Breaking News
Investing Pro 0
💎 Access the Market Tools Trusted by Thousands of Investors Get Started

Japan Manufacturers Return Home, Fueling Demand For Tokyo Steel

Published May 15, 2022 05:00PM ET Updated May 15, 2022 08:18PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Bloomberg. Vehicles bound for shipment parked at a port in Yokohama on May 12. Photographer: Toru Hanai/Bloomberg

(Bloomberg) -- Japanese manufacturers are increasingly looking to move offshore operations to their home market, according to a Tokyo Steel Manufacturing Co. executive.

The rapidly weakening yen, global supply-chain constraints, geopolitical risks and shifting wages patterns are prompting the switch, Kiyoshi Imamura, a managing director of the steelmaker, said in an interview in Tokyo last week. 

Among those moving manufacturing to Japan are makers of everything from auto parts to cosmetics and consumer electronics, he said, with the trend expected to accelerate toward the end of this year.

According to Imamura, more Japanese companies are shifting operations out of China, Southeast Asia and Russia. The move to build new plants in their home country is fueling demand for steel used in construction, with the company receiving nearly 30 orders related to such switches, he said. 

“The yen has fallen so much that Japan’s trade balance won’t be back in the black -- under such circumstances, companies judge it’s better to do manufacturing in Japan,” Imamura said. His company has seen orders for steel used in construction rise 10% so far this year, compared with a year earlier, he said.

Even before the yen’s tumble this year, the Japanese government has been supporting relocation of domestic companies’ production bases back to the country. 

The Ministry of Economy, Trade and Industry is funding companies to assist them to invest in new plants that makes crucial products and materials to alleviate the risks of supply-chain bottlenecks. In November, the government also approved 774 billion yen ($6 billion) in funding for domestic semiconductor investment. 

“Now that the yen has weakened, it’s no surprise more companies will work on boosting domestic production capacity,” Takayuki Homma, chief economist at Sumitomo Corp. Global Research Co., said in a separate interview. The falling yen, which was increasing export margins, was “offering an option to ship goods from Japan strategically,” he said. 

Surging labor costs in other nations are also a factor. Imamura said Japan’s wages have barely changed over the past 30 years, while wages in Southeast Asia have roughly tripled over the same period.

Price Spikes

Takeshi Irisawa, an analyst at Tachibana Securities Co. in Tokyo, agreed the trend was a bright sport in Japan’s steel market. Still, he noted the country’s entire demand for steel used in construction was stagnant, and recent spikes in steel prices “will be a setback, making it a little difficult for the lower yen” to be a big driver for Japanese production in the short term.

The companies moving operations to Japan also face other hurdles, including high electricity costs and a shortage of labor due to the nation’s shrinking and aging population, said Homma. They will need to be innovative in both efficiently producing goods with fewer workers and coming up with value-added products. 

Imamura also said more nuclear power generation was essential to revive the competitiveness of manufacturing in the country. He joined calls by Japanese companies to quickly restart nuclear reactors that were idled after the Fukushima disaster more than a decade ago as the nation grapples with soaring energy costs.  

Read: Japanese Steel Producer Calls for Faster Nuclear Power Revival

©2022 Bloomberg L.P.

Japan Manufacturers Return Home, Fueling Demand For Tokyo Steel

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your profile, will be public on and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email