Geography ProjectGeography Project

Study on Japanese automobile Study on Japanese automobile industryindustry

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

An overview of An overview of automobile industry in automobile industry in JapanJapan

Japan is the Japan is the world’s largest automobile world’s largest automobile manufacturermanufacturer and exporter by number of and exporter by number of vehicles manufactured in a year, and has vehicles manufactured in a year, and has three of the world's ten largest three of the world's ten largest automobile manufacturers.automobile manufacturers.

Currently, 50 million of these high-price Currently, 50 million of these high-price products of over 100 million yen are being products of over 100 million yen are being produced and sold per year worldwide.produced and sold per year worldwide.

A list showing the world automobile production in 2007

According to the list

Japan ranked no.1 in the world

followed by US (no.2) and PRC (no.3).,

showing the importance of Japan to the world automobile industry

A pie chart showing the export percentage of manufacturing products in 2006,

Automotive industry accounts for 17.2%, which ranks the FIRST POSITION among all industries

Pie chart showing the export of

manufacturing products in 2007.

Automobile accounts for 22.1%,

which is higher than the one in 2006 (17.2%).

Reflecting the increasing

importance of automobile

industry in Japan.

Automobile IndustryAutomobile IndustrySpatial distributionSpatial distribution Automobile industry tends to Automobile industry tends to

cluster along coastal areas as only cluster along coastal areas as only 1717%% of the country is flat land of the country is flat land

Mainly found in SE part of Honshu Mainly found in SE part of Honshu like Tokyo-Yokohama region, like Tokyo-Yokohama region, Osaka-Kobe region and Aichi Osaka-Kobe region and Aichi region (the base of Toyota)region (the base of Toyota)

Some are found in northern Some are found in northern Kyushu like Oita and FukuokaKyushu like Oita and Fukuoka

These locations have the proximity These locations have the proximity to local market (presence of steel-to local market (presence of steel-using industries and large using industries and large population concentration)population concentration)

Export of products is also easy Export of products is also easy with portswith ports

Locational advantages of Locational advantages of Osaka-Kobe regionOsaka-Kobe region

1.1. Availability of extensive flat land as Availability of extensive flat land as automobile factories are space-automobile factories are space-demandingdemanding

2.2. Proximity to major cities of the Hanshin Proximity to major cities of the Hanshin region, e.g. Nagoya, Kobe, Osakaregion, e.g. Nagoya, Kobe, Osaka

3.3. Presence of large local market, with Presence of large local market, with population of about 8.3 million, e.g. population of about 8.3 million, e.g. Osaka is Japan’s second largest cityOsaka is Japan’s second largest city

4.4. Well-developed infrastructure, e.g. Well-developed infrastructure, e.g. Toyota is located at junctions of major Toyota is located at junctions of major highways and railwayshighways and railways

5.5. Large cities supply scrap metalLarge cities supply scrap metal

6.6. Agglomeration of other heavy industries, Agglomeration of other heavy industries, e.g. iron and steel industrye.g. iron and steel industry

7.7. Coastal location facilitates import and Coastal location facilitates import and exportexport

8.8. Further expansion is possible by Further expansion is possible by reclamationreclamation

Kansai regionKansai region The largest automobile manufacturer, Toyota, builds The largest automobile manufacturer, Toyota, builds

most of the manufacturing plants in Nagoya regionmost of the manufacturing plants in Nagoya region

Top 3 automobile Top 3 automobile manufacturers in Japanmanufacturers in Japan

ToyotaToyota

NissanNissan

Honda Honda

ToyotaToyota

Toyota is the biggest automobile Toyota is the biggest automobile manufacturing company in the world.manufacturing company in the world.

As shown on the next page, the number As shown on the next page, the number of cars manufactured by Toyota is the of cars manufactured by Toyota is the largest.largest.

Toyota has its own production

plants on 27 places

throughout the world.

IMPLICATIONS:

•Multi-point production

+

Trend of globalization

Tsutumi Plant (Toyota)

Weld LineTochigi Plant(Nissan)

Characteristics of Characteristics of automobile industryautomobile industry

Energy-demandingEnergy-demanding Transport-oriented e.g. port location is Transport-oriented e.g. port location is

crucialcrucial Capital intensive/ Hi-tech industryCapital intensive/ Hi-tech industry Heavy industryHeavy industry Fabricating industryFabricating industry

Automobile

Industry

Market

Port

Transport

land

Labour

Institutional

Power

Market as a Market as a locational factorlocational factor

Cost-minimizationCost-minimization

Heavy products (Cars)Heavy products (Cars)

i) Distribution cost is lowered i) Distribution cost is lowered ∵ ∵ High proximity to large cities or High proximity to large cities or

towns towns (i.e. Osaka, Amagasaki)(i.e. Osaka, Amagasaki)

ii) Price is lowered ii) Price is lowered further salesfurther sales

Locations of Toyota’s plants in the region of Osaka-Kobei

Collecting informationCollecting information

Allow close contact with Allow close contact with demands and tastes of demands and tastes of consumersconsumers

Collection of feedbackCollection of feedback ++ Quick adaptation of Quick adaptation of market changesmarket changes

Market as a Market as a locational factorlocational factor

2.Por2.Portt Ports along Osaka Bay facilitatesPorts along Osaka Bay facilitates

i)i) import of raw materials import of raw materials lower importance of pulling of raw lower importance of pulling of raw

materialsmaterials

ii) ii) export of manufactured productsexport of manufactured products expansion to new marketsexpansion to new markets cheaper distribution cost using cheaper distribution cost using shipmentshipment

3.Transport3.Transport

Well-developed Well-developed transport network transport network linking up industries linking up industries area and large cities area and large cities (e.g. railway, (e.g. railway, expressway )expressway )

high accessibility to high accessibility to markets markets

4.Land4.Land

Space-demanding industriesSpace-demanding industries

Extensive and flat land is requiredExtensive and flat land is required

i.e. Along Osaka Bay , large piece of i.e. Along Osaka Bay , large piece of reclaimed land is available for automobile reclaimed land is available for automobile industries industries

Manufacturing

Plants

5.Labour 5.Labour

Well-educated labour is needed for hi-Well-educated labour is needed for hi-technology used in productiontechnology used in production

Highly-skilled scientists, engineers and Highly-skilled scientists, engineers and technicians available i.e. Osaka technicians available i.e. Osaka University nearbyUniversity nearby

Sectoral spatial division of labour Sectoral spatial division of labour

Automation and capital-intensive production methodAutomation and capital-intensive production method

demand for labour decreasesdemand for labour decreases

only small amount of skilled-labour neededonly small amount of skilled-labour needed high mobility of labourhigh mobility of labour

Japan has a lot of universities in other places Japan has a lot of universities in other places (e.g. Kyoto University, Tokyo University)(e.g. Kyoto University, Tokyo University)

sources of labour supplysources of labour supply

6.Raw-material6.Raw-material Steel used as a raw material of components in Steel used as a raw material of components in

the production is heavy and bulkythe production is heavy and bulky

located neared to Iron &Steel plants which are located neared to Iron &Steel plants which are established along the coastal areas established along the coastal areas

procurement costs lowered procurement costs lowered

price loweredprice lowered further sales further sales

More and More corporations have More and More corporations have set up plants in NICsset up plants in NICs

Component parts can be made in Component parts can be made in these plants and shipped back these plants and shipped back to Japan for fabricationto Japan for fabrication

factor of port is far more importantfactor of port is far more important

7.Power7.Power

Heavy IndustryHeavy Industry

energy-demanding industryenergy-demanding industry

Low availability of power resources in Japan Low availability of power resources in Japan

not beneficial to move to such locationnot beneficial to move to such location

Use of electricityUse of electricity

flee the industry from the source of powerflee the industry from the source of power

8.Institutional 8.Institutional Free trade +Lassie-faire policy are Free trade +Lassie-faire policy are

promotedpromoted

Market economy is adoptedMarket economy is adopted influence of government is smallinfluence of government is small

No foreign exchange control+ stable and No foreign exchange control+ stable and healthy banking and economic healthy banking and economic foundationfoundation

sources of capital is wide sources of capital is wide

Future developmentFuture development

Return of plants and factories to JapanReturn of plants and factories to Japan More new plants in JapanMore new plants in Japan Mainly for designing new types of carsMainly for designing new types of cars e.g. Honda building factorye.g. Honda building factory Construct a R&D centre in Japan before Construct a R&D centre in Japan before

20092009 Toyota investment in Japan is triple to its Toyota investment in Japan is triple to its

investment in Europe and the USinvestment in Europe and the US

ReasonsReasons

Affected by locational factorAffected by locational factor labourlabour raw materialraw material entrepreneurentrepreneur

labourlabour

Close to headquarters:Close to headquarters:

As car production, processing becoming more As car production, processing becoming more complicatedcomplicated designers and engineers and designers and engineers and skilled laborsskilled labors can can be found be found supervise the quality of production easiersupervise the quality of production easier

Better communication and coordination in Better communication and coordination in designing new designing new types of cars can be provided, types of cars can be provided,

e.g. oil-saving and eco-friendly care.g. oil-saving and eco-friendly car

raw material &raw material &entrepreneurentrepreneur

Close to raw material supplier so as to Close to raw material supplier so as to reduce cost reduce cost

Reduce the risk of spreading commercial Reduce the risk of spreading commercial secret so as to keep commercial secrets secret so as to keep commercial secrets confidentially.confidentially.

Growing automobile Growing automobile production in Chinaproduction in China

However, in 2010,there is a decreasing trend However, in 2010,there is a decreasing trend of car production in Japan, but more in China.of car production in Japan, but more in China.

From 10,800,000 to10,000,000From 10,800,000 to10,000,000 as china’s cost production is cheaperas china’s cost production is cheaper

. e.g. labor cost, rental cost. etc. e.g. labor cost, rental cost. etc

http://news.bbc.co.uk/chinese/trad/hi/newsid_6http://news.bbc.co.uk/chinese/trad/hi/newsid_6530000/newsid_6532000/6532063.stm530000/newsid_6532000/6532063.stm