The heat is on as Japan’s corporations under the LDP’s Abe move towards a military-driven economy

military Japan footingWhile out yesterday came across a group of elderly Japanese women mostly in their 60s and 70s with one of them out on the street with a megaphone encouraging passing pedestrians to sign petitions stating their opposition to war. Something sinister is brewing underneath the veneer of Japan’s media and television wasteland. Toshiba announced last December, 2015 that it would be closing a television and PC manufacturing facility. This will result in roughly 7,000 of its employees being laid off, after it was revealed that Toshiba had been caught cooking its accounting books on US$1.3 billion (drop in the bucket). Toshiba plans on streamlining its operations concentrating on nuclear energy and computer chips. Both of those technologies have military applications while television sets and refrigerators don’t do very well on battlefields.

“Due to restructuring costs, which include the sale of its Indonesian TV plant, Toshiba said it expected a net loss of around 550 billion yen ($4.53 billion) in this fiscal year ending in March, 2016, Toshiba’s stock has fallen about 40 percent since the news it was cooking the books first reported in April, 2015.”

Toshiba isn’t the only Japanese corporation facing problems, Japan’s entire corporate governance is coming into question. Japan being a very management-centric culture makes me think people inside Toshiba’s accounting division had connections to the LDP and possibly even the BoJ to cook the books to cover for the failures of QE. A shift from a consumer based economy of consumers who buy electronic gadgets and home appliances, to a military manufacturing economy. I don’t really know but that certainly is a good inference I think. And to reinforce that military shift in the mind of most Japanese, better be on the alert for North Korean rogue missile launches. And as long as we are under military threat, better send a few more Japanese fighters to Okinawa to cover those pesky little islands.

Japan’s other large electronics corporation Sharp, has been looking at a buyout deal with the Taiwan-based corporation Foxconn. Foxconn which was formally known as Hon Hai Precision Industry Co., along with Innovation Network Corp. of Japan, a government-backed fund, have been competing for control of Sharp since last year 2015. If this buyout deal goes through it will be worth US$5.1 billion. The century-old Sharp electronics maker has “suffered deep losses after its consumer-electronics business declined and it faced tougher competition in the display panels it sells to smartphone makers.” As I am watching these large electronics corporations in Japan fold, I am also watching defense-related corporations increase sales as Japan’s corporations get a reshuffle under LDP PM Abe for a military-driven economy.

Now, let’s take a look at Japan’s growing weapons industry. Japan’s arms manufacturers:

Worldwide military expenditure amounted to $1339 billion in 2007, a 45% increase since 1998, with Japan in 5th place, claiming 4% of the market and $4.8 billion in sales. The leading Japanese manufacturer was Mitsubishi Heavy Industry, ranked 22nd globally, followed by Mitsubishi Electric (64th), NEC (79th) and Kawasaki Heavy Industries (85th). Unlike leading Western manufacturers, such as BAE Systems whose products are 95% defense [“defense” is a misnomer] related, arms represent only 2-10% of the larger Japanese firms output. The firms are in their entirety, however, as large as the top-ranking companies. NEC with 152,000 employees is just as large as Boeing, the leading international arms producer. As such they have access to all the political and media influence of major corporations.

The majority of their output is split between ‘kokusanka‘, i.e. internal development of such weapon systems as tanks, armored personnel carriers, and some missiles and licensed production of foreign systems, such as Fuji Heavy Industries production of a modified version of Boeing’s AH-64D Apache Longbow. Other smaller companies include; Howa, (small arms), Asahi-Seiki (small-caliber ammunition), Nippon Koki, Daikin Kogyo and Komatsu’s Defense Systems Division (large-caliber ammunition), Sumitomo Heavy Industries (machine guns) and Japan Steel Works’ Hiroshima plant (medium and large-caliber guns).

And finally, some musical entertainment (just like YouTube Japan to throw a 24 second advertisement in before the video begins) as we come into clearer focus on Japan’s corporations and Abe’s 2016 promise that Japan will “play a bigger role in 2016.” Bigger role? With what? A military-based economy? The “heat is on”, Mr. Abe.

GLENN FREY – THE HEAT IS ON

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