Steel is the primary sponsor of the 30 billion yen ($214 million) project, with minority participation by other funders, including the City of Kitakyushu, Fukuoka Prefecture, and the Facilitation Fund for Industrial Structural Adjustment of MIT!. A series of public infrastructure improvements have been made, including new roads, and the realignment of a major railway is planned. Space World was expected to attract 2 million visitors a year after opening, but actual visitor levels in 1990 were far below this rate. The park employs 250 full-time and 500 part-time workers. About one-half of the full-time workers are regular or 244

STEEL TOWN TO SPACE WORLD

permanent employees, and the other half have one-year contracts. Of the part-time workers, three-fifths are women. About eighty former Nippon Steel workers work at Space World, mainly in maintenance. Most of the other park employees are new hires, generally in their early twenties. Average wages for these workers are about 550 yen per hour-just below the level of the local McDonald's fast-food restaurant. Space World is one of numerous theme parks and leisure resorts now being developed in Japan. In addition to the Yawata project, Nippon Steel is developing a leisure park in conjunction with MCA of America at its Sakai plant. Other large industrial companies are developing similar projects-many at rundown shipyards, ironworks, coal mines, and similar disused industrial facilities. Sponsors of these projects include Sumitomo Heavy Industries (Kawana Marina at Oihama Shipyard, southwest of Tokyo), Mitsui Mining (Coal-Geothermal-Bio-Park at Miike Mine, Omuta), Marubeni (Tanabe Bay Resort, Wakayama-ken), Matsushita (theme park at Yubari coal mine, Hokkaido), Nissan (a mobility park, "where people enjoy nature by car," Shizuoka-ken), Honda (a mammoth 700-hectare Mobility World, Tochigi-ken).16 MITI, through legislation, financial incentives, and administrative guidance, has been encouraging companies to initiate such projects. Japan's growing prosperity, the popularity of "organized leisure," and the shortage of land for recreational purposes provide the basis for company hopes that visitors will be attracted to theme parks and leisure projects in what are sometimes dirty and depressed industrial areas. Again, however, there seems to be a "follow-my-Ieader" syndrome at work, and it is not clear that all of the planned parks will succeed. 17 At least one new theme park-the Yokohama Exotic Showcase-has been an expensive failure. MITI provides financial incentives for leisure developments in areas of industrial depression and encourages industrial cities to become partners in such projects (which are then known as "third-sector," public-private projects). But MITI does not appear to conduct any regional planning or comprehensive evaluation of proposed projects, in part because turning down a project would create political problems. The lack of critical evaluation of large development projects extends to local government. Although the city of Kitakyushu is a financial contributor to Space World, the city did not independently evaluate Nippon Steel's plans for the project. It did not do its own cost-benefit analyses or explore alternative uses for the site. Given the shortage of land in the city and the small number of new jobs that Space World will create, it would seem important to explore alternative uses. Officials took the view that if the company was willing to risk its money, so was the city. But that 2 million visitors will come to the park each year seems 245

Philip Shapira

questionable. The works, located in an old industrial area, has no adjacent tourist-related facilities (such as hotels, shops, or restaurants), there are few other visitor attractions in the city, and the present transportation infrastructure is limited. For the city of Kitakyushu, the restructuring of the Yawata Works poses difficult challenges. The city is known as a "castle town" for industries related to steel. City officials estimate that between seven hundred and eight hundred firms in the area are related to the Yawata plant. As employment and production at the Yawata Works has declined, work for subcontractors and suppliers has fallen too. Immediately after endaka, in 1986, there were 5 workers seeking employment for each job available in Kitakyushu, compared with 1.6 job seekers per available job for Japan as a whole. The city's economy has improved since then, but in 1988 Kitakyushu still had 2 job seekers for each available job. In that year for Japan as a whole, excess labor was scarce; I job was available for every. 9 job seeker. However, although unemployment is higher in Kitakyushu than the national average, the city has not suffered the wholesale layoffs and massive destruction of communities seen in Pittsburgh and other U. S. steelmaking areas (Hoerr 1988). The larger problem facing the city is not dealing with immediate unemployment but rather developing and defining its economic future. Population has been declining as union workers have been transferred out of the city and younger people have left to find jobs elsewhere, especially in the growth centers of the Tokyo-Osaka metropolitan complex. In some ways Kitakyushu is in a much more difficult position than Pittsburgh because Japan centralizes corporate headquarters, finance, information, and political power in a single city, Tokyo. In recent years, the dominance of Tokyo has grown; it has become the center not only for decision making but for the development of new industries. Nippon Steel's decisions to shift its research and development center from Yawata to Kimitsu and to put its most modern technology in the Kimitsu plant reflects this. MITI maintains policies for regional development and the decentralization of high-technology activities to peripheral regions. Yet, at the same time, it pursues strategies to develop Tokyo as an international city to rival London and New York; this means increasing Tokyo's power over finance, technology, and information. The view in both Kitakyushu and at MITI is that making Tokyo a global city is much more important than decentralizing some of Tokyo's functions to the regions. Faced with this dilemma, Kitakyushu, playing a new and unfamiliar role for cities, has pursued its own economic development strategies. With large steel and other heavy industries in decline, the city is trying 246

STEEL TOWN TO SPACE WORLD

to develop new sources of employment. The strategies being pursued are similar to those adopted elsewhere in Japan and in comparable cities in the United States and Europe: developing new high-technology industries, small businesses, and services. For example, the city is trying to develop incentives and progranls to encourage small and medium-sized enterprises, one of the largest of which is a new ((technocenter" park for innovative smaller firms. This II-hectare facility will provide shared manufacturing research and development and software facilities. New public-private economic development organizations have been fashioned after similar organizations in U.S. cities (especially Pittsburgh, which many officials in Kitakyushu see as a model). 18 Kitakyushu is not especially favored in its efforts to develop new high-technology industries. The city was developed by the Japanese government for the single purpose of making steel. Other aspects of the local economy have traditionally been underdeveloped. The city is dominated by a few large, heavy-industrial plants, leading, according to local analysts, to an unfavorable ((smokestack" image and a dependent branch plant industrial culture. Factories with more than one thousand workers engage 61 percent of Kitakyushu's manufacturing work force, compared with 13 percent nationally. Conversely, the city has a much lower than average share of small, innovative companies and plants, especially in high-technology industries. The island of Kyushu has attracted a large share of Japan's semiconductor plants, but few of these are in Kitakyushu. The city lacks a major technological university. Moreover, there is competition from other locations in Kyushu, especially through MITI's own program of new technopolis centers designed to attract hightechnology industries to peripheral sites. There are six new technopolis centers in Kyushu but, in order to create a spacious ((greenfield" environment, these centers have been deliberately placed outside older industrial areas. Kitakyushu has seen an expansion in employment in tertiary services since the 1970s, but at a slower rate than the national average. 19 Employment in the city's tertiary sector increased by 43,800 or 14.2 percent, between 1972 and 1986. In the same period, Japan's employment in the tertiary sector grew by 32.9 percent. Between 1981 and 1986, tertiary employment actually fell in Kitakyushu by more than 1,900 jobs-a drop of . 5 percent, compared with a national increase of 9.4 percent. The city had employment declines in trade-eating and drinking establishments (- 3.0 percent), transportation and communications ( - 9.1 percent), finance and insurance ( - 14.6 percent), and utilities ( -10.7 percent)-reflecting the general reduction in the city's core manufacturing base, which fell by 10,300 jobs (-9.4 percent) over the 247

Philip Shapira

1981-86 period. Thus, in the 1980s, Kitakyushu has not generated sufficient new tertiary jobs to replace numerically jobs lost in manufacturing. Moreover, wages in Japan are highly controlled by a seniority scale, size of enterprise, gender, and occupational status. For example, a female salesworker aged thirty-five to thirty-nine years in Japan typically earns one-half to two-thirds what a male chemical or metal industry worker in the same age group makes. Similarly, on average, in an enterprise employing fewer than one-hundred workers, a male production worker aged fifty to fifty-four years earns 80 percent, a male production worker aged twenty to twenty-four years earns 48 percent, and a female production worker aged twenty to twenty-four years earns 37 percent what a male production worker aged fifty to fifty-four years earns in an enterprise employing more than one thousand people (Japan Productivity Center 1987). Kitakyushu's economic base is skewed toward large-scale enterprises concentrated in industries such as steel and chemicals, which pay among the highest wages in manufacturing and employ a largely male, relatively old, work force. On the other hand, most of Kitakyushu's service industries serve local markets (e. g., consumer services, retail trade, and eating and drinking establishments), are small in size, and employ many women and part-time workers. Hence, shifting from manufacturing to tertiary services and from large-scale plants to new small businesses tends to lower average wage levels. The city is thus still In a phase of adjustment to the decline of the Yawata works. The restructuring of industry and the pattern of regional development in Japan has shifted the city from its place at the center of Japanese industrial development to a peripheral location with an uncertain future. Efforts to develop high-technology industries and service industries (especially tourism) are underway, but they face many difficulties. Central government policies conflict, working simultaneously to assist development and to hinder it. The city government has been thrust into a new development role, but this role is often subsidiary to large and powerful private interests (such as Nippon Steel). Kitakyushu has experienced higher than average unemployment, although-because of the work force adjustment strategies of large employers-it has not seen sudden or massive disruptions. Over the longer term, the city's future may be one of declining population and slower income growth. Kitakyushu's transition from steel town to Space World may, indeed, be problematic.

CONCLUSIONS

The experience of industrial restructuring at Kitakyushu and within the Japanese steel industry provides 248

STEEL TOWN TO SPACE WORLD

many contrasts with experience in the United States. Perhaps one of the most striking differences is the way in which employment adjustment has been carried out. In Japan, the steel work force at Nippon Steel and other steelmakers has declined, but the employment practices and adjustment strategies used in the industry have avoided the massive displacement of regular workers. These practices and strategies include commitment to employment security and use of buffer strategies such as shukko, transfers to suppliers, transfers to new business, and temporary suspension (with pay) for workers close to retirement. In important ways, the large companies have taken on many of the functions of employment adjustment (e.g., job development and income maintenance) associated with the public sector in the United States. Workers for suppliers and subcontractors have received much less protection and have experienced unemployment. Nonetheless, taken as a whole, the Japanese steel industry has achieved a remarkably consistent and controlled decline in its total work force over the past two decades and has avoided peaks of displacement (despite recessions). This stands in great contrast to the experience in the U.S. steel industry, where a comparable long-term picture of decline is evident but where there have been large short-term fluctuations in employment-which, in turri, have caused massive community disruptions (Fig. 10.7). In the United States, these massive disruptions

1972=100 120···..····· . · · . . ······· . ·......·· · . ····.. ·..······

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,

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1978

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FIGURE

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1982

+

.

1984

1986

1988

10.7

IRON AND STEEL INDUSTRY EMPLOYMENT, JAPAN AND THE UNITED STATES, 1972-88

Source: Japan iron and steel industry data and U. S. Bureau of Economic Analysis.

249

Philip Shapira

have generated labor-community coalitions that seek to retain jobs. But such coalitions do not appear to have developed strongly in Japan. The pattern of employment practices, including employment security for union workers and enterprise unionism, means that there is much less fertile ground for the development of local coalitions. However, although the worst excesses of massive displacement appear to have been avoided, the decline of the steel industry (along with the decline of other heavy industries) has intensified regional disparities in Japan. Tokyo has long been the center of Japanese political, financial, and corporate power. And as older southern and northern heavy industrial areas have declined, growth in new-technology industries, research and development, and producer services has been concentrated in central Japan (Tokyo-Osaka region), reinforcing core-periphery differences. Old industrial cities like Kitakyushu face problems of population decline and slower income growth. To date, central government policies for regional development have been contradictory and ineffective. Nippon Steel and other Japanese steelmakers-again in contrast to U. S. experience-have maintained a commitment to their core business and have continued to invest in steelmaking and new steelmaking technologies. Production has declined in Japan, and plants have been rationalized and closed. But the accompanying decline in employment seems to be due to aggressive efforts to raise productivity and lower long-term costs rather than simply leave the industry. The Japanese steelmakers have also initiated major efforts to diversify, based in part on the need to develop alternative sources of employment for redundant workers and to develop business areas in core new technologies. U. S. steelmakers have rarely used their diversification programs to provide jobs for displaced steelworkers and have had a weaker internal technology from which to diversify. Some of the Japanese industry's diversification efforts appear well founded, built on products and skills found within the steelmaking business. Other diversification schemes are based on a helter-skelter approach of replicating the strategies of other firms and seem shaky. Finally, it is worth noting that the roles of Japanese governmentat both central and local levels-appear to be changing. In the 1950s and 1960s, MITI played a critical role in rebuilding and expanding the Japanese steel industry, although often under the influence of the industry itself (MITI was known then as the "Tokyo office of Yawata Steel") (Johnson 1982). Today, the links between MITI and the steel industry are still close, and much formal and informal exchange goes on between the industry and the ministry. But the role of MITI in guiding the current round of steel industry restructuring does not seem to have been as large or conclusive as in the past. Instead MITI, _perhaps in search of a 250

STEEL TOWN TO SPACE WORLD

new role, has focused its efforts on assisting smaller firms, policies to aid the development of new-technology industries and services (such as leisure parks), and economic and regional development. At the same time, while Japanese local governments have often provided economic assistance to business and development projects, the case of Kitakyushu demonstrates that local governments are now being forced to assume a much larger role in devising economic development strategies to replace declining industries. This role for Japanese cities is one that U. S. cities have been assuming for at least a decade. U.S. cities have not found it easy to develop equivalent jobs to replace those lost in declining heavy industries and now increasingly suffer from labor-market polarization. In Japan, despite much new enthusiasm for local economic development, older industrial cities like Kitakyushu may well find it difficult to develop good new sources of employment to replace manufacturing jobs lost in the process of industrial structural change.

NOTES

Acknowledgments: This study was initiated while the author was at West Virginia University's Regional Research Institute and benefited considerably from support provided by the Institute, the University's Office of the Provost, and its Office of International Programs. Grateful acknowledgments are also due to Hiroe Yamazaki and Shuichi Hashiya for their invaluable research assistance. 1. Nippon Steel Corporation data and data reported in Mitsubishi Heavy Industries (1989). Note that all tonnage figures in this chapter are metric tons. 2. In 1960, Kitakyushu's population was 1,034,400, compared with 749,800 in Fukuoka City. By 1990, Fukuoka's population had grown dramatically to 1,221,600, while Kitakyushu's had decreased to 1,034,000 (data from Kitakyushu City, Economic Affairs Bureau). 3. This description of the supplier and subcontracting structure at Yawata is based on personal interviews conducted in Kitakyushu in July 1989 with Nippon Steel, the Japan Steel Workers Union, and several suppliers and subcontractors. 4. See Chalmers 1989 for a discussion of honko ("main workers"), shagaiko ("workers outside the firm"), and subcontracting in Japanese industry. 5. This estimate was provided by Professor Sadayuki Saito of the Kitakyushu Institute of Regional Studies in an interview at Kitakyushu University, July 13, 1989. This estimate of subcontract workers covers workers of other firms employed inside Nippon Steel in Kitakyushu and workers in outside suppliers in the city. 6. Data provided by Takuo Ishizuka of the Policy Department of the Japan Federation of Steel Workers' Unions (Tekko Roren), interview in Tokyo, August 2, 1989.

251

Philip Shapira 7. This projection of 1978-79 steel demand was made by the Industry Structure Council, a MITI advisory body. 8. In 1978, the Depressed Industry Law provided for stabilization plans, capacity reductions, financial assistance, joint labor-management consultation, and regional and industry employment assistance measures in electric furnace steelmaking and thirteen other industries (Uekusa and Ide 1986). 9. Nippon Steel's first three rationalization plans were initiated in 1978, 1982, and 1984. 10. In the mid-1980s, Japanese steelmakers began to lose markets in Korea and China as these countries increased their own production (and exports). 11. Nippon Steel was a major provider of technology to these countries. It helped to build the Shanghai Baoshan mill, one of the largest in the world, and the huge Works in Korea. 12. Nippon Steel has itself started to establish offshore operations, notably a joint venture (initiated in 1987) with Inland Steel to produce cold-rolled sheets in South Bend, Indiana. The plant will use Nippon Steel's state-of-the-art technology to supply high-quality steel for automobile, electrical, and other operations at an annual production of .9 million tons. 13. Discussion of Nippon Steel's restructuring assumptions and strategy is based on an interview with Shigeki Sugita, Senior Manager, Corporate Planning Division, Nippon Steel, Tokyo, August 1, 1989, and on company documents. 14. If achieved, this will be equivalent to a 3.9 percent average annual growth in regular steel work force productivity between 1985 and 1993. While remarkable, this growth seems possible given that Nippon Steel attained a 3.4 percent average annual growth in regular steel work force productivity between 1979 and 1985. 15. Unfortunately, no specific statistics seem to be collected on what happens to subcontract workers-what levels of unemployment they suffer and how many subcontract companies go bankrupt. 16. Diamond Industria (1989) lists many other theme park and leisure projects in addition to those described in the text. 17. Besides problems of oversupply, new leisure facilities may be constrained by the fact that Japanese workers still work more hours a year than the workers of any industrialized country and take few holidays. There has been a notable lack of success in reducing time spent at work. 18. In 1987, sixty people from Kitakyushu, including the mayor, visited Pittsburgh to examine the city's revitalization efforts after the collapse of its steel industry in the early 1980s. The group met with Pittsburgh officials and personnel from the Allegheny Conference on Community Development-one of Pittsburgh's public-private partnerships. 19. The tertiary sector covers employment in wholesale and retail trade, eating and drinking establishments, business and consumer services, transportation and communications, finance and insurance, real estate, utilities, and government services not counted elsewhere.

pasco

252

STEEL TOWN TO SPACE WORLD

REFERENCES

Bensman, David, and Roberta Lynch. 1987. Rusted Dreams: Hard Times in a Steel Community. New York: McGraw-Hill. Chalmers, Norma. 1989. Industrial Relations in Japan: The Peripheral Workforce. London: Routledge. Diamond Industria. 1989. "Giant Resort-Leisure Land Development Projects in Japan." Japan Economic Jounlal, July. Gordon, Andrew. 1988. The Evolution of Labor Relations in Japan: Heavy Industry, 1853-1955. Cambridge, Mass.: Harvard University Press. Hicks, Jonathan P. 1989. "Steelmakers' Inferiority Syndrome." New York Times, August 7. Hoerr, John P. 1988. And the Wolf Finally Came: The Decline of the American Steel Industry. Pittsburgh: University of Pittsburgh Press. Isojima, Takeshi. 1989. "Iron and Steel." Japan Economic Almanac. Japan Productivity Center. 1987. Practical Handbook of Productivity and Labor Statistics 1987-1988. Tokyo. Johnson, Chalmers. 1982. MITI and the Japanese Miracle. Stanford, Calif.: Stanford University Press. Kimura, T. n.d. "The Total Restructuring of Nippon Steers Yawata Works." Report prepared for Nippon Steel, Kitakyushu. Mimeo. Klamann, Edmund. 1990a. "Can Mouse Ears Fit Steel Hats?" Japan Economic Journal, April 28. - - . 1990b. "Nippon Steel Targets PC Market." Japan Economic Journal, September 29. Kosai, Yutaka. 1986. The Era of High Speed Growth. Tokyo: University of Tokyo Press. Lynd, Staughton. 1982. The Fight against Shutdowns. San Pedro, Ga.: Singlejack Books. Minami, Ryooshin. 1986. The Economic Development of Japan. London: Macmillan. Mitsubishi Heavy Industries. 1989. Ocean-Related Research Center Report No. 274. Tokyo: Mitsubishi. Noh, Toshio, and John C. Kimura, eds. 1989. Japan: A Regional Geography of an Island Nation. Tokyo: Teikoku-Shoin. Saito, Sadayuki. 1983. "Laborer's Boarding House, 'Rodo-Geshuku. '" Studies in Kitakyushu Institute of Regional Studies, no. 30:53-68 (in English). Saxonhouse, Gary R. 1979. "Industrial Restructuring in Japan." Journal of Japan Studies 5, no. 2 (Summer): 273-320. Shimodaira, Hiromi. 1989. "Restructuring of Regional Labor Markets and Labor Demand-Supply Imbalance since the Late 1970s in Japan." Paper presented at the International Symposium on Problems of Local Employment under Structural Adjustment, National Institute of Employment and Vocational Research, Tokyo, September 12-14.

253

Philip Shapira Statistics Bureau, Management and Coordination Agency. 1989. Monthly Statistics of Japan, no. 336. Tokyo, June. Tokunaga, Shigeyoshi. 1984. "The Structure of the Japanese Labor Market." In Industrial Relations in Transition: The Cases of Japan and the Federal Republic of Germany, edited by Tokunaga Shigeoyoshi and Joachim Bergman. Tokyo: University of Tokyo Press. Uekusa, Masu, and Hideki Ide. 1986. "Industrial Policy in Japan." In Inqustrial Policies for Pacific Economic Growth, edited by Hiromichi Mutoh et a1. Sydney: Allen & Unwin. Zenage, Thomas R., and C. Tait Ratcliffe. 1988. The Japanese Century: Challenge and Response. Hong Kong: Longman.

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Part V

JAPAN AND THE WORLD

11 Reshaping Western Pacific Rim Cities EXPORTING JAPANESE PLANNING IDEAS Peter T. Rimmer

The British were not great builders in the Roman or the Spanish kind. ... That was not their way. Their Colosseum was only the station racecourse, their Pantheon the modest Anglican Cathedral, and the palaces of their proconsuls were, by and large, hardly more than their comfortable gentlemen's residences. But the profusion of their buildings was unexampled. The architects of the British Empire, often amateurs, really did alter the face of the earth: never in history had one people distributed its constructions so lavishly, or stamped its taste so ineluctably across the continents. -Jan Morris, The Spectacle of Empire

During my first visit to Japan in 1979, a professor of economics at one of the former imperial universities much admired the urban legacy of the British in Asia. He fretted that Japanese planners had made no lasting contribution to the geographical organization, patterns of urbanization, and physical and spatial character of overseas cities. In hindsight, his thoughts were premature. As part of a link between the urbanization process and global economic forces, Japanese planners have begun to make their mark on the development of cities, the spatial organization of society, and the built environment, particularly within the western Pacific Rim. This area of increasing Japanese economic activity-exports, imports, joint ventures, foreign direct investment, and technology transfer-stretches from Korea in an arc 257

Peter T. Rimmer

through China and southeast Asia to Australia and New Zealand. New urban forms are being created, some existing built environments are being transformed, and others discarded as artifacts of a superseded colonial era. Although the link between cities and global economic forces is regarded as a contemporary phenomenon, the urban forms and processes of western Pacific Rim cities reflect successive waves of European imperialism since 1500-Spanish, Portuguese, Dutch, French, and Britishand, to a lesser degree, of colonizers-Germany, Japan, and the United States of America. According to King (1990a, b), the old empires had· to decay to free up flows of capital, goods, services, and labor that enabled the accoutrements of world cities to be grafted onto their colonial bases. Given the impending reorganization of the Pax Americana system on the western Pacific Rim, these new opportunities have given Japanese planners the opportunity of making a lasting contribution to the region's urban forms and built environment. In seeking the essence of a likely Japanese urban transplant, two basic issues need to be explored: How has urban planning developed in Japan since the Pacific war? And what elements have been exported to the western Pacific Rim? In addressing these issues two basic phases in Japan's postwar planning have to be examined: the period between the end of the Pacific World War and the first oil shock (1973-74), and the period after the first oil shock. During the first phase the country's planners were preoccupied with rehabilitating and developing Japanese cities to serve an economy dominated by heavy metal and chemical industries. Comprehensive transport and land use planning was a key element in these endeavors. Subsequently, these "eye-on-the-future exercises" were packaged for export to southeast Asia. While these methods were being implanted in southeast Asian cities, planners within Japan turned to the creation of an information economy based on computerized communications during the second phase of postwar development. This new technology underpinned Japan's plans for advanced cities in the twenty-first century. Then plans were formed for prepackaging and transplanting the new designer cities to overseas locations. Although southeast Asia was targeted initially, the scope of Japan's postmodernization plans has widened to encompass the entire western Pacific Rim. Japanese cities during the first phase of Japanese postwar planning provided role models for southeast Asian cities in the 1970s and 1980s.

POSTWAR URBAN PLANNING IN JAPAN

(1945-73)

Once Japan had shrugged off the constraints of the United States occupation in 1960, her planners were 258

RESHAPING WESTERN PACIFIC RIM CITIES

able to draw upon their prewar experience in former colonies, particularly Manchukuo, and pursue a policy of high-speed growth based on the heavy metal and chemical industries. As the major metropolitan areas of Tokyo, Osaka, and Nagoya experienced congestion, physical planners tried to guide manufacturing into a series of growth poles established as new industrial cities and special areas in the initial National Comprehensive Development Plan (1962) and as industrial complexes in the second comprehensive plan (1969). Although even more grandiose plans were fomented by Prime Minister Tanaka, they did little to lessen the concentration of activities in the major metropolitan areas. As congestion was the key issue, Japanese planners devoted much effort to comprehensive land use and transport studies.

Comprehensive Urban Land Use and Transport Planning Japanese planners were latecomers to the comprehensive land use and transport studies that featured five basic concepts: accessibility, traffic generation, trip distribution (i.e., spatial distribution of traffic), modal split (i. e., selection of transport mode and route), and traffic assignment (i. e., traffic on the transport network). These concepts had been pioneered in prototypical studies of Detroit and Chicago during the late 1950s. Diffusion of these fundamentals of transport planning from their midwestern heartland to Japan was rapid (Black and Rimmer 1982). In 1967, the initial land use and transport study using the familiar trip generation, trip distribution, modal split, and traffic assignment models was undertaken in Hiroshima (750,000 people). It was followed in 1967-68 by a land use and transport study of an area within 50 kilometers of Tokyo (21,310,000 people) that used the same basic framework but a different combination of models. Both approaches were repeated and contrasted in Osaka in 1970. Unlike Western land use and transport studies, in which private consultancy firms developed and applied urban planning techniques, the Japanese government centralized its planning functions. Hence, the Ministry of Construction's City Planning Bureau was able to produce a masterly synthesis of the urban planning process based on the Hiroshima and Tokyo prototypes. Although possible Western sources of the. ingredients of this package have been identified, the study also incorporated important technical innovations, particularly a consideration of urban goods movements to compensate for the traditional bias toward passenger travel in comprehensive land use and transport studies. Blending Western and Japanese ideas, this set of procedures has been used as the basis for forty-two land use and transport studies 259

Peter

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throughout Japan (1967-84), the Hiroshima prototype, for instance, being applied to Sapporo and the Tokyo prototype to Nagoya. These surveys have been cooperative studies between the central, provincial (prefectural), and local governments in which the Ministry of Construction has had an important input because the central government bore onethird of the cost. Plans for road networks, interchanges, and subways are passed to a special committee comprising administrators, professors, and private-sector interests. In turn, their comments are presented to the provincial government, which, after consultation with the Ministry of Construction, gives its final approval. This centralized administrative structure makes it relatively easy for the Japanese government to prepackage its transport-planning expertise for export as a means of fulfilling its newly found international aid role and creating markets for equipment manufacturers (Rix 1980).

Tokyo Because experience gained in Tokyo has pervaded the export package, we need to distill the salient features of its land use and transport system from planning developments in the capital since the Pacific war (Rimmer 1986a). The main thrust has been to preserve Tokyo's strong center strategy-a reflection of its large business center and radial surface railway structure. At first, the emphasis was on integrating new or expanded radial surface railway lines with land use activities. But congestion in the city center because of a breakdown in the high-capacity distribution system provided by electric tramways led to removal of the tramways. They were replaced by an increased number of buses and, more important, by high-frequency subways. Bus patronage, however, was adversely affected by traffic congestion, which in turn was attributed to a sparse expressway program. The response was to build eight radial expressways, reinforcing the strong center strategy, and to add two orbital expressways, making the total length of expressway 71 kilometers. Initially, urban "road" planning failed to recognize the interrelationship between land use, traffic, and transport, but subsequently an attempt was made to integrate housing development and trucking terminals with the expressway program. Although the spread of the motor car made mass transit unprofitable, subsidies were provided for subways and monorails. As opposition to new transport facilities increased, efforts were made to introduce traffic management measures in the short term and as long-term solutions to promote research into new transport sys-

260

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terns: downtown people movers and automatic guideways (e.g., Yamaguchi Line and Yukarigaoka Line in Tokyo, New Shuttle in Saitama, and the privately owned Yamaman Line in Chiba). From this postwar history of land use and transport developments in Tokyo we can distill four basic ingredients that have been incorporated in Japan's export package-radial surface suburban railways, subways (and monorails), expressways, and transport system management-with new transport systems as possible future options. With Jakarta's population expected to reach 17 million by the year 2000, Manila 13 million, and Bangkok 12 million, southeast Asian cities were obvious markets for Japan's land use and transport export package.

EXPORTING JAPAN'S LAND USE TRANSPORT PACKAGE

When Japanese planners won their first overseas land use and transport contract in Manila in 1973, Australian planners had already completed studies of Kuala Lumpur (1964) and Singapore (1971) (Map 11.1). Subsequently, u.S. planners were prominent in Kuala Lumpur (1974, 1980) and Singapore (1974), German planners in Bangkok (1975) and Jakarta (1975), British planners in Manila (1977) and Surabaya (1977), and Australian planners in Metro Cebu (1980). By then, Japanese planners had undertaken pilot studies of eight provincial cities in four countries-Yogjakarta and Tanjung Karungl Telok Betung (Indonesia), Alor Setar and Kota Bahru (Malaysia), Davao City and Metro Cebu (Philippines), and Chiang Mai and Nakhon Rachasima (Thailand) (Rimmer 1986a, b). These surveys led to Japanese studies of land use and transport in a series of provincial cities: Medan (1978), George Town, Penang (1979), and Johor Bahru conurbation (1982), and Davao City (1982). Since then Japanese planners have returned to the capital cities with a land use and transport study of Malaysia's Klang Valley (1984) and specific transport improvement studies in Bangkok, Jakarta, and Metro Manila. No consultancy studies have been undertaken in Singapore, but Japanese construction companies have been the major contractors working on that city's mass rapid transit system. Metro Manila has been a particular focus of Japanese transport planners since the early 1970s and the site of the Japanese governmentsponsored Transport Training Center at the University of the Philippines, which offers training in traffic engineering and hands-on experience with imported traffic signals.

261

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11.1

MAJOR AND PILOT LAND USE AND TRANSPORT STUDIES UNDERTAKEN IN SOUTHEAST ASIAN CITIES

Source: Rimmer 1986c.

Metro Manila

All four basic ingredients-suburban railways, subways, expressways, and transport system management measures-that figured prominently in Tokyo have been incorporated in a succession of land use and transport plans for Metro Manila. Although a scheme was mooted for the electrification of suburban railways, developments in Metro Manila did not go beyond the provision of an improved diesel service. In 1973, no less that 135 kilometers of intraurban railways, part of which would be a subway, were recommended for Metro Manila, but because of high cost the project was pared to 40 kilometers of light rail, of which 15 kilometers are now in operation. The suggested 51-kilometer network of ring and radial expressways-ten radial and six circumferential routes-was more acceptable, and though the plan may not be completed in its entirety, it provides the framework 262

RESHAPING WESTERN PACIFIC RIM CITIES

for a polycentric city (with suburban trucking terminals as a means of alleviating central area congestion). Because the construction of expressways has been tardy and costly, attention has shifted to transport system management measures-signs and road marking, traffic signals, lanes for buses and jeepneys only, traffic islands and medians, footpaths and passenger shelters-that offer immediate low-cost relief. Experience in Manila prompted Japanese planners to refurbish their land use and transport export package. Although incomes were higher in Manila than in Japan when the first subway was constructed in Tokyo in 1927, there was a growing realization that few southeast Asian cities could realistically afford heavy rail systems or even monorails. While rail has been retained as a long-term strategy, Japanese planners placed greater emphasis on expressways as the basis for a polycentric city and highlighted suburban trucking terminals as a means of alleviating central area congestion. Greater stress has been placed on bus improvements (with Japan's Overseas Economic Cooperation Scheme, for example, providing a low-interest loan to the Metro Manila Transit Corporation to purchase an additional four hundred buses). Most attention, however, has been placed on area traffic control to bring Japan into line with other national consultants. Thus, these changes have turned Japan's land use and transport strategy on its head by stressing low-cost measures in the short term and expressways in the medium term, the long-term aim being a rapid transit rail system as a step toward a strong city center.

Provincial Cities Because southeast Asian capitals had completed their land use and transport plans by the time this refurbished package was available, Japanese planners concentrated their attention on provincial cities, such as Medan, George Town, Johor Bahru, and Davao City, that were handicapped by lack of infrastructure, chaotic transport conditions, and, above all, inadequate public transport. This chapter concentrates on public transport rather than the complete land use and transport package because subsequent work by Japanese planners in Jakarta, the Klang Valley, and Metro Manila has been focused on improving management and operations in this sector. Extrapolating from the southeast Asian experience, Japanese planners have developed a three-step procedure for public transport developments based on city SIze. 1. In cities with populations of fewer than 1 million, such as Johor Bahru (620,000) and Davao City (485,000), urban public transport 263

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needs should be met by microbuses and minibuses, though efforts should be made to introduce regular-size buses in the medium term. 2. In cities of 1 million or more but fewer than 4 million, such as Kuala Lumpur (1 million), stage buses are expected to dominate public transport, and efforts have been made to upgrade city bus services in the short and medium terms. It will be necessary, however, to reserve exclusive rights-of-way because rail transit will be needed in the longer term. 3. In cities exceeding 4 million people, such as Jakarta, city bus systems have difficulty in satisfying demand and the introduction of rail transit systems ranging from light rail (25,000 passengers per hour) through suburban heavy rail (40,000 to 50,000 per hour) to rapid rail (60,000 to 70,000 per hour) should be under study, being constructed, or in operation. Clearly, the outcome of this "horses-far-courses" process is a tracked city and the prospect of a strong center. There are exceptions. George Town (720,000 people), which has a city bus system, has already reached the second level. The Klang Valley (2,020,000) is pressing for inclusion at the third level with plans for light rail transit. Singapore (2,500,000) reached the third level with the opening of the first stage of its 70-kilometer rapid transit rail system in 1987. Although George Town's position stems, at least in part, from the city's past status, these exceptions arise from higher levels of average income. Otherwise buses in low-income provincial cities, such as Johor Bahru and Davao City, are expected in the near future to supplant minibuses and relegate them to a feeder role at the expense of microbuses, while the minitaxi will be pushed into extremely short distance services (Fig. 11.1 ). In the longer term, rail will be the dominant mode. If all goes according to plan, by the year 2000 Jakarta should have 120 kilometers of electrified rail upgraded to carry commuter trains, Manila will have an extended light rail transit system, Bangkok will have a rapid transit rail system, and Kuala Lumpur will have its Metrolink. Even George Town, Johor Bahru, and Davao City-if they follow the advice of consultants-will be contemplating shiny new rail technologies by that date. Consequently, stage buses will be pushed into a feeder role, while minibuses and minitaxis will be left to dispute the extremely short routes. With the phasing out of the minitaxi, a four-tier arrangement of public transport would be expected in southeast Asian cities: rail, feeder bus, 264

RESHAPING WESTERN PACIFIC RIM CITIES

POSTWAR

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FIGURE

11.1

AN EVOLUTIONARY MODEL OF PUBLIC TRANSPORT ApPLIED TO SOUTHEAST ASIAN CITIES

Source: Rimmer 1986a.

minibus, and taxi. This "horses-for-courses" approach fails to take account of the fragmented demand for public transport and glosses over the debates involving railway versus busway and bus versus minibus. For instance, a plausible case could be made for minibuses not only as feeder service but as providers of metropolitan-wide high-quality service during peak periods and specialized service for "stiletto" markets. The resolution of these debates has been complicated by the computerized telecommunications revolution, in which Japan is expected to play a pivotal role.

URBAN PLANNING IN JAPAN SINCE

1973

The immediate postwar phase of Japanese planning was terminated by the oil shock, which resulted in a marked slowdown in the rate of economic growth and ushered in the Third National Comprehensive Development Plan (adopted in 1977). This plan marked the shift from heavy to light industries, notably electronics and precision instruments, and the creation of integrated areas aimed at resuscitating regional activities. Simultaneously, individual in265

Peter 1. Rimmer TABLE

11.1

MAJOR TRANSPORT PLANS UNDERTAKEN BY JAPANESE PLANNERS IN SOUTHEAST ASIA

COUNTRY

TITLE

DATE

Brunei Burma China Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Malaysia Malaysia Malaysia Philippines Philippines Philippines Philippines

Government Public Transport Newwork Plan Rangoon Railway Line Electrification Plan Shanghai City Express Railway Plan Jakarta Ring Road Plan Medan City Transport Plan Greater Jakarta Area Railway Transport Plan Jakarta Bay Highway Plan Jakarta-Cenjareng Airport Route Plan Jakarta Comprehensive Road Transport Network Plan Jakarta-Kanbonbatan Railway Improvement Plan Jakarta Manggarai Station Crossover George Town-Butterworth Road Plan Johor Bahru Transport Plan Klang Valley Transport Plan Metro Manila Transport Plan Manila Highway Plan (R-I0 Road Construction Plan) Manila Subway (First Line) Plan Metro Manila Highway Plan (C-3 and R-4 Road Construction Plan) Manila-Batan (C-5 and C-6 Road Construction Plan) Davao City Urban Transport-cum-Land Use Plan Metro Manila Outer Major Road Project (South) Metro Manila Ring Road Transport Plan (Phase 1) Metro Manila Outer Major Roads Project (North) Metropolitan Transport Plan Greater Bangkok Expressway System Metropolitan Railway Overpass Plan Metropolitan Bangkok Transport Survey Plan

1983 1983 1984 1976 1978 1980 1980 1982 1983 1984 1984 1978 1980 1984 1973 1973 1974

Philippines Philippines Philippines Philippines Philippines Thailand Thailand Thailand Thailand

1974 1978 1978 1980 1981 1982 1978 1980 1982 1984

dustries decreased their investment in products and increased it in knowledge and services. These far-reaching changes reflected in living standards, levels of technology, and growth rates have required closer connections between private business and public producers of scientific information, improved contacts between manufacturers and "stiletto" markets for customized products, and the development of a market for information. This "softening" of individual fields and the economy as a whole was refle~ted in the Fourth National Plan (adopted in 1987),

266

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which charted new fields of endeavor for small and medium-sized enterprises in pioneering private venture businesses. In the process new urban and regional forms are emerging to accommodate an information-oriented society, and existing settlements are being reshaped or discarded as artifacts of the heavy-industrial era. The National Land Agency (Kokudocho 1985), in mapping the contours of the "new information society" (joho shakai) as the next stage in social evolution, set out to chart these new urban forms. The efforts of the National Land Agency in charting 'land and informationalization' in the twenty-first century have been neglected by the infatuation with the technopolis concept. A book (Tatsuno 1986) and a host of papers (Clasmeier 1988; JETRO 1983; Mandeville 1987; Morris-Suzuki 1988; and Tatsuno 1988) have outlined the creation of nineteen high-technology, integrated communities through the collaboration of government, business, and the academic community. Basically, these knowledge-oriented industrial structures are the largest industrialization plan since the growth poles touted under the New Industrial Cities program were established in 1962. Like their predecessors, the new urban forms designed to be the backbone of the Japanese economy in the twenty-first century are likely to have mixed success. Indeed, the technopolis concept is but a small part of the information society mapped out by the National Land Agency, whose blueprint is broadly based on Japan's playing a leading role in the next technological revolution. Its "motor" will be computerized telecommunications arising from the convergence of the telephone and the computer. Coupled with cable television (CAlV), the information network system (INS) will provide the social infrastructure underpinning Japan's advanced information network of the twenty-first century. A prototypical information network system (INS) is already in existence in Tokyo's Mitaka-Musahino to permit "telecommuting" through personal computers located in suburban home-based offices (Forester 1987). Dwellings have been equipped with digital telephones, terminals, and "sketchphones" connected to digital exchanges via high-quality fiber-optic cables to permit working at home; these devices may also be used for "narrowcast" entertainment, teleshopping, home banking, electronic newspapers, centralized control of home appliances, and security (with links to police, fire station, and hospital). By 1995, Japanese planners intend to introduce the Integrated Services Digital Network (ISDN), which will trigger the real explosion in telecommunications because it will be able to handle all kinds of information that can be transmitted in digital formvoice, numerical data, facsiInile, and moving pictures. This new tech-

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nology will require novel behavior patterns; a new set of infrastructures, including large and multipurpose cables, huge data bases, and a new educational system; and a transformed social system. The key feature of the schematic telecommunications-transportland use diagram is the predominance of optical and other access circuits over transport networks; the only transport modes included are a commuter railway, ports, and an expressway information system in the large city (see Map 11.2). Clearly, the suggestion is that expenditures on computerized telecommunications will outstrip those on the second-generation transport system. Through greater reliance on communications channels, the computerized telecommunications revolution promises to bring greater freedom to ordinary people, but paradoxically it will also bring greater surveillance over existing transport operations. This is evi-

COMMUNICATIONS SATELUTE

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EXPRESSWAY INFORMATION SYSTEM

MAP

11.2

JAPAN'S "INFORMATIONALIZED" CITY AND REGION OF THE TWENTY-FIRST CENTURY

Source: Rimmer 1988. Note the communications satellite and direct broadcasting satellite. Acronyms: CATV, cable television; CAl, cable instruction television; FA, factory automation; LAN, local area network; OA, office automation. 268

RESHAPING WESTERN PACIFIC RIM CITIES

dent in the automated highway system underpinning the expressway information system, which offers opportunities for providing vehicle information and charging users for congestion and road damage. As on-board computers are developed to monitor and control vehicle operations, electronic information systems will be a step toward driverless motor vehicles and railways in the twenty-first century. Computerized telecommunications will also play an important part in freight transport, particularly in the control and despatch of vehicles. The resultant lower public transport costs and better use of private vehicles will also restructure retailing and distribution systems by permitting the introduction of "justin-time" systems with their zero inventories. These changes will be apparent in dynamic new settlements in Japan before existing settlements are transformed by the new technology. The core. element of the futuristic large city is the teleport, which is the ground base for handling international and domestic satellite communications. This earth station is linked to local area networks (LAN) that link terminals, mainfrarnes, minicomputers, and personal computers housed in "intelligent buildings." The teleport is closely associated with the large city's international information exchange center and is expected to attract heavy users of telecommunications, such as financial institutions, insurance companies, software development firms, and information-processing services (see Map 11.2). Hence, the teleport is also connected to an industrial area (with factory automation), a specialized hospital with its own medical information data base, and, above all, to the so-called heart of the city. This area possesses both office automation and local area networks. Shown north of the heart of the city on the map are communications connections between cable television and a residential area; a new town with a home cable television network and community information center; a satellite office; and a research and education city with cable instruction, an educational data base, and a local area network. In the eastern part of the city is a large-size factory and a freestanding city business core with an office annex. The latter is connected to the main-trunk optical fiber network linking the heart of the city with the region. After noting the domestic broadcasting satellite (DBS), we can highlight the key features of the region's local city hosting the regional data base and associated with the local software factory. Clearly, the local city is the pivot for a range of activities located in the northern part of the region: the new countryside industrial area, the remote area with its branch school and clinic, and the recreation site. Also the local city is associated with a range of activities located to the south of the maintrunk optical fiber network: the regional industrial information center

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Rimmer

with a local area network and local area data base, the regional industrial area, and the freestanding overseas business with its own teleport arrangement. Clearly, the technolopolis area with its associated university information and training centers is but one small part of a much larger plan. Yet it has been at the forefront of moves to prepackage cities for export overseas.

EXPORTING DESIGNER CITIES

The United States is the acknowledged leader in computerized telecommunications, but Japan is likely to be the greatest external force shaping transport and communications on the western Pacific Rim. Not only does Japan lead in the optical fiber sector, which is vital for transmitting messages, but it has the capacity for incorporating advanced industrial activities in prepackaged satellite cities cloned on Silicon Valley. Two such packages have been designated the technopolis and the multifunction polis.

Tech napolis Mitsubishi Electric Company provides an elaborate blueprint (1987) for exporting technopolises to newly industrializing economies. It begins by outlining the well-known features of the Japanese technopolis: production and distribution facilities for high-tech industries; academic and publicly owned research and development establishments geared to high-tech needs, access to transport and communications structures offering connections to major cities; and a congenial habitation zone for teachers, engineers, and their families. It goes on to provide a remit for a technopolis development corporation (based on London's Docklands project), a design strategy, and a modular design concept. Finally, it isolates two major corridor areas as ideal locations for technopolises: the eastern China corridor from Seoul to Hong Kong; and (b) the southeast Asia corridor from Chiang Mai to Bali (Map 11.3). These overseas technopolises are designed to help the host countries develop production engineering, project execution, capital goods manufacture, and research and development; to facilitate the transfer of technology; to create a high-quality environment to stimulate foreign investment (including Japanese domestic production dispersed abroad); and to avoid the problems of fragmented and unproductive investment in research and education. A step beyond the original Mitsubishi Electric Corporation's 270

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160·

40·

40·

• • 20·

20·

o·

20·

20·

@ ~~J~~tinternational •

40·

Other cities

-

Airway

0

Development corridor

o

100

~

kilometres

80·

iOO·

140·

120·

MAP

160·

11.3

DEVELOPMENT CORRIDORS ON THE WESTERN PACIFIC RIM

Source: Rimmer 1989b.

scheme is to identify a third corridor-the eastern Australia corridor running from Cairns to Adelaide-and, according to the technopolis criteria used in Japan, to identify twenty sites (Map 11.4). Whereas the likely sites in eastern China and southeast Asia would probably specialize in intermediate technologies, Australian technopolises offer the prospect of more advanced processing in biotechnology, new materials, and mechatronics. Before the sites in Australia could be analyzed in more detail, the leisure division of the Ministry of International Trade and Industry (MITI) suggested a broader concept than the technopolis-the multi271

Peter

J.

Rimmer

j,

i

19

j

i

18

26~

sqo kilometres

MAP

11.4

POTENTIAL TECHNOPOLIS SITES IN AUSTRALIA

Source: Rimmer 1989a.

function Polis. Indeed, Australia is deemed the ideal site for a multifunction polis, which features a new type of relationship with Japan. The host country's resource-rich economy complements the proponent's technologically advanced base. Further, Australia has relatively cheap land for investment and Japan the necessary capital. Also, Australia offers the possibility of new materials development, and Japan has the necessary technical skills. A similarity of time zones between the countries facilitates travel and communication.

Multifunction Polis Initially, a city of between 50,000 and 150,000 people costing between $A5 billion and $A10 billion was

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envisaged by MITI and its Australian counterpart-a size more akin to the Tsukuba Scientopolis rather than technopolis. Drawing inspiration from North Carolina's Research Triangle and France's Sc~ence Resort City in Languedoc-Rousillon, the multifunction polis is aimed at integrating work and leisure (see Table 11.2). Key industries will include high-technology industries geared to export, such as biotechnology, computer software, and communications equipment, and to the future, such as new materials (polymers, nonferrous metals, and new ceramics), new energy, and research into the oceans and space. Attention will be paid to "high-touch" activities such as conventions and resorts by an associated academy, which will train workers. These activities have been incorporated by the project consultants, a consortium led by Arthur Andersen and Company/Kinhill (1989a, b) into three basic groups: biosphere (international environment management); technopolis (research and development into agricultural technology, information technology, and new materials); and renaissance city (leisure, health, and tourism). Subsequently, the manufacturing and leisure basis has been downplayed, and education, telecommunications, and health have been promoted as the key pivots of this new urban form. The multifunction polis has captured the imagination of Australian academics, who have written a veritable flood of pro and anti papers on the relative merits of this "hot house" for development (see, for example, Castles 1990; Langdale 1988; McCormack 1989; Mandeville 1987; MFP Australia Research 1989; Minagawa 1990; Morris-Suzuki 1988, 1990; Rimmer 1989a, b). Rather than repeat material on Australia's ability to attract foreign investment and develop a multicultural society, this chapter is confined to sketching the broad outlines of the project and identifying Japanese and Australian interests in the proposal. JAPANESE INTERESTS. MITI sees the Australian multifunction polis as providing an environment in which information activities can be more fully developed than in Japan, thereby underlining Japan's need to switch from resource-based activities as part of its structural readjustment program. The multifunction polis would also expose large numbers of Japanese people and businesses to international influence as part of a general plan to internationalize the country's economy and culture (and a possible throwback to the earlier Silver Columbia scheme for transplanting elderly Japanese overseas). Locating the multifunction polis in Australia will highlight the need of Japanese people to change their life-styles to include more leisure and an improved environment. The multifunction

273

TABLE

11.2

CHARACTERISTICS OF MULTIFUNCTION POLIS

ITEM RATIONALE

ELABORATION

Japan lacks natural resources and space possessed by Australia. A twenty-first-century city in Australia would be an integrated center encompassing high-tech industries, resorts, an international conference complex, and research facilities.

BASIC CONCEPT

Creation of the "fifth space"

Characteristics

Functions

New city life spaces of the twenty-first century include five spaces: living, employment, recreational, resort, and integrated (i.e., the multifunction polis). City of human dimensions Temporary residence for visitors on extended visits Soft infrastructure Sophisticated information and communications facilities to compete with metropolitan cities Information infrastructure Convention Events Exhibitions Promotion of twenty-first-century industries (high tech/high touch) International R&D projects

High-quality educational facilities to university level Education for life Resort and leisure Cultural facilities INDUSTRY

High tech industries (including space development)

High-technology industry Biotechnology Medical Pharmaceutical New materials/rare metals Electronics Computer software

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Table 11.2. Characteristics of Multifunction Polis (continued) ITEM

High touch industries

INFRASTRUCTURE

ELABORATION Convention industry Resort industry Fashion industry (different seasons from northern hemisphere) Audio-visual recording industry Cinema Music Medicare Education Information (telecommunications, databases, etc.)

Source: Sangyo Kozo Shingikai 1988, 1.

polis is expected to reduce international friction by offering an opportunity for indirect cooperation between Japan and the United States at a neutral location. Coincidentally, it will offer a place to invest Japan's trade surplus, to "internationalize" small and medium-sized manufacturing firms lacking overseas experience, to provide opportunities for property developers, and to supply construction interests with the chance to gain experience with appropriate forms for the twenty-first century. Above all, the multifunction polis will assist the internationalization of small and medium-sized joint-venture firms, which MITI has taken under its wing since the shift to knowledge-intensive industries. Not only are these firms short of in-house training programs and research and development activities; they also lack necessary overseas experience. Although the multifunction polis, like technopolises, is primarily a MITI venture, the proposal is attractive to Japanese planners and bureaucrats because it is easier to undertake than urban redevelopment at home. Australian interests in the multifunction polis hinge on the establishment of a new contract between business, academia and government. Given the Australian federal Government's reluctance to divert public funds to offer place-specific subsidies to city projects, the commercial viability of the multifunction polis will depend on its attractiveness to high-technology investors. Besides attracting Japanese capital and technology to Australia, the project offers the prospect of stimulating the creation of new international information industries through a strategic alliance of research and development in incubator enterprises (Langdale 1988). This nexus is expected to draw in expertise to enhance scientific and technological disciplines and to offer a test bed AUSTRALIAN INTERESTS.

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Peter'. Rimmer

for developing new value-added telecommunications services-a possible magnet for transnational equipment manufacturers and secondary information services. These considerations have prompted the Australian federal and state governments, in consultation with the Japanese working group, to add nine principles to the prefeasibility study. They emphasized the need to create a truly international city in terms of investments and participants and to ensure that it is driven by the private sector (i. e., without government subsidies). Other desiderata included the need to develop an advanced urban infrastructure to attract a series of "information society" industries and to establish leading edges in communications and education (Commonwealth Department of Industry, Technology and Commerce 1988). Further, the original assumption that the concept must take the form of a separate city located in one place has been relaxed. The way is open for one or more cities, a truly "invisible city" comprising cities linked by computerized telecommunications, or a hub with spokes and activities distributed along high-speed transport and communications networks linking major Australian and overseas cities. All mainland states and the Australian capital territory have one or more sites in mind. Because both Australian and Japanese governments are loath, however, to fund the necessary infrastructure with start-up costs of A$2.5 billion and a total cost of A$40 billion over thirty years for a city of some 250,000, the project has to depend on commercial developers and joint venturers. No site for the multifunction polis has yet been chosen, though a site within the eastern Australia corridor would be favored and the Sydney-Canberra-Melbourne axis or Surfers Paradise would be the likely winners. Irrespective of site, however, the debate about the polis, coupled with plans for a Very Fast Train and a new international airport, has driven home to Australians that new and dynamic pivots within the eastern Pacific Rim corridor must be seen in a western Pacific Rim context. Above all, they must be conscious of planning trends in Japan and the way in which Japan's planners are packaging cities for export. Their sights have extended beyond the western Pacific Rim to a global perspective, suggesting that envisaging the multifunction polis as a world-class center with a world media center, world sports center, and world university may not be too farfet'ched in Japan's long-term plans.

TOWARD A GLOBAL TECHNOBELT?

Contemplation of the twenty-first century is probably more extensive in Japan than in any other country. 276

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Already Mitsubishi Electric has commissioned a report on world technopolises that includes both the Japanese technopolis concept and the broader multifunction polis idea. Little imagination is needed to see that developments on the western Pacific Rim can be incorporated into a global "technobelt" linking the western Pacific Rim, North America, and Europe-the three main arenas of capital accumulation. The spread of computerized telecommunications within this global technobelt will involve substituting them for movements of people and paper. Hence, the question arises as to whether governments· are justified in pursuing multimillion-dollar fixed-track transport systems in the expanding conurbations of the western Pacific Rim. Trade-offs between telecommunications and transport and scope for saving energy resources are uncertain. Basically, we are in the identical position as the land use and transport planner in 1920 trying to envisage the likely effects of the motor vehicle in 1980, though our time frame is shorter. Computerized telecommunications offer the prospect of mitigating congestion by building on the success of Singapore's area licensing scheme by using in-vehicle information, vehicle monitoring, and automatic charging to alter vehicle routing, control parking, and price vehicles out of congested areas. The new technology also offers the prospect of controlling an array of different-sized public transport vehicles from the 9-seater microbus to the 150-seater jumbo bus. Much will depend, however, on the need to visit the city center for work or services and the ability of the center to compete with suburban shopping centers. Nevertheless, the growth of the motor vehicle can be anticipated to cause the expansion of the once compact cities of the western Pacific Rim and a relative decline in city-center activities. It can be estimated that in the year 2020 the populations of Bangkok and Manila will exceed 20 million and Jakarta 35 million (Rimmer 1986a). These cities, inflated by a continued rural exodus, are likely to be dominated by consumer and business service industries (goods distribution, banking, insurance, and security). Because automation is expected to stifle inherent labor cost advantages, an explosion of manufacturing activity is unlikely. Thus, it may be more appropriate for major western Pacific Rim cities to retain the flexible bus rather than the railway. Unwise expenditures on tracked passenger systems can leave a legacy of deficits that will reduce other transport and nontransport options in the longer term. Indeed, it may be preferable to build transport systems around a range of road-based vehicles. The inherent flexibility of road-based transport will enable us to steer a path between the polar visions of western Pacific cities-the intelligent cities and regions created by Japanese computerized telecommunications and the new Armaged277

Peter J. Rimmer

dons of violence and social upheaval. Surely, western Pacific cities of the future will be a mix of the two!

REFERENCES

Andersen, Arthur, and Company/Kinhill. 1989a. "Multifunction Polis: A Concept to Shape the Future-Pilot Concept Paper." March 28. - - - . 1989b. "Australia-Japan Multifunction Polis Joint Feasibility Study: Spatial Attributes Study." July. Black, J. A., and P. J. Rimmer. 1982. "Japanese Highway Planning: A Western Interpretation." Transportation 11 :29-49. Castles, F. 1990. "Behind the Tinsel Is It Feasible?" Australian Society, March, 2223. Commonwealth Department of Industry, Technology and Commerce. 1988. "The Multifunction Polis Proposal: One Australia Perspective." Canberra. Forester, Tom. 1987. High-Tech Society: The Story of the Information Technology Revolution. Oxford: Basil Blackwell. Glasmeier, Amy K. 1988. "The Japanese Technopolis Programme: High Tech Development or Industry Policy in Disguise." International Journal of Urban and Regional Research 12, no. 2:268-84. JETRO. Technopolises, Now in Japan. 1983. No. 34. Tokyo: Japan External Trade Organization. King, Anthony D. 1990a. Urbanism, Colonialism and the World-Economy: Cultural and Spatial Foundations of the World Urban System. London: Routledge. - - - . 1990b. Global Cities: Post Imperialism and the Internationalization of London. London: Routledge. Kokudocho (National Land Agency). 1985. 21 Seiki johoka to Kokudocho (Informationalization in the 21st Century and the National Land Agency). Tokyo: Kokudocho Keikaku/Chosa. Langdale, J. 1988. "Telecommunications and the Multi-Function Polis: Urban and Regional Development Implications." Paper presented at Study Group 9, Geography of Telecommunications and Communications, International Geographical Congress, Sydney, August. McCormack, Gavin. 1989. "And Shall Jerusalem Yet Build? Japan's Multifunction Polis Project and Australia." ASAA Review, Asian Studies Association of Australia, 12, no. 3: 1-6. Mandeville, T. D. 1987. "Japanese Technopolis Concept: Its Relevance to and Implications for the Establishment of Multi-function Polis in Australia." Paper prepared for the Coordinator-General, Queensland, Information Research Unit, Department of Economics, University of Queensland, August. MFP Australia Research, Ltd. 1989. "Developing a Commercially Viable MFP Concept: An Australia Perspective-Second Paper." March 28. Sydney. Minagawa, S. 1990. "Institutionalization of Economic Relations with Japan: A Case

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Study of Direct Investment in Australia and the Multifunction Polis Area." Research paper No.2. Nanzan Center for Australian Studies, Nanzan University, Nagoya. Mitsubishi Electric Company. 1987. Technopolis: A Knowledge-Oriented Future for Industrializing Countries. Tokyo. - - . 1989. Tekunoporisu. Tokyo. Morris, Jan. 1982. The Spectacle of Empire. London: Faber & Faber. Morris-Suzuki, Tessa. 1988. "Technopolises, Technopia and M-ultifunction Polises: Japanese Regional Planning in the Information Age." Paper presented at Study Group 9 Geography of Telecommunications and Communications, International Geographical Congress, Sydney, August. - - - . 1990. "Serendipity, or Split Personality." Australian Society, March 20, 24-25. Rimmer, Peter J. 1986a. Rikisha to Rapid Transit: Urban Public Transport Systems and Policy in Southeast Asia. Sydney: Pergamon Press. - - - . 1986b. "Changes in Transport Organizations within Southeast Asian Cities: Petty Producers to Statutory Organizations." Environment and Planning A, no. 18:1559-80. - - - . 1988. "The Dialectic of the External and Internal: A Perspective on Australia's Future Transport-Land Use Activity System." Invited Speakers: 14th Australian Road Research Board Conference. Vermont, Melbourne: Australia Road Research Board, August 28-September 2. Pp. 223-38. - - - . 1989a. "Putting Multi-Function Polis into Context: MITI's Search for a Place in the Sun?" Australian Planner 27, no. 2: 15-21. - - - . 1989b. "Japanese Conlmunications Developments and the Australian Transport-Land Use System: The Missing Link." Transactions of Multi-Disciplinary Engineering, Institution of Engineers, Australia, GE 13, no. 2:57-72. Rix, A. 1980. lapan's Economic Aid: Policy Making and Politics. London: Croom Helm. Sangyo Kozo Shingikai (Industrial Structure Council). 1988. "MFP koso ni tsuite" (MFP Vision). Tokyo. Tatsuno, S. 1986. The Technopolis Strategy: lapan, High Technology, and the Control of the Twenty-first Century. New York: Prentice-Hall. - - - . 1988. "Building a Japanese Technostate: MITI's Technopolis Program." In

Changing the Technopolis: Linking Technology, Communication and Economic Development, edited by R. W. Smilor, G. Kozmetsky, and D. V. Gibson, pp. 3-22. Cambridge, Mass.: Ballinger.

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12

Global Interdependence and Urban Restructuring in Japan Richard Child Hill and Kuniko Fujita

What, in the final analysis, is distinctive about Japanese urban development? What sorts of issues does Japan's urban trajectory pose for social theory and comparative research? In concluding, we highlight several arguments running through the contributions to this book. 1. Global interdependence. For over a century, Japanese urban development has been intimately intertwined with Japan's changing position in the world system. 2. Flexible production systems. The interplay between global forces and city development in Japan has been mediated by the capacity of the Japanese to reorganize their systems for producing goods and services flexibly in response to external political and economic imperatives. 3. The developmental state. A systematic governmental effort to steer economic development in close cooperation with private firms has been a critical ingredient in Japan's capacity to adjust locally to shifting global forces. 4. Conflicts and contradictions. The meshing of industry and government notwithstanding, urban development in Japan has also been driven by internal social conflicts and contradictions. The interplay between the global economy and locally organized production systems, state restructuring strategies, and urban social con280

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flicts has produced a distinctive Japanese pattern of urban development that can be seen in the functioning of the nation's urban system as a whole, in the internal organization of metropolitan areas, in the nature of local restructuring and redevelopment efforts, and in the challenges now facing Japanese cities.

GLOBAL-LoCAL INTERDEPENDENCE Three hundred years of peace under a closed, centralized, feudal regime fostered a well-developed city system during Japan's Edo era. But because feudal lords protected their revenue base by restricting trade, choice of occupation, and choice of residence, Edo Japan also constrained the urbanization process. The Edo era came to a close when Japan was forced to open her doors to world capitalism in the middle of the nineteenth century. Japanese urban development has been intertwined with Japan's changing position in the world system ever since. Reforms during the ensuing Meiji era stimulated city growth by transforming fiefs into prefectures and by lifting feudal restrictions on trade, occupation, and migration. To survive in international trade, resource-poor Japan had to import raw materials for the manufacture of goods and export finished products to pay for her imports. Japan experienced a remarkable growth in foreign trade between 1870 and 1920, mainly in silk and cotton textiles. 1 Foreign trade stimulated the expansion of port cities, like Kobe and Yokohama. Burgeoning cities provided labor and commodity markets for industrialization. And industrialization shifted the locus of urban growth from the nation's interior and coastal periphery to the Pacific Belt. The urbanizing effects of international trade intermingled with the urban system carved out during the feudal Edo era to produce a unique set of rank-size relations among Japanese cities. As depicted by Nakamura, Japan's system of cities corresponds neither to the classical rank-size rule nor to primacy or biprimacy patterns. Rather, Japan has two sets of twin cities-TokyolYokohama and Osaka/Kobe-with a third metropolis, Nagoya, located in the geographical middle between them. A fourth city, Kyoto, the nation's cultural capital, is nestled alongside Osaka and Kobe. The period of militarism and controlled war economy during the 1930s and early 1940s likewise reveals the impact of international relations on urban structure in Japan. As the role of military expenditures in Japan's economy increased, the connection between big business and the 281

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central government grew tighter. Closer relations between corporations and government prompted economic activity to gravitate from Osaka, heretofore the center of commerce and industry, to Tokyo, the center of government. Japan's development as an "enterprise nation" during the highgrowth period of the 1950s and 1960s also received external stimulus. As detailed by Miyamoto, reforms instituted by the occupation forces-particularly the new postwar constitutional and human rights regime-freed up national energies and helped stimulate the exceptionally high rate of urbanization during the early postwar period. State support for big enterprises backed by strong government regulatory powers furthered the concentration of corporate headquarters in Tokyo and the relative economic decline of Osaka after the war. Global energy shocks in 1973 and 1979 and the steep appreciation of the yen brought on by the Plaza Accord among the G5 nations in 1985 are the latest external catalysts for Japanese urban industrial restructuring. Rising energy costs and the escalating value of the yen boosted the price of Japanese exports and subjected Japanese industry to rising competition from the newly industrializing economies of East Asia. In response to the new global imperatives, Japan's urban industrial system changed from a space economy based upon heavy industry to one based upon information. Japan has also shifted from a raw material-importing, at-home producing, and finished good-exporting nation to a country increasingly preoccupied with setting up production bases abroad and expanding consumption at home. Japan's postwar interdependence with the world economy has had consequences for her western Pacific Rim neighbors. Peter Rimmer lucidly demonstrates how Japan's exports, imports, joint ventures, foreign direct investment, and technology transfer are having a dramatic impact on urban development along an arc running from Korea through China and southeast Asia to Australia and New Zealand.

FLEXIBLE PRODUCTION AND THE WORLD CITY

Production systems-business units linked by technology and organization into the manufacture of final products-are the core building blocks of modern economies. In seeking to understand the interplay between global economic organization and city development, urbanists study the spatial and logistical strategies modern corporations employ in deciding where to locate their administrative and production operations. The literature on "global" or "world"

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cities is an important body of work in this tradition. How well does the global city model fit the Japanese urban experience? Contemporary Western writings on world cities are indebted to the work of Stephen Hymer (1971). A brilliant student of the U. S. multinational corporation, Hymer applied location theory to the administrative structure of the modern corporation and posited a global hierarchy of cities corresponding to the hierarchy of the transnational corporate enterprIse. Hymer traced the evolution of the business enterprise from workshop to family firm, from family firm to regional and national corporation, and from national corporation to multidivisional and multinational enterprise. Each step in the evolution of the firm brought an increase in specialization and administrative complexity. Each step brought greater centralization of coordination activities in a control center and greater decentralization of execution activities to peripheral branches. Each step further elongated the corporate hierarchy of dominance and subordination. As the U. S. corporation evolved during this century, its local operations came to be supervised by field offices. Field offices were looked over by divisional head offices. And head offices were presided over by a general office or command center. In Hymer's model, corporations locate their branch plants in specialized production and marketing cities around the globe according to the pull of labor power, markets, and raw materials. Field offices are located in regional cities, where they serve as centers of coordination and control over the local operations lodged in production and marketing cities. General corporate offices, the brain centers that set goals and plan global strategies, are located at the apex of the ecological pyramid. Corporate headquarters are drawn to world cities to be close to wealthy capital markets, high-level government bureaus, major media, and key business services that facilitate the global movement of capital. A city's wealth, occupational structure, educational level, cultural sophistication, tax base, and capacity for economic development are largely determined by where its economic base activities are lodged in the transnational hierarchies of modern corporations. Recent students of the world city have elaborated on Hymer's basic argument,2 but they continue to assume, as did Hymer, that corporate evolution entails the widening separation of conception from execution within the firm (Cohen 1981; Friedmann 1986; Noyelle and Stanback 1984; Sassen 1990). The social separation of administration from production within the firm leads to the geographical separation of command activities (predominantly lodged in regional, national, and global cities) 283

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from standardized mass-production activities (predominantly lodged in branch-plant industrial cities) (Massey 1984). The formation of world cities thus goes hand in hand with the global dispersion of manufacturing and the decline of industrial cities in advanced capitalist societies. Tokyo's overwhelmingly dominant position in Japan's urban system and the city's increasing centrality in international trade and investment networks conforms to the world-city model. As Miyamoto makes clear, Japan's circuits of information originate in Tokyo because the media are overwhelmingly concentrated there, including television, publicity, advertising, and fashion. Business services, education, culture, and the arts are centered in Tokyo as well. And Douglass documents Tokyo's prominence as a command center for the increasingly far-flung operations of Japanese transnational corporations as well as her rising status as an international finance and commercial hub for global corporations headquartered outside of Japan. Yet Tokyo simultaneously deviates from the world-city model in a crucial way. Far from experiencing manufacturing decline, as world cities are presumed to do, greater Tokyo is the center of industrial innovation and development in Japan. Tokyo's manufacturing vitality stems from the fact that most research and development is performed by private companies in Japan, and Japanese corporations do not separate conception from execution along the lines of the Western mass-production model. Japanese industrial and work organization blurs the distinctions among command, research, development, and production functions (Ozaki 1991). For that reason, and because market competition compresses the product cycle in Japan, a premium is placed on close working relations among people at all stages of the production process. Companies therefore try to place their research and development and state-ofthe-art production facilities as close as they can to their central offices in greater Tokyo. Tokyo's industrial might is also linked to the restructuring of Japan's economy since the early 1970s, particularly to the move from mass production to flexible specialization (Fujita 1991). The 1970s energy crises and the 1980s appreciation of the yen prompted Japanese corporations to shift their priorities from exports to the domestic market. There has been a concomitant shift in the logic governing production from an emphasis on planning to an emphasis on the market or, to use Yorimitsu's terminology, from "planning-hegemonic production" to "markethegemonic production." Market emphasis reflects a new stage of Japanese economic development, one in which growth is pulled by the cultivation of domestic demand through creation of new products. In market-hege-

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monic production, customer orders shape the production process, which in turn shapes the nature of finished products. 3 Market-hegemonic production brings a huge increase in the quantity of information required to manufacture products. Demand for information spawns new information technologies. New information technologies spawn new information-related industries-businesses specializing in collecting, analyzing, and processing information and in applying new information to widening areas of the economy. 4 These information-intensive businesses constitute a new breed of Japanese manufacturing firm. According to Kiyonari, the new breed of manufacturer is small or medium sized; produces diverse, high-value products in small batches; fixates on the customer; is flexible and adaptable in its methods for organizing production; and is oriented more toward profit than toward market share. Businesses that restructure to meet the new domestic demand are also more prone to diversify their products; switch often between lines of business; share managerial resources with other businesses; creatively apply new technologies; and enter into new types of local, regional, and international production networks. Japanese manufacturing corporations, like the Toyota Motor Corporation, which is discussed by Fujita and Hill, have been known in the past for building pyramidal production systems made up of multilinked production chains among parent companies and subcontractors. Tiered specialization creates a system of stratification among enterprises and segments of the labor force by firm size, value added, wages, and work conditions (Hill 1989). Supplier associations coordinate parent-subcontractor relations at the interface of each link. But as market-hegemonic production takes hold, this system is rapidly changing. Business diversification loosens traditional ties between parent and subcontractor. Large corporations are looking for subcontractors in new sectors. Subcontractors are producing products of their own for the local market and disbanding their subcontracting associations with large corporations. Small firms are expanding the scope of their business through sharing technology and cooperating in new product development with other companies. As specialized companies link together in new combinations, the parent-supplier pyramid changes into a horizontal network. Obayashi traces this kind of urban industrial transformation in greater Tokyo's Kanagawa Prefecture. Pollution problems, energy shocks, and endaka brought about the restructuring of Kanagawa's economy from basic assembly and processing to information-intensive industries. Today, the prefecture is filled with high-tech small and medium-sized businesses that research, develop, and manufacture machinery, semi-

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conductors, VCRs, information services, and computer hardware and software. According to Obayashi, Kanagawa's industrial networks function as a seedbed (nayedoko) for new products, production processes, and related service activities. Kanagawa's restructuring has produced a unique urban industrial formation, a highly concentrated network production system made up of many highly specialized, small and medium-sized firms producing pilot products on special order for the research labs of large corporations. Kanagawa's specialized firms are independently run by technically skilled craftsmen. Small-firm networks facilitate technology transfer and provide access to the information necessary to produce diverse products in small volumes in short periods of time. The transformation from a traditional division of labor based on reducing production costs to a division of labor that facilitates quick production of high-quality goods is altering the spatial division of labor among regions within Japan and between Japan and other nations on the Pacific Rim. Japan's manufacturing companies are turning greater Tokyo into their research and development center. Small, customized producers serve Tokyo consumers and perform pilot projects for corporate research and development labs. The pilot products, if accepted by consumers, are manufactured in longer runs in Japan's outlying regions or abroad. Thus, as Tokyo's small manufacturing firms restructure into higher-value, "gilt edge" producers, the international exchange of specialized goods and finished parts between local industries in Japan and their competitors in the newly industrializing economies (NIEs) is creating a new Pacific Rim division of labor. Japan's current global restructuring is expressed in the vast spatial tapestry of industries centering upon Tokyo. Corporate headquarters are at the core; research and development activities are spread out in a fiftykilometer radius; production facilities line freeway corridors reaching out as far as three hundred kilometers; the whole urban mosaic is supported by high-speed information and transportation infrastructure, including door-to-door delivery systems. Successful restructuring has enabled Tokyo to retain manufacturing, particularly high-tech manufacturing, and associated construction and wholesale and retail trade to a greater degree than big cities in the West. This helps to explain why Tokyo has not experienced many of the social problems attributed to world-city development by Western theorists, including inner city unemployment, welfare dependency, job/employee mismatches, and fiscal stress.

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Japan's capacity to adjust locally to changes in the global environment is based to an important degree on systematic government efforts to guide economic development in close cooperation with private firms. There is evidence throughout this book that Japanese officials think through the functional and spatial linkages among productive activities and attempt to reshape them in accordance with changing conditions. The experience of Japan's traditional industries and industrial regions is a case in point. As the nation has moved from an economy based on heavy manufacturing to one based on information, Japan's industrial' localities have been upgrading their technological and market position in the international division of labor. The experience of Kanagawa Prefecture recounted above, and that of several other Japanese manufacturing communities surveyed in this book, offers support for a theory of contemporary urban and regional development that emphasizes the reemergence of industrial districts. Charles Sabel (1989) has outlined the industrial district development model most comprehensively, but the theory has also been advanced by a number of like minded colleagues (see, for example, Piore and Sabel 1984; Friedman 1988; Scott 1988; Hirst and Zeitlin 1989; Zeitlin 1989). According to this line of reasoning, changes in the world economy since the early 1970s, including slow-growing national markets, rising international competition, fragmentation of demand for manufactured goods, and severe ups and downs in currency exchange rates and raw material prices, have led to interconnected transformations in the organization of industry and urban areas. The organization of manufacturing is shifting from mass to flexible production. Flexible production is organized via networks of small manufacturing firms lodged in regional industrial districts, which have become the new centers of dynamism in the global economy. Neocorporatist social compacts among business, government, and labor and local developmental states form the institutional framework for these industrial districts. Three types of industrial districts 5 can be discerned among the localities analyzed in this book. First, areas like Tsubame and Nagoya's Midori ward conform to the classical definition of a small-firm industrial district-a myriad of small enterprises intertwined in locally based manufacturing networks that do not center on a few large corporations. Second, corporate castle towns, like Toyota City and Kamaishi, consist of hierarchical, closely integrated, industrial networks of large parent companies (e.g., Toyota Motor Corporation, Nippon Steel) and numerous

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medium-and small-sized supplier firms. Finally, in technopolises, like Kanagawa, research and development-oriented, large "mother" plants and small pilot firms agglomerate to incubate new industries. A coordinated web of government and private-firm relationships has facilitated restructuring in each industrial region surveyed. In fact, the studies in this book strongly suggest that the local institutional imbeddedness of business, government, and labor has advanced the international competitiveness of Japan's textile, steel, metal-working, and automobile industries. Institutional imbeddedness takes different forms in different types of industrial districts, but in every instance a local developmental state coordinates public infrastructure and services with business investment. In corporate castle towns, welfare corporatism-company provision of extensive social benefits and services to core employeescements worker loyalty to the firm, and supplier associations help integrate subcontractor and parent-company operations. Trade associations playa critical role in small-firm industrial districts. Third-sector science parks are crucial to the functioning of technopolises. These various forms of local corporatism facilitate the operation of flexible manufacturing principles across the entire production system. As revealed in the following examples, corporatist institutional coordination helps localities revitalize by upgrading their industrial niche in the international division of labor.

Small-Firm Industrial Districts Miyakawa describes how Nagoya has preserved its traditional tie-dyeing industry by specializing in the manufacture of higher-value segments of the production process. Labor shortage and rising wages during the 1960s led tie-dyeing companies to relocate production from Nagoya to neighboring textile prefectures, then to the northern tip of Honshu, and then to South Korea. During the 1970s, as wages rose in Korea and Korea set up trade regulations with Japan, tie-dyeing manufacturers moved production facilities to China. Today, a threefold east Asian division of labor characterizes the industry. Japan is the international design center and produces high-value goods for its home market. In Korea, skilled older workers engage in highvalue, small-lot tie-dyeing. China has become the main processing area for the industry. The central Midori ward has remained the nucleus of Nagoya's tiedyeing industry throughout the various phases of restructuring. Nagoya's artisans adjusted to the new international division of labor by devoting their skills to higher-value-added tie-dyeing fabrics and artistic design. 288

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Tie-dyeing craft and trade associations helped artisans restructure by providing cooperative services-market information, loans, new product promotion-as did national, prefecture, and city industrial policies supporting research and development in the traditional industrial arts. Tsubame, analyzed by rradao Kiyonari, is traditionally known for the production of metal flatware. One hundred forty-seven metal flatware producers and three hundred suppliers and subcontractors are organized in the Japan Western-Style Metal Flatware Trade Association. Ninety percent of these companies are located in Tsubame and nearly all of what they produce is for export. In the 1960s, Tsubame producers moved into the production of higher-value metal housewares and created a parallel trade association to control exports by voluntary restrictions on members. Most recently, Tsubame's manufacturers have moved another rung up the value-added scale. They are now producing processed metal products, including steel mirrors, golf equipment, airplane toilets, medical equipment, water pump parts, and support arms for bullet trains. In 1985, the city established a New Industry Promotion Development Center in alliance with private trade associations to pool resources to develop new products and new markets as Japan shifts from an exports-driven to a domestic demand-driven economy. Each phase of local restructuring has been in response to competitive challenges from abroad and has enabled Tsubame to maintain local employment, income, tax base, and population.

Corporate Castle Towns As depicted by Fujita and Hill, intergovernmental and corporate cooperation underpinned the development of Toyota's spatially concentrated and logistically coordinated automobile production system. Throughout the 1950s and 1960s, Toyota City purchased and improved land, built infrastructure and highways, granted tax incentives, and annexed areas to smooth the way for Toyota Motor Corporation's production operations. Favorable national legislation, especially the Industrial City Law, provided a supportive framework for Toyota City's industrial policy efforts. Today, as Toyota internationalizes its auto production system, the company is rationalizing its home operations and creating new higher-value production activities in cooperation with city, prefecture, and Ministry of International Trade and Industry (MITI) officials. New local activities include research and development on artificial intelligence, liquid-crystal sheet-glass technology, and an emerging telecommunications/transportation "fusion" industry. 289

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Kamaishi is a corporate castle town for Nippon Steel. Yorimitsu traces the impact on Kamaishi of a sequence of corporate reorganization and rationalization plans, including closing old mills, concentrating high-blast furnaces in newly built steel plants, and transforming integrated mills into plants making specialty steel products. These moves culminated in the 1989 closure of Kamaishi's last blast furnace. Kamaishi has been highly dependent on steel production but is now attempting to restructure in other directions, including marine biotechnology. Kamaishi's marine development projects are linked to the Ministry of Transportation's "marine town" plan; MITI's "marinopolis" plan; and the Ministry of Agriculture, Forestry, and Fishery, "marinovation" plan. At the center of the marine development effort is a Marine Biotechnology Research Institute jointly funded by MITI, Iwate Prefecture, Shizuoka Prefecture, the city of Kamaishi, the city of Shimizu, and twentyfour private corporations, including Nippon Steel.

Technopolises Kanagawa developed a "brain center" industrial policy in the late 1970s focusing on technology intensification and information exchange in the private sector. The prefecture's governor in alliance with a leading local entrepreneur put together the Kanagawa Ind.ustrial Problem Committee, which in turn produced the Kanagawa Science Park. High-tech zones-designated for research and development firms, incubation and start-ups, and technology information networks-have facilitated Kanagawa's emergence as one of Japan's leading high-technology manufacturing centers. The transformation of local economies from the mass production of heavy-industrial goods to information-based flexible specialization is also connected to changes in national urban and industrial policy. From the Second World War to the early 1970s, Japan's powerful MITI targeted the rebuilding and expansion of domestic heavy industry. During this period comprehensive transport and land use planning structured cities to accommodate heavy industry. MITI has changed emphasis since the 1970s oil shocks and now focuses on assisting smaller firms to develop new technology and service industries. Concomitantly, new urban plans have been created to accommodate the information society. Best known is the Technopolis Plan for nineteen high-tech integrated communities. As discussed by Rimmer, technopolis development is conditioned by public investment in infrastructure and services, including large and multiple-purpose fiber-optic cables, huge data bases, and a new educational system. 290

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Each phase of urban development has been organized through an intergovernmentally coordinated planning mechanism. Plans for road networks, interchanges, and subways, in the first phase of urban development, and telecommunications infrastructure, in the second, were based upon land transport studies performed by the Ministry of Construction's City Planning Bureau in cooperation with prefecture and local governments. These plans are sent in turn to special committees made up of government bureaucrats, university professors, and private-sector interests. The special committee's comments are then presented to the prefecture governments, which, after consultation with the Ministry of Construction, give their final approval. This planning process represents another variation on Japanese-style corporatism and consensus mobilization. Regional development policies have also changed with shifts in Japan's position in the global economy. Japan's National Land Development Agency has put forward four comprehensive national land development plans since 1962. Early postwar regional development policies focused upon problems of rural exodus and urban density-the creation of infrastructure for industrial location in the 1950s and of growth pole programs in the 1960s. The focus of regional development policy changed in the 1980s from rural to urban transition to a concern with the regional implications of one-point functional concentration in Tokyo. Japan's manufacturing communities have confronted the threat of economic decline and the need for restructuring differently than industrial cities in the United States. First, unlike the United States, Japan has a nationwide perspective on issues of industrial decline. It formulated national urban and regional guidelines embodied in its successive national comprehensive land development plans. Second, Japan's central state does more to cushion the social dislocation and hardship caused by industrial decline and restructuring than does the federal government in the United States, indicated by the range and duration of Japanese measures targeted at "stagnant industries."6 Third, in contrast to U. S. firms, large Japanese companies have been more committed to modernization and investment in their core business. They have closed plants, but they have also aggressively attempted to raise productivity, develop high-value specialty operations, and diversify into related fields. Fourth, large industrial corporations in Japan have gone to much greater lengths than their U. S. counterparts to minimize local unemployment generated by their restructuring strategies. Companies are apparently committed to employment security and use various buffer 291

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strategies to attain that end, including job development and income maintenance. In the United States, massive community disruption and job fluctuations led community and labor groups to coalesce in a struggle against plant closings; not so in Japan, where massive displacement of workers has been avoided thus far. Fifth, third-sector revitalization projects in Japan, exemplified by fine ceramics in Toyota City and marine biotechnology in Kamaishi, involve cooperative efforts among central government ministries, prefectures, cities, and private companies to a greater degree and on a larger scale than parallel efforts in the United States. On the other hand, in comparison to the United States, Japan appears to have less local citizen participation in the redevelopment process. Shapira points to the lack of government evaluation of Space World, a large urban redevelopment project in Kitakyushu that seems to have been masterminded by one large industrial corporation. In a parallel vein, Yorimitsu argues that Kamaishi's redevelopment projects are insufficiently grounded in the local economy and that local citizens should be more involved in redevelopment planning.

CONTRADICTIONS, CONFLICTS, AND THE FUTURE CITY

Corporatist alliances notwithstanding, Japanese cities have also been torn by social contradictions and conflicts. 7 In particular, the trade-off between economic growth and a congenial living environment has been a continuing source of social contention since Japan's economic resurgence in the 1950s.

Profits from Concentration The share of Japan's population residing in cities rose from one-third to three-quarters between 1950 and 1980. By the 1970s, half the nation's population was concentrated in Tokyo-Yokohama, Osaka/Kobe/Kyoto, and Nagoya. According to Miyamoto, the concentration of companies and people in such high densities was made economically profitable by the government-supported big enterprise system. In Japan's market economy, profits from economic concentration accrued to private enterprises, while the social costs of high-density living were borne by the public sector. But since Japan's public sector emphasized social investments to increase industrial productivity rather than social consumption expenditures on public ameni292

GLOBAL INTERDEPENDENCE AND URBAN RESTRUCTURING

ties, the urban supply of schools, day nurseries, hospitals, parks, and sewer systems lagged considerably behind economic growth. Big-city residents suffered the consequences: pollution, soaring land prices, housing shortages, shrinking space per house, and inadequate public services. Miyamoto also connects the Japanese "doughnut city" phenomenon to the profits to be made from spatial concentration. Japanese cities, like cities in the United States, have experienced population decline in the urban core and expansion in the suburban rings. But unlike American cities, Japan's doughnut-shaped metropolitan areas are not the result of declining central city economic power in relation to the suburbs. Just the reverse is true. Japanese corporations are attracted to the urban core. As corporate demand for office and commercial space bid up land and housing prices, people who could not afford the rising price of real estate were pushed out of the central city. Japan has few inner-city slums. Instead, low-income workers live in satellite cities, where they suffer inadequate housing, environmental deterioration, and a shortage of schools. 8 The urban doughnut structure also causes traffic congestion, long commuting times, and dangerously packed trains running at twominute intervals during rush hours. The discrepancy between rapid economic growth and a deteriorating physical and social environment spawned citizens' movements in the 1960s and 1970s. Citizens' groups mounted legal struggles against pollution and elected social reform administrations in prefectures in the largest urban areas. Reform policies brought a halt to enterprise and population concentration in the three major conurbations in the mid-1970s. But the enticements of locating in Japan's large urban areas, especially in the Tokyo megalopolis, including access to social capital, research institutions, human resources, and information density, overpowered reform efforts in the 1980s. 9 The recentralization of economic power and the reconcentration of population have aggravated land use conflicts within the Tokyo region and are widening the development gap between Tokyo and cities in the rest of Japan.

Land Use Struggles Douglass demonstrates how the transformation of Tokyo into a world city during the 1980s set off social conflicts among residents and companies over access to land, housing, and public amenities. Consistent with writings about land use-based social stratification in North American cities (Lamarche 1976; Fitch 1977; Logan and Molotch 1987), corporate strategies to turn Tokyo into a world city through the expansion of the city's above- and below-ground 293

Richard Child Hill and Kuniko Fujita

frontiers have exacerbated housing shortages and displaced Tokyoites from their central city neighborhoods. Land use conflicts are particularly acute in Tokyo's twenty-three inner-city wards where a large chunk of potentially premium office and commercial property is still devoted to residential use. Land price inflation concentrates most in the inner city and along the waterfront and then ripples like a wave throughout the greater Tokyo area. The land price spiral has also polarized the distribution of wealth between corporations and residents who own land and those who do not.

Growth without Development The "Tokyo problem"-one-point convergence of functions in the nation's capital-also threatens the autonomy of outlying regions and localities. As command, communication, research, development, and design activities concentrate in Tokyo, local officials worry about becoming mere appendages to a buildingblock production system masterminded in the nation's capital. In Obayashi's terminology, such a system produces ((local growth without development," by which he means regional economic dependence on external rather than internal driving forces. The growth-without-development issue points to a lack of integration between industrial and regional policy in Japan. Industrial policy refers to the social organization, and regional policy to the territorial organization, of technical innovation and economic development. Japanese industrial policy allocates resources by indicative planning methods. But development targeted from without ultimately fails localities, according to Obayashi. Changes in world economic forces eventually lead to the obsolescence of targeted locations, which forces communities to look to the central government for relief. Reminiscent of arguments made by Jane Jacobs (1984) about North American urban development, Obayashi argues that local growth with development requires that communities organize their own innovative, seedbed (nayedoko) functions.

Fiscal Dependence Fiscal centralism also hinders efforts at autonomous local development in Japan. Japan's local finance system parallels that of northern European nations: municipalities and prefectures deliver most domestic services, while tax revenues are monopolized by the central government. 10 Special districts of the U. S. variety (e.g., in education) are rare. So while Japanese local governments do a lot of 294

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administrative work, they have relatively little fiscal authority and are financially dependent upon the central government in Tokyo. Cities do not have the fiscal wherewithal to tackle big problems on their own. Japan's overall urban and regional problems are therefore inseparable from the "Tokyo problem."

CONCLUSION

Contributors to this book vary in perspective and approach, but they share a hope that Japan's urban future will be determined less by a central plan crafted in Tokyo than by the multiplication of local visions of an engaged urban citizenry. Japan's local governments are in fact assuming a larger role in devising development strategies. Tailoring industrial strategies to fit the individual contours of regional and local economies will likely shape the future of Japanese cities.

NOTES 1. Ten percent on the average in Japan as compared to 2 percent elsewhere, according to Nakamura. 2. Sassen (1990), for example, emphasizes the role global cities playas markets for independent producer and consumption services linked to corporate command functions and as production complexes made up of highly stratified service occupations. 3. Toyota Motor Corporation's "pull system" is a case in point (see Womack, Jones, and Roos 1990). 4. A new fusion of industries and information technologies is in process as illustrated, for example, in mechatronics, which fuses general machinery, electrical machinery, precision machinery, electronics, and telecommunications into a new industry. 5. Industrial districts can be defined as dense, relatively self-contained networks of local firms manufacturing varied products to satisfy changing tastes and extending their markets by defining new wants. On this definition flexibility is the capacity of producers to respond quickly to environmental changes as manifested in demand and supply conditions in the market. 6. All levels of government in the United States may together make commensurate efforts, however. The restructuring role of government at the central and local levels has been changing in Japan, according to Shapira. MITI played a critical role in restructuring steel in the 1950s and 1960s (see Johnson 1982). But today, MITI focuses more on smaller firms, new technologies, and service industries.

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7.

8.

9.

10.

Shapira argues that Japan's local governments are assuming a new role in devising economic development strategies to replace declining industries, one that parallels the role U. S. cities have been playing over the last ten years. However, other contributions to this collection indicate that Shapira may be understating the past development role of local government in Japan (see Chaps. 5 and 8) and understating the present development role of the central state (see Chaps. 3 and 9). Labor-management conflicts in the late 1940s and early 1950s, grassroots environmental movements in the late 1960s, and the current quest among localities to garner more fiscal and developmental autonomy from the central government readily attest to this thesis. The doughnut pattern is also aggravated by central and local government policies. Miyamoto contrasts new-town projects in Japan and the United Kingdom, where new towns were designed to be relatively self-sufficient housing, employment, and commercial settlements. In Japan, new towns are high-rise bedroom communities in areas adjoining big cities, and they lack local employment opportunities. Tokyo's functional primacy.in Japan is much greater than world cities in European nations or the United States. According to Miyamoto, Tokyo's world-city structure is now quite different from the "national core-city structures" characterizing Japan's other two great urban areas, Osaka and Nagoya. The central government counters fiscal centralization to some degree by giving localities a local grant tax with no strings attached and national categorical grants to fill the gap between local expenditure demands and revenues.

REFERENCES

Cohen, Robert B. 1981. "The New International Division of Labor, Multinational Corporations and Urban Hierarchy." In Urbanization and Urban Planning in Capitalist Societies, edited by Michael Dear and Allen Scott, pp. 287-318. New York: Methuen. Fitch, Robert. 1977. "Planning New York." In The Fiscal Crisis of American Cities, edited by Robert Alcaly and David Mermelstein, pp. 246-84. New York: Vintage. Friedman,' David. 1988. The Misunderstood Miracle: Industrial Development and Political Change in Japan. Ithaca, N. Y.: Cornell University Press. Friedmann, John. 1986. ((The World City Hypothesis." Development and Change 17: 69-83. Fujita, Kuniko. 1991. ((Women Workers and Flexible Specialization: The Case of Tokyo." Economy and Society 20, no. 3 (August): 260-82. Hill, Richard Child. 1989. ((Comparing Transnational Production Systems: The Case of the Automobile Industry in the United States and Japan." International Journal of Urban and Regional Research, September, 462-80.

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GLOBAL INTERDEPENDENCE AND URBAN RESTRUCTURING Hirst, Paul, and Jonathan Zeitlin, eds. 1989. Reversing Industrial Decline? Industrial Structure and Policy in Britain and Her Competitors. Oxford: Berg. Hymer, Stephen. 1971. "The Multinational Corporation and the Law of Uneven Development." In Economics and World Order, edited by J. W. Bhagwati, pp. 113-40. New York: MacMillan. Jacobs, Jane. 1984. Cities and the Wealth of Nations. New York: Random House. Johnson, Chalmers. 1982. MITI and The Japanese Miracle. Stanford, Calif.: Stanford University Press. Lamarche, Franc;ois. 1976. "Property Development and the Economic Foundations of the Urban Question." In Urban Sociology: Critical Essays, edited by C. G. Pickvance, pp. 85-118. New York: St. Martin's Press. Logan, John, and Harvey Molotch. 1987. Urban Fortunes: The Political Economy of Place. Berkeley: University of California Press. Massey, Doreen. 1984. Spatial Divisions of Labor. London: Macmillan. Noyelle, Thierry J., and Thomas M. Stanback, Jr. 1984. The Economic Transformation of American Cities. New York: Rowan & Allanheld. Ozaki, Robert. 1991. Human Capitalism: The Japanese Enterprise System as World Model. Tokyo: Kodansha. Piore, Michael, and Charles Sabel. 1984. The Second Industrial Divide. New York: Basic Books. Sabel, Charles F. 1989. "Flexible Specialization and the Reemergence of Regional Economies." In Reversing Industrial Decline? Industrial Structure and Policy in Britain and Her Competitors, edited by Paul Hirst and Jonathan Zeitlin, pp. 17-70. Oxford: Berg. Sassen, Saskia. 1990. The Global City. Princeton, N. J.: Princeton University Press. Scott, Allen J. 1988. Metropolis: From the Division of Labor to Urban Form. Berkeley: University of California Press. Womack, James P., Daniel T. Jones, and Daniel Roos. 1990. The Machine That Changed the World. New York: Rawson Associates. Zeitlin, Jonathan. 1989. "Local Industrial Strategies." Economy and Society 18, no. 4 (November): 367-73.

297

About the Contributors

MIKE DOUGLASS is an associate professor in the Department of Urban and Regional Planning at the University of Hawaii. He has worked in Japan as a university lecturer in Kyoto, as a member of the research staff at the U.N. Centre for Regional Development in Nagoya, and as an adviser to Japanese overseas development institutions. KUNIKO FUJITA teaches industrial sociology and urban sociology at Michigan State University. She is currently doing research on Tokyo's industrial districts and is completing a project on urban-industrial restructuring in Japan and the United States with Richard Child Hill. RICHARD CHILD HILL is a professor of sociology and urban affairs at Michigan State University. He is co-author of Restructuring the City: The Political Economy of Urban Redevelopment (1983) and Detroit: Race

and Uneven Development (1987). T ADAO KIYONARI chairs the Center for Business and Industrial Research and is former dean of the Faculty of Business Administration at Hosei University, Japan. YASUO MIYAKAWA is professor of economic geography at Aichi Kyoiku University, Japan. He is the author of A Systematic Location Theory of

Manufacturing (1977), The Mutation of Japan's Industry in the World (1988), and numerous articles on industrial systems, regional planning, and urban problems. He serves as a councillor of the Urban Economic Science Association in Japan. KENICHI MIYAMOTO is professor and former dean of the Faculty of Business at Osaka City University, Japan, where he teaches regional economics. He is also representative director of the Japan Environmental Conference and president of the Research Institute of Local SelfGovernment. His writings include On Social Overhead Capital, Urban Economics, The Contemporary City and Farm Village, and Environmen-

tal Economics.

299

About the Contributors

HACHIRO NAKAMURA is a professor of sociology at Bunkyo University, Kanagawa Prefecture, Japan. He is a former professor of sociology at the Institute of Social Sciences, University of Tsukuba, where he served as chair of the Graduate School of Social Sciences from 1984 to 1986. MAMORU OBAYASHI is an associate professor of economics, Faculty of Commerce, Senshu University. Before joining Senshu University, he held a position with the Research Institute on the National Economy. PETER J. RIMMER is head of the Department of Human Geography, Division of Society and Environment, Research School of Pacific Studies, the Australian National University. He is the author of numerous papers, books, and monographs, including Riksha to Rapid Transit: Urban

Public Transport Systems and Policy in Southeast Asia. PHILIP SHAPIRA is an assistant professor in the School of Public Policy at Georgia Institute of Technology. He has also served as a Congressional Fellow and analyst with the Office of Technology Assessment of the United States Congress. MASATOSHI YORIMITSU is a professor of population problems at Hitotsubashi University, where he has been a member of the faculty since 1971. He has written extensively in the fields of labor migration, labo"r markets, industrial location, regional development, and small business.

300

Index

Business bankruptcies and closures,

Abu-Lughod, Janet, 23 Aerltalia: and Japan's aircraft industry,

147-48

170 Aichi prefectural government: and development of Toyota's production system, 166-67, 180-81; and local industrial policy, 168 Aichi Steel Works: in Nagoya, 161 Aircraft industry: and GHQ policy, 169; and Kawasaki Heavy Industry Corporation, 169; and Mitsubishi Heavy Industry Corporation, 169-70; in Nagoya, 168-71; research and development organizations in, 170-71 Allinson, Gary, 196 Ando, Seiichi, 126, 207 Apter, David, 21 Armstrong, Larry, 197 Arnesen, Peter, 197 Automobile industry: evolution of, in Nagoya, 165-68 Automobile parts industry: in Nagoya,

162 Australia: potential technopolis sites in,

272 Bamford, Julia, 22 Bank of Japan: and Toyota Motor Corporation, 165 Benton, Lauren A., 21 Bestor, Theodore, 22 Bluestone, Barry, 23 Boeing Corporation: and Japan's aircraft industry, 170 Broadbent, Jeffrey, 196 Buick City: and Toyota City model,

178

301

Business networks: and changing spatial division of labor, 150-51 Castells, Manuel, 21, 22, 34 Ceramics industry: in Nagoya, 161 Chalmers, Norma, 233 Chase-Dunn, Christopher, 113 Chonaikai, 106-7. See also Neighborhood associations Chubu Electric Power Company: and steel industry in Nagoya, 161 Chubu Federation of Economic Associations: and steel industry in Nagoya, 161 Chukyo University, 168 Citizens' movements: and environmental problems, 6, 60-61, 293; in Kamaishi City, 216-17; and neighborhood associations, 10, 84, 106-8; and reform municipalities, 59-61; in Tokyo, 84-88; and urban reform policies, 293 C. Itoh Corporation, 87 Clark, Rodney, 196 Cohen, Robert, 113, 283 Cole, Robert, 197 Cusumano, Michael A., 23, 197 Daido Steel Corporation: and the steel industry in Nagoya, 161 Democratic corporatism, 194-95 Designated city system, 125 Designer cities for export, 270-76. See also Multifunction polis; Technopolis plan

Index Desubcontracting: and business diversification, 148- 50 Development and import scheme: in electronics and automobile industries,

153-55 Direct foreign investment: and growth of Japanese corporations, 114; magnitude of, 89-90; phases in, 89-91 Dore, Ronald, 177, 194, 196 Douglass, Mike, 115 Drennan, Hugh, 66 Dupont Japan Corporation: and Kanagawa Science Park, 137 Edo era: castle towns in, 27-28; and the Tokugawa Shogunate, 26-28; urbanization during, 5, 281 Electric appliances and parts industry: in Nagoya, 162 Electronics industry: in Kanagawa Prefecture, 130-31 Endaka: and business diversification, 148-49; and desubcontracting trends, 148; and direct foreign investment, 90-91; and growth in domestic consumption, 127, 141-43; and hollowing out of manufacturing, 229; and industrial restructuring, 127, 235-36; and new international division of labor, 151- 52; and rising land prices, 93-94; and rising wages, 103 Exhaust Control Act: and automobile industry, 166

Fuji Heavy Industries Corporation: and Nagoya aircraft industry, 171 Fujita, Kuniko, 22-23 Fuji Tableware Company: and Tsubame City, 146 Fujitsu Corporation, 130 Fuji Xerox Corporation: and Kanagawa Science Park, 137 Fukuoka City: employment change in,

228 Fukuoka Prefecture, 18; employment change in, 228 Furushima, Toshio, 32

Gara-bo: and the spinning industry in Nagoya, 159 GHQ policy: and Japan's aircraft industry, 169 Glasmeier, Amy K., 267 Globalization of small business: in Tsubame City, 153-54 Global-local interdependence: and appreciation of the yen (endaka), 282; during the Edo era, 281; and energy shocks, 282; and international trade, 281; during the Meiji era, 281; and militarism, 282; and Pacific Rim urban development, 282 Global technobelt: and computerized telecommunications, 277 Goodman, Edward, 22 Gordon, Andrew, 23 Green Road high technology corridor: and urban development in Nagoya,

167-68 Fitch, Robert, 22 Flanagan, Scott, 115 Flexible specialization: and changes in Japan's economy, 205; in Kanagawa Prefecture, 122, 128-30; in Tokyo's Ota Ward, 129; and Toyota's production system, 177; in Tsubame City, 143-47, 153-54; and the world city,

282-86 Friedman, David, 22 Friedmann, John, 113, 283

Hanes, Jeffrey Eldon, 81 Harrison, Bennett, 23 Hashimoto, Kazutaka, 113 Hidaka, Jikichi, 44 Hierarchical corporatism: in Japanese companies, 194 Hill, Richard Child, 22 Hino, Masateru, 113 Hiramatsu, Morihiko: and one product for each village" concept, 134-35 U

302

Index Hiroshima City: land use and transport planning in, 259 Honda Motor Corporation: and Nagoya, 161; and theme park development, 245 Hymer, Stephen, 113, 283 Industrial decline: Japan compared to the U.S., 291-92 Industrial districts: and corporate castle towns, 289-90; definition of, 295; and institutional imbeddedness, 288; in Kamaishi, 290; in Kanagawa, 290; and local corporatism, 288-92; and local developmental state, 287-92; in Nagoya, 288-89; small-firm type, 288-89; technopolis type, 290; theory of, 287; three types of, 287-92; in Toyota City, 289; in Tsubame, 289 Industrial restructuring: and inforrnationalization, 7; from mass to flexible product!on, 7-8. See also Flexible specialization Informationalized city: basic characteristics of, 268-70 Inoue, Kiyoshi: and founding of Japax Company, Ltd., 135-36 International division of labor: horizontal and vertical dimensions of, 155 Ishikawa, Hajime, 128-31 Ishizuka, Hiromichi, 34 Ishizuka, Takuo, 251 Ishokuju: and quality of life in Japan,

of, 171-72; small-business members of, 172 Japan Highway Telecommunications: and Toyota Motor Corporation, 168 Japan Housing Corporation: and Toyota Motor Corporation, 167 Japan Metal Housewares Cooperative: and Tsubame City, 145 Japan Overseas Economic Cooperation Scheme: and Metropolitan Manila Transit Corporation, 263 Japan's economy: changing position of, in the world, 203-5; employment patterns in, 228, 233-34, 241-42; and enterprise unions, 17; export dependency of, 204; and four major industrial zones, 225; and informal sector, 21; and informationalization, 205; and new manufacturing industries, 151; product cycle in, 13; and restructuring of heavy industries, 224-25; and shift from mass to flexible specialization, 205; stages and development in, 203-4; and third sector organizations, 15; and three types of industrial districts, 15 Japan Western-Style Flatware Cooperative: and Tsubame City, 144-45 Japan Western-Style Flatware Export Trade Association: and trade friction with the U.S., 145 Japax Co., Ltd., 135 'iageya: and urban redevelopment, 97-

98

103-4 Iwate Prefecture, 218 Jacobs, Jane, 23 Japan Development Bank: and Kanagawa Science Park, 136 Japanese state: and property value assessments, 109; and urban land tax policies, 109-10 Japan External Trade Organization (JETRO), 267 Japan Fine Ceramics Center: investors in, 171; in Nagoya, 159; organization

303

Johnson, Chalmers, 177, 189, 250, 295 Jones, Daniel T., 23, 295 Just-in-time delivery system: and the informationalized city, 269; and Toyota City's industrial policy, 184-86; and Toyota Motor Corporation, 183-84. See also Toyota's production system

Kamaishi City: as company town for Nippon Steel, 209; comprehensive development plan for, 219; depen-

Index Kamaishi City (cont.) Kanagawa Science and Technology dence of, on Kamaishi Steel Mill, Academy: and Kanagawa Science 216-18; development projects for, Park, 137 218-19; employment trends in, 17, Kanagawa Science Park: and Kanagawa 210-14; geographical location of, Prefecture industrial policy, 133-39; 208-9; industrial structure of, 210and Private Sector Vitality Act, 137 12; local industrial policies of, 18; Kanazawa City: growth in, during Meiji and mismatch between available jobs era, 29-30 and job seekers, 17, 213-14; popula- Kariya City: and Toyota City, 179 tion change in, 209-10; and the steel Kato, Takashi, 209 industry, 16-19, 214-18; unemploy- Kawasaki City, 15; industrial restructuring in, 122-23; and Kanagawa Prement in, 212. See also Kamaishi fecture, 122 Steel Mill; Nippon Steel Corporation Kamaishi Research Center: and marine Kawasaki Heavy Industries Corporation: development projects, 218-19; public and aircraft industry in Nagoya City, 169 and private contributors to, 218 Kawasaki Steel Corporation, 241 Kamaishi Steel Mill: diversification Kimitsu Steel Works: and Nippon Steel projects at, 217-18; employment deCorporation, 243 cline at, 209-10; history of, 214-16; King, Anthony D., 22, 23, 258 and the Mitsui Zaibatsu, 215; and Kinuura City: and Toyota City, 197 Nippon Steel Corporation, 215; relaKitakyushu City: absence of labor-comtionship of, to Kamaishi City, 216munity coalitions in, 244-45; as 18. See also Nippon Steel Corporacompany town for steel industry, 246; tion employment change in, 226-28, Kamigo City: and Toyota Motor Corpo247-48; geographical location of, ration, 185 225-27; industrial restructuring in, Kanagawa High Technology Supporting 16-19, 243-48; local industrial poliFoundation: and Kanagawa Science cies of, 18, 246-48; and Space Park, 137 World Theme Park, 18, 244-45; and Kanagawa Prefecture: as bedroom subTechnocenter Park, 247; unemployurb of Tokyo, 123-25; comprehenment in, 246; and Yawata Steel sive development plans of, 131-34; Works, 16-19, 225 and electronics industry, 130-31; and Kiyonari, Tadao, 144, 150 growth without development, 12627; high-technology industries in, 12, Klassen, L. H., 61 121; and Kanagawa Science Park, 12; Koito Corporation: and Kanagawa Science Park, 137 and Kawasaki City, 122; and Kehin Koromo City: and Toyota City, 178; industrial zone, 120; local industrial and Toyota Motor Corporation, 165policy of, 11, 131-39; and nayedoko 66, 185-87 function, 128-31; profile of economy Krishna, A. Rama, 197 of, 120-25; ratio of daytime to nightKurosaki Refractories: and Nippon time population in, 124; and regional Steel, 243 policy, 125-28; research, science, Kyoto: as seat of the emperor's court, 28 technology, and development centers Kyushu island: and Kitakyushu City, in, 121-22; and Yokohama City,

225

120-22

304

Index Land use and transport planning: four basic concepts of, 259 Law for General Recreation Resort Development: and Kitakyushu City, 18 Law for Iron and Steel Production: and the automobile industry, 165 Law for Machine Tools (1938): and the automobile industry, 165 Law for Promoting the Construction of Multi-Core Regions: and Toyota City, 168 Law for the Promotion of Traditional Industrial Arts: and Nagoya's tiedying industry, 14, 163-64 Law to Promote Private Sector Participation in Public Projects: and Kanagawa Science Park, 133 League of Wage Workers in Toyota City: and Toyota Motor Worker's Union, 187 Liberal Democratic Party: and gerrymandering, 116; and small farmers, 22, 109; and Toyota City, 186 Local corporatism: and industrial districts, 288-92; and urban economic development, 175-76 Local developmental state: and industrial districts, 287-92; and social consumption expenditures, 191-92; and social investment expenditures, 18991; and Toyota City, 189-92; and Toyota's production system, 177-78 Local industrial policy: in Kanagawa Prefecture, 131-39; in Kitakyushu City, 18, 246-48; in Nagoya, 14; in Toyota City, 14-15, 184-86 Logan, John, 22 Lumber industry: in Nagoya, 161-62 McMillan, Charles J., 196 Maeda, Akihito, 102 Mammen, David, 69 Mandeville, T. D., 267 Manila City: Japanese land use and transport plans for, 262-63 Market hegemonic production: and

305

changing production systems, 28485; and new breed of small firm,

284-85 Marubeni Corporation, 87; and resort development, 245 Matsushita Corporation: and theme park development, 245 Measures Targeted at Stagnant Industries, 17 Measures to Assist Workers and Businesses in Depressed Industries and Regions, 220 Mechatronics: and fusion industries,

205 Mei ji era: and foreign trade, 35- 36; and growth of cities, 29- 35; and informal economy, 34, 46; location of growing and declining cities during, 36-40, 46-47; relation between urbanization and industrialization during, 31-32; and rise of industries, 32-35; urban occupations during, 33- 34, 46 Metal housewares industry: employment in, 145; and international competition, 145-46; suppliers and subcontractors for, 145; in Tsubame City, 143-47. See also Industrial districts Ministry of Agriculture, Forestry, and Fishery: and "marinovation" plan,

218 Ministry of Construction, 101; and City Planning Bureau, 259-60; and land transport studies, 291 Ministry of International Trade and Industry (MITI): changing role of, in economic restructuring, 250- 51; coordination of private sector activities by, 109; and cosmopolis plan, 99; and Facilitation Fund for Industrial Structural Adjustment, 244-45; and Kanagawa Science Park, 136-37; and "marinopolis plan," 218; and multifunction polis concept, 20, 271-72; and proposal for just-in-time delivery system, 165; and survey of overseas

Index Ministry of International Trade (cont.) small business operations, 155; and technopolis plan, 127-28, 290 Ministry of Transportation: and marinetown plan, 218 Mitsubishi Electric Corporation: and aircraft industry in Nagoya, 169; and blueprint for exporting technopolises,

20, 270 Mitsubishi Heavy Industries Corporation: and aerospace industry in Nagoya, 159, 169 Mitsubishi Motor Corporation: and auto industry in Nagoya, 159-61 Mitsui Corporation, 87 Mitsui Mining Corporation: and theme park development, 245 Miyamoto, Kenichi, 21, 57, 60, 81 Molotch, Harvey, 22 Mori, Taikichiro, 115 Morris, Jan, 257 Morris-Suzuki, Tessa, 267 Multifunction polis: Australian interests in, 275-76; basic planning elements of, 272-76; Japanese interests in, 273-75; potential sites of, in Australia, 276 Nagano Prefecture, 154 Nagasu, Kazuji: and age of regional society idea, 134-35; and brain center concept, 135 Nagoya City: aircraft industry in, 14, 168-71; automobile industry in, 165-68; ceramics industry in, 161; Green Road high technology corridor in, 167-68; industrial geography of, 160; industry profile of, 160-62; land use and transport planning in, 260; local industrial policies of, 14; and preservation of traditional industries, 164; tie-dying industry in, 14, 16264; and Tokugawa Shogunate, 160. See also Toyota City; Toyota Motor Corporation; Toyota's production system

Nagoya City economic development organizations: Electronics Technology Center, 164, 171; Industrial Rehabilitation Project, 164; Institute of Industrial Technology, 164; International Center, 164; Research and Development Institute for Manufacturing, 171; Small Business Information Center, 164; Small Industries Development Promotion Center, 164; Technology Exchange Center, 171; West Coastal Industrial Estate, 170; World Academic Town for International Collaboration, 173 Nakamura, Takafusa, 33 Nakasone administration: and neoconservative public policy, 55 National Comprehensive Land Development Plans: First Plan (1962), 6, 207, 259; Second Plan (1969), 207, 259; Third Plan (1973), 207, 265; Fourth Plan (1987), 7, 70, 126-28,

164, 208, 266-67 National industrial policy legislation,

14, 17-18. See also entries beginning with Law; Measures National Land Agency, 113, 267; and national comprehensive land development plans, 291 N ayedoko function: defined, 11, 12830; in Kanagawa Prefecture, 128-31; and local development, 137-39 NEC Corporation, 130 Neighborhood associations, 10, 84,

106-8 Neighborhood social organization, 106-

8 Netzer, Dick, 65 New breed of manufacturing firm: characteristics of, 185 New Industrial Cities Program, 267 New Kanagawa plan: and citizen participation, 132-33 Newly industrializing economies (NIEs): as recipients of Japanese mass production industries, 127

306

Index New towns: in Japan compared to in the United Kingdom, 296 NGK Insulators Corporation: and ceramics industry in Nagoya, 161 Nihon Life Insurance Company, 75 Niigata Prefecture, 143 Nippon Mortgage Company, 115 Nippon Sheet and Glass Corporation: and Toyota Motor Corporation, 16768 Nippon Steel Corporation: business diversification by, 23, 237-41; centralization of steel production by, 238; and joint ventures with foreign companies, 240; and Kamaishi Mill, 1619, 215-18; and offshore operations, 252; production and employment trends of, 235- 36; and relations with suppliers and subcontractors, 232; restructuring strategies of, 217, 229, 234-43, 252; and Space World Theme Park, 244-45; and steel industry in Nagoya, 161; work force reduction strategies of, 241-43; and Yawata Steel Works, 225-34 Nippon Telephone and Telegraph, 168 Nippon Tsusho: and Tsubame City, 146 Nissan Motor Corporation: horizontal division of labor in Asia, 155; and theme park development, 245 Nissho-Iwai Corporation, 87 NKK Corporation, 241 Noritake Corporation: and the ceramics industry in Nagoya, 161 Noyelle, Thierry J., 283

in, 8; land use and transport planning in, 259; and Mayor Seki Hajime, 54; public revenue and expenditure trends in, 77-79; and Taisho democracy, 54; urban redevelopment projects in, 80-81; urban structure of, 70-73; view of the future in, 79-81 Osaka compared to New York City: and doughnut phenomenon, 58; by industrial structure, 63-64; by social investment expenditure, 77-78 Osaka compared to Tokyo, 53-81; by cities in metropolitan area, 70; by citizens movements, 81; by city/suburb relations, 70-74; by functional centralization, 66-75; by industrial structure, 64-70; by number of small enterprises, 75-76; by urban redevelopment, 80-81 Osaka Prefecture: city/suburban income distribution, 73-74; city/suburban population distribution, 72-73; city/ suburban tax revenue distribution, 73-74; major cities in, 70-71; population trends in, 71 Osborne, David, 177 Osono, Tomokazu, 115 Overseas technopolises: possible locations of, on Pacific Rim, 270-71; potential sites of, in Australia, 272 Overrurbanization, 6 Owari Precise Products Company: and aircraft industry in Nagoya, 170 Oyama, Yochi, 197 Ozu, Yasujio, 85-86

Ohmae, Kenichi, 22 Okimoto, Daniel, 23 Okita, Saburo, 207 Osaka: business concentration in, 7172; and environmental pollution, 76, 80; and failure of postwar urban policy, 80; and financial stress, 76-79; future of, as an international cultural center, 81; industrial reorganization

Pacific industrial zones, 5 Paelinck, H. P., 61 Panitch, Leo, 193 Pempel, T. J., 22 Perry, Matthew C.: and Treaty of Kanagawa, 120 Piore, Michael J., 22, 197 Place: concept defined, 85 Popham, Peter, 113

307

Index Portes, Alejandro, 21 Private Sector Vitality Act: and Kanagawa Science Park, 137 Privatization of public services, 61 Real estate developers: in Tokyo, 97102 Redfield, Robert, 28 Reformist municipalities: and citizens' movements, 59-61 Regional development policy: and industrial location, 125-28; postwar history of, 206-8 Reich, Robert, 195, 197 Richardson, Bradley, 115 Rimmer, Peter, 113 Roos, Daniel, 23, 295 Rothschild, Joyce, 23 Rural to urban migration: and stages of economic development, 205-6 Sabel, Charles, 22, 197, 287 Saito, Sadayuki, 251 Samuels, Richard, 22, 115, 196 Sapporo City: land use and transport planning in, 260 Sassen, Saskia, 283, 295 Saturn production system: and the Toyota model, 178 Sawa, Nagayo, 21 Saxenian, Anna, 22 Seki, Hajime, 8, 21; and establishment of urban science in Japan, 54. See also Osaka Shinano Kensin Company: in Tsubame City, 154 Shizuoka Prefecture, 218 Singer, Milton, 28 Small businesses: and competition from the NIEs, 143; and urban industrial restructuring, 141- 51 Southeast Asian cities: Japanese land use and transport studies for, 26162; Japanese public transport developments in, 263-65

Spatial division of labor: and business networks, 150- 51 Steel industry: corporate restructuring plans in, 16-19, 220-21; expenditures in, on research and development, 240; history of, 16-19; in Japan compared to in the U.S., 24850; in Kamaishi City, 214-18; in Kitakyushu City, 224- 54; during Meiji era, 214-15; and Nippon Steel Corporation's restructuring strategies, 234-43; and parent company relations with suppliers, 232; production and employment trends in, 234; unemployment in, 217; and Yawata Steel Works, 229-34. See also Kamaishi Steel Mill; Nippon Steel Corporation Steiner, Kurt, 26, 60 Struggle for place: in Tokyo, 85-86 Sugita, Shigeki, 252 Sumitomo Heavy Industries: and theme park development, 245 Sumitomo Metals Corporation, 241 Suzuki Motor Corporation: and Nagoya City, 161 Tabb, William T., 65, 116 Takaoka City: and Toyota Motor Corporation, 185 Tanaka, Chobei: and the Kamaishi Steel Mill, 214-15 Tanaka, Naoki, 133 Tannenbaum, Frank, 195 Tatsuno, S., 267 Technopolis plan: and the Ministry of International Trade and Industry, 127-28 Thrift, Nigel, 22 Tie-dying industry: evolution of, in Nagoya, 162-64; female workers in, 162-63; industry associations in, 162; international division of labor in, 162-64; in Midori district, 162. See also Industrial districts Timberlake, Michael, 21

308

Index Tobishima Construction Company: and Kanagawa Science Park, 136 Tokugawa Shogunate: and Kanagawa, 120; and Nagoya, 160; and system of alternate residence, 27-28; and Tokyo, 83 Tokyo: centralization of functions in, 7-8, 60, 66-70; citizens' movements in, 84-85; class divisions in, 102-3, 108; concentration of land ownership in, 87-88, 114; congestion in, 88; distance to work in, 88, 104-5; earthquakes in, 84; environmental problems of, 87-88; and flexible specialization, 9-13, 128-31, 284-85; high-rise developments in, 101, 115; history of expansion and restructuring in, 83-89; housing costs in, 87-97, 104, 114-15; and informationalization, 67-68; and internationalization, 69, 89-97, 111-13; labor force in, 103; land prices in, 87-97, 110, 114; land use in, 89, 94-102, 260-61; net migration to, 90-93; real estate developers in, 97-102; research, education, and culture in, 11, 68-69; small-business sector of, 12-13; social dislocation in, 106-8; social isolation in, 108; spatial division of labor in, 9-13, 150-51, 286; and the struggle for place, 102-8; and technological innovation, 67, 284; urban redevelopment strategies in, 9-10, 101; waterfront development in, 98102; as a world city, 3, 9-10, 97-

102, 113, 284 Tokyo metropolitan government, 22,

113 Toshiba Corporation, 130 Toyoda, Eliji, 197 Toyoda, Kiichiro, 184-85 Toyoda, Shoichiro, 197 Toyoda, Tatsuro, 197 Toyoda Automatic Loom Works: and origins of Toyota Motor Corporation,

165

Toyoda family: and Toyota Motor Corporation, 182-83 Toyoda Spinning and Weaving Company: and the origins of Toyota Motor Corporation, 165 Toyota City: electoral alliance in, 14; geographical location of, 178; history of, 178-80; labor disputes in, 14; local industrial policies of, 14-15, 184-86; as a local developmental state, 189-92; occupational structure of, 180; population growth of, 14, 179; profile of, 178-80; social consumption expenditures in, 191-92; social investment expenditures in, 189-91; tax revenue trends in, 188; and tax revenue from Toyota Motor Corporation, 189; and Toyota Motor Corporation, 175-200; and Toyota's production system, 179-80. See also Toyota's production system Toyota Concrete, 167 Toyota Housing Corporation, 167 Toyotaism, 176. See also Toyota's production system Toyota Motor Corporation: and automobile industry in Nagoya, 159; corporate welfare programs of, 191-93; just-in-time delivery system of, 16566; and local corporatist politics, 186-88; prefabricated housing division of, 166-67; and Toyota City, 175-200. See also Toyota's production system Toyota Motor Workers Union: and community organization, 187-88; and Democratic Socialist Party, 187; and Japan Socialist Party, 186-87; and uRed Purge," 187; and social compact with Toyota Motor Corporation, 186-88 Toyota's production system: and company town organization, 177; decentralization in, 196; employment by gender and firm size in, 182; flexible specialization in, 177; institutional

309

Index Toyota's production system (cont.) imbeddedness in, 176-77; just-intime delivery system in, 183-84; labor force segmentation in, 181-82, 192-93; and the local developmental state, 177-78; spatial concentration in, 184; spatial development in, 176; subcontracting layers in, 181-82; supplier associations in, 182-83; and the Toyoda family, 182-83; and Toyota City's industrial policy, 184-91; and welfare corporatism, 177; and western development theory, 176-78 Toyota Technological Institute: and Toyota Motor Corporation, 167, 192 Tsubame City: business diversification in, 155; export of flatware from, 144; flexible specialization in, 143-47, 153- 54; growth in, of taxable private income, 147; industrial cooperatives in, 145-46; and the metal flatware industry, 143-45; and new breed of firm, 12-13; population change in, 146; small businesses in, 143-47; and trade associations, 12. See also Industrial districts Tsubame Electrical Machine Works, 146 Twin Bird Industries: in Tsubame City, 146 Twin Bird Kogyo Corporation: in Tsubame City, 153-54

United Nations Center for Regional Development: in Nagoya, 167 Urban economic development: environmental consequences of, 102; and global-local interdependence, 28182; and local corporatism, 175-76; and theme park and leisure resorts, 245-46 Urban land development: beneficiaries of, 102 Urban land use and transport planning: Japanese studies of, in Southeast

Asian cities, 261-62; Tokyo's strong center strategy for, 260-61 Urban planning: "and the informationalized city and region, 268-71; for land use and transport, 259-65; and the multifunction polis, 272-76; phase one (1945-1973), 19-20, 25865; phase two (since 1973), 20, 26570; and strong center strategy, 1920, 260-61; and the technopolis concept, 267-72 Urban problems: big city decline, 6165; commuting time, 10, 70, 88, 104; concentration of land ownership, 87-88, 114; congestion, 6, 5860, 70, 88; doughnut phenomenon, 7, 57-58; environmental pollution, 6, 10, 76, 80, 87-88; fiscal centralization, 8, 76-77, 294; fiscal stress, 7-8, 60-63; growth without development, 13, 126-27, 294; housing prices, 6-7, 10, 70, 87-97, 104, 114-15; inadequacy of public amenities, 61, 292-93; land prices and speculation, 7, 9-10, 70, 87-97, 114; local autonomy, lack of, 13, 294-95; mismatch between available jobs and job seekers, 62-63, 213-14; social costs of economic concentration, 59-60, 292-93; stress, 104-8; unemployment in stagnant industries, 217-18; uneven regional development, 65-66, 250 Urbanization: during controlled war economy period (1930s-1940s), 8, 55, 281-82; and decline of big cities, 61-65; and the diffusion of electric power, 34-40, 47; during Edo era (1603-1868), 5, 26-28, 281; and evolution of the business enterprise, 283; and international trade, 281; in Japan compared to in the U. S., 56; during Meiji era (1868-1912), 5, 2935, 281; and migration, 26-47; and Pacific coastal industrial zones, 37, 47; and population change in urban

310

Index and rural areas, 296; and population concentration in three largest metropolitan areas, 57; and population growth in prefectures, 45; in postwar Japan, 6-9; in prewar Japan, 5-6, 26-49; and rank-size comparison of cities, 40-41, 47, 281; and social conflicts, 292-95; three phases of, 61-63; and western Pacific RirTl, 257-79, 286; and world city model,

282-86 van Wolferen, Karel, 116 Vernon, Raymond, 63 Vogel, David, 114 Wallace, Michael, 23 Weber, Max, 21 Welfare corporatism: and Japanese firms, 194-96; and Toyota's production system, 177 Western Pacific Rim: development corridors in, 271

Womack, James P., 23, 295 World city: and corporate headquarters activities, 283; and flexible specialization, 282-86; and the Japanese urban experience, 282-86. See also Tokyo Yamaha Corporation, 172 Yawata Steel Works: history of, 229-31; impact on, of Nippon Steel Corporation's restructuring, 243-48; modernization at, 230-31; production and employment trends of, 230- 31; steel workers union in, 243-44; subcontracting organization of, 231- 34. See also Kitakyushu City; Nippon Steel Corporation Yokohama City: and Kanagawa Prefecture, 120-22; port of, 11 Yokoyama, Kyutaro: and Kamaishi Steel Mill, 214-15 Yutatakai: and Toyota Motor Workers Union, 188

Zaibatsu: and the aircraft industry, 169

311