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Japan's Military Aviation Industry

Military aircraft production in Japan has always been uniquely inefficient, but considered necessary to maintain domestic manufacturing capabilities. The ban on exports and the exclusion of multi-year buys, gave manufacturers no choice but to charge the government exorbitant prices for new aircraft. In the new century, with too many defence programs chasing too little cash, Japan's aerospace industry seemed on the verge of major restructuring.

As of 2004 the JDA was supporting nine dedicated aircraft assembly lines. Five fixed-wing production programs were spread among four manufacturers - the Fuji T-7 trainer, Kawasaki C-X transport and P-X maritime patrol aircraft, Mitsubishi F-2 fighter, and the ShinMaywa Industries US-1A amphibious search and rescue aircraft. All of Japan's big three - Fuji Heavy Industries (FHI), Kawasaki Heavy Industries (KHI) and Mitsubishi Heavy Industries (MHI) - manufacture fixed- and rotary-wing aircraft, as well as supplying large components for foreign commercial aircraft manufacturers. Three helicopter manufacturers for an industry that can't export aircraft is probably two too many - Fuji is by far the smallest one. At that time consideration was being given in the five-year budget to call for the termination of at least one aircraft assembly line, with the AH-64D and F-2 considered the most likely targets.

Japan's aerospace industry had avoided the consolidation and restructuring seen in the aerospace companies in Europe and North America. Mitsubishi Heavy Industries, Kawasaki Heavy Industries, and Fuji Heavy Industries were each key partners of U.S. aerospace firms, and produced nearly 40 percent of the Boeing 787 Dreamliner. Approximately a dozen U.S. companies partnered with Mitsubishi Aircraft Corporation to develop the first Japanese jetliner, the 80-120 passenger Mitsubishi Regional Jet or MRJ.

While the industry had been waiting for the rebuilding of the aircraft production after the end of World War II, the mainstream of world's aircraft industry had already shifted to the jet-powered aircraft. The competent engineers had dispersed domestically, and production facilities and equipment had been destroyed. Licensed productions of F-86 fighter and T-33 trainer of the Japan Air Self-Defense Force (JASDF) with the U.S. manufacturers have played a key role to solidify an industrial base for manufacturing aircraft in Japan.

Subsequently, in parallel with technology transfers and licensed production of the fighter and patrol aircraft such as F-4, F-15 and P-3C, the aircraft industry sought opportunities to domestically develop and produce the military aircraft such as T-1, T-2 and T-4 trainer, F-1 support fighter, and C-1 transport. And also the industry sought the civil aircraft such as YS-11 of the first civil transport, and other civil transport with Japan's indigenous technology. In the military sector, the development of next-generation maritime patrol and transport aircraft by Japan's Defense Agency will offer potential business opportunities for advanced aircraft engines, avionics, and aircraft parts.

Japan's aircraft industry has a mixed history. From its beginnings in the 1920s the industry grew to become a major international producer of military aircraft. After World War II, the occupation authorities prohibited aircraft R&D and production facilities were either removed or destroyed. The year 1952 marked the resumption of activity, and the industry has gradually increased its production and sophistication since that time.

The government's industrial policy tools for the aircraft industry are both similar to and different from those used for other growing industries. Early government funding to encourage the industry's development focused on producing and marketing domestic aircraft based on existing technology: the major project was technologically but not commercially successful. The type of assistance has changed, but in many ways follows a pattern seen in computers and robotics. The government shifted its support from participating in production to funding research and prototype development of new products and/or new technologies in public laboratories. In many cases, private industry has participated in government-supported projects.

Japans aircraft industry was forced to disband after World War II and remained idle until about 1952, when aircraft research and production was conditionally permitted with prior government approval. Because there was no domestic military or civil demand at this time, the industrys activities were limited to repair and maintenance of U.S. military aircraft. With the establishment of the JDA in 1954, the aircraft industry expanded to include production of mi1itary items. Since then it has been gradually rebuilt and expanded, mostly through licensed production programs, and partial1y through Japans own development programs.

In the post World War II period, Japans aircraft industry was rebui1t and expanded largely through the licensed production of U.S. mi1itary ciircraft. The Mutual Defense Assistance Agreement between the United and Japan, signed in 1954, provided the basis for U.S. grant-aid, Foreign Military Sales, and coproduction of U.S.-developed weapon systems. Grant-aid funds were terminated in 1964 and today Japan regularly purchases military equipment from the United States and coproduces a number of U.S.-developed weapons. It has been U.S. policy not to enter into coproduction agreements for significant weapons except with members of the North Atlantic Treaty Organization, Australia, New Zealand, and Japan. As the economies of U.S. allies have developed, the trend toward coproduction has increased.

U.S.-Japan coproduction arrangements have been in the form of licensed production. Under these arrangements, for each coproduction project, an umbrella agreement -- Memorandum of Understanding (MOU) -- is signed by the two governments. Then Japanese manufacturers domestically produce the equipment under technical assistance contracts with the U.S. companies that developed and produced the equipment initially.

Since the mid-1950s when Japan began production of the F-86 fighter and T-33 trainer aircraft under licensing arrangements with North American and Lockheed, respectively, there has been a series of U.S. military aircraft produced in Japan under similar arrangements. These aircraft have included the P2V-7 maritime patrol aircraft, the F-104 and F-4 fighter aircraft, and more recently, the P-3C maritime patrol and F-15 fighter aircraft. These programs have provided aircraft to Japans self-defense forces-- and at the same time assisted Japan in developing a modern aircraft - manufacturing capability.

The high cost of Japanese production is due to a number of factors, including licensing and technical assistance fees that must be paid to U.S. companies under the licensing agreements, and limited production runs which do not achieve scale economies. Japans self-defense forces have limited requirements and Japans current policy prohibits exporting weapons to other countries.

Early coproduced U.S. aircraft included helicopters, jet trainers, maritime patrol planes, and first-generation jet fighters. These coproduction efforts were followed by more advanced fighter aircraft including the F-104J and the F-4EJ, and several typesof helicopters. A Rand Corporation study of these programs found that U.S. industry representatives were emphatic in saying that their coproduction partners had access to any technical information. The study quotes a U.S. aerospace executive who stated: We were paid to put them in business and we gave them everything we had.

On June 20, 1978, the U.S. Government approved the F-15 licensed production agreement with Japan. The program originally spread the acquisition and production of the F-15s over an 8-year period. In addltlon to achieving military obJectives being pursued, the-F-15 agreement provided financial benefits to the United States, including export sales, licensing and technical assistance fees paid to U.S. companies, and R&D recoupment ($1.6 million per aircraft) paid to the U.S. Government.

At the time Japan was evaluating the F-15, it was also considering a Mirage of France, the Viggen of Sweden, and the Tornado, jointly developed by Great Britain, West Germany, and Italy. It should be noted that none of these systems involve the technical sophistication or cost of an advanced fighter aircraft like the F-15. Japan would have chosen to coproduce a less-capable aircraft rather than buy the F-15 or develop its own system.

The plants of Japan's large aeronautics companies often house military and civil assembly lines side by side. Workers trained on one line are often shifted to another. Expensive composite-material processing equipment, purchased by the government for military projects, is subsequently used to process parts for civil aircraft. Japan, as a matter of policy, did not export arms or technology directly related to the production of arms. In 1967, Japan formalized its policy against arms exports to Communist bloc countries, countries under United Nations sanctions, and countries involved, or likely to become involved in a conflict. In practice, all arms exports -- which require a case-by-case review by MITI -- are effectively banned with the exception of a few civilian items which could have military uses (e.g., computers, helicopters, and trucks).

In the defense sector, Japan adopted new principles and guidelines on arms exports, the first major overhaul in nearly half a century of its arms embargo policy. Japan will now allow arms exports only if they serve the purpose of contributing to international cooperation and its security interests. With a challenging threat environment because of China and North Korea, the Japanese Ministry of Defense increasingly procures defense products through Foreign Military Sales (FMS) and Direct Commercial Sales (DCS).

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Page last modified: 10-12-2018 18:37:41 ZULU