The Location Dynamics of Japanese Paper Industry in the Restructuring Period

Abstract

    This paper reveals the location dynamics and its contributing factors in Japanese paper industries from 1990s. Japanese paper industry was characterized as structural recession industry and received national political intervention, like a cartel for rationalization in 1980s. But from 1990s, retreat of political intervention and decrease in demand, paper manufacturing companies started spontaneous industry reorganization, especially through M&A and the scrapping of excess production capacities, and oligopoly has been advanced since 1990s.
    The locational dynamics of Japanese paper industries are summarized as below points: in the print/ information form sphere (1) main factories of each company, especially located in provincial area and belonged to the merging company, have been increasing amount of production. (2) on the other hand, old or small and medium-sized factories located in inner metropolitan area and belonged to the merged company have been decreased or stopped production, or were shut-down and transferred its production to the main factories.
    To explain the above results, capital investment for production equipment and availability and form of industrial water are examined as the contributing factors. As a result, main factories after M&A have favorable conditions for increasing production in the following points. Firstly, main factories have has few inefficient production machines in the early 1990’s, possibility of productivity improvement was high through introducing new equipment. So, each company invested new paper machines only in specific key factories. Secondly, factories that are increasing production have advantages accessing for industry water supply, in the point of amounts and costs. Key factories can use a large amount of cheaper river water flow supply than other water supply form, like industrial water services by public sector. In view of these circumstances, in the end of political intervention and the demand decrease, intensive production in factories with high profitability aiming at productivity improvement is a significant factor that causes location dynamics in current paper industry.