By PAUL KALLENDER-UMEZU
TOKYO — Japan’s defense industrial base, facing years of declining spending and export restrictions, faces a “crisis” and must urgently restructure in conjunction with Defense Ministry leadership, according to results of a six-month study.
The report, “Towards Formulation of a Strategy for Survival,” released by the MoD’s Defense Production and Technology Base Research Committee, notes that damage done by a half-century ban on weapon exports combined with decreased annual defense spending have left Japan’s defense industry in a parlous state.
Japan’s defense budget has sagged to 4.64 trillion yen ($58.7 billion) this year from 4.87 trillion yen in 2004, and helped force 102 small- and medium-sized companies out of Japan’s defense market.
Adding to the problems is the plight of internationally recognized major contractors, who were sheltered by the arms export ban that was only lifted in December and accustomed to dealing with piecemeal procurement by their sole customer, the MoD. These companies are unable to compete in an international market dominated by global companies shaped through 20 years of megamergers and consolidation.
The report abuts Japan’s 2010 Mid-Term Defense Program, Japan’s latest five-year defense policy, which urges creation of a more dynamic and flexible military to support the U.S. as a more assertive China and unpredictable North Korea potentially raise tensions in East Asia.
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