Ver.1.3 The Electrical Industry in Japan April 24, 2013 Japanese Electrical Electronic and Information Union State of the Electrical Industry (1) Position of the electrical industry in Japan (FY2009) The machine industry’s share of total domestic production Employed workers in Japan Metalworking industry 1.14 million people (2.3%) Machine industry 35.5 yen (7.4％) Metalworking industry 10.9 trillion yen (2.2％) Total 483 trillion yen Machine industry 4.14 million people (6.6%) Total 62.82 million people Breakdown of machine industry Precision machinery 1.3 trillion yen (3.7％) Source: Prefectural economic accounts (Cabinet Office) Labour Force Survey (Ministry of Internal Transportation equipment Affairs and Communications) 12.6 trillion yen (35.3％) General machinery 8.5 trillion yen (23.9％) Total 35.5 trillion Electrical machinery 13.2 trillion yen (37.0％) Information service industry 1.64 million people (2.6%) Breakdown of machine industry All-purpose, production, business machinery 1.43 million people (34.5%) Total 4.14 million people Electrical machinery 1.67 million people (40.3%) Transportation equipment 1.04 million people (25.1%) Looking at FY2009, the electrical industry accounts for 2.7% of domestic GDP (electrical and electronics sector only) and 5.3% of domestic employment (2.7% for electrical and electronics sector, 2.6% for 2 information service sector). Beautiful earth & Happy life Japanese Electrical Electronic and Information Union State of the Electrical Industry (2) Trends in Electrical Industry Employment Numbers 400 300 (x10,000 people) Trends in number of electrical industry workers (FY/no. of general regular employees) Electrical machinery, equipment and supplies Electronic parts and devices Information and communication electronics equipment Information services/internet-related 292 296 299 102 108 113 295 296 300 292 114 119 124 128 200 100 62 65 68 73 72 31 27 28 28 97 96 90 FY2003 FY2004 FY2005 273 276 125 129 64 63 73 69 28 30 32 25 25 80 77 73 63 59 59 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 0 Note: FY2011 data excludes Iwate, Miyagi and Fukushima Prefectures (these three account for less than 1% of surveyed districts nationwide). Source: Labour Force Survey (Ministry of Internal Affairs and Communications) In FY2011 the number of people (regular employees) working in the electrical industry (electrical machinery equipment and supplies manufacturing, information and communication electronics equipment manufacturing, electronic parts, device manufacturing and information services industries) totaled 2.76 million (a 1.1% year-on-year increase). Looking at medium-term employment trends, there is a declining trend for electrical machinery equipment and supplies and an increasing trend for information services. 3 Beautiful earth & Happy life Japanese Electrical Electronic and Information Union State of the Electrical Industry (3) Electrical Industry Domestic Production and Sales 32.0 8.6 9.2 9.3 9.4 10.1 10.4 9.3 8.2 8.3 7.9 11.7 11.3 11.6 12.9 13.9 11.8 11.0 11.2 11.0 5.4 4.3 10.0 11.6 11.3 FY2011 13.9 7.3 5.6 10.3 10.0 9.9 1.5 1.5 1.4 1.6 1.4 1.5 1.4 8.1 7.9 7.4 7.0 7.1 FY2011 13.1 7.6 FY2010 13.3 6.6 22.9 8.2 FY2010 13.3 14.1 7.8 25.1 FY2009 15.4 7.9 23.2 FY2009 14.6 8.0 FY2008 11.3 8.3 FY2008 11.7 12.1 26.8 FY2007 7.8 FY2007 13.9 31.9 FY2006 13.6 30.5 FY2005 13.1 30.1 28.8 FY2004 13.8 29.2 FY2003 15.0 28.0 FY2002 13.3 14.4 11.3 Electronic parts and devices FY2001 10.8 12.8 10.1 FY2000 10.6 12.7 9.1 Information communication equipment Electrical industry 37.5 FY1999 10.6 8.4 9.8 34.8 FY1998 11.5 7.7 9.3 9.4 34.1 FY1997 13.3 7.5 32.6 FY1995 13.2 32.8 31.3 36.6 38.1 FY1996 8.2 FY1994 0 12.5 8.2 FY1993 10 7.6 34.1 FY1992 20 33.3 36.6 FY1991 30 35.8 FY1990 40 Trends in Domestic Output of Electrics and Electronics Industries (FY) (trillion yen) FY1989 50 Source: Report on Indices of Production (Ministry of Economy, Trade and Industry) Trends in Sales for Information Services Industry (FY) Others 6.3 2.8 3.1 3.4 3.7 FY1997 FY1998 FY1999 FY2000 1.3 0.2 FY1996 4.4 1.2 0.2 2.0 1.2 0.2 2.1 1.3 0.2 FY1995 1.3 0.3 4.3 1.2 0.2 2.5 FY1994 1.2 0.3 3.9 3.3 3.5 1.3 0.2 2.0 3.4 4.9 FY1993 1.2 0.1 1.9 2.8 5.3 4.6 FY1992 1.1 0.1 1.6 1.3 0.2 2.1 FY1991 0 3.6 FY1990 3 3.3 FY1989 6 1.4 0.5 1.4 0.7 5.5 1.6 1.7 1.4 1.5 8.9 9.2 1.4 0.9 1.5 1.0 1.7 1.1 1.6 1.2 6.6 6.7 6.9 7.2 8.0 FY2006 7.5 10.1 FY2005 9 9.6 FY2004 12 Systems and other management contracts FY2003 Software development, program production FY2002 (trillion yen) FY2001 15 1.6 Source: Survey of Selected Service Industries (Ministry of Economy, Trade and Industry) The post-FY2008 decline in production continues for information and communication equipment and electronic parts and devices. Beautiful earth & Happy life 4 Japanese Electrical Electronic and Information Union State of the Electrical Industry (4) Electrical Industry Performance and Management Indicators Performance Trends and Forecasts (consolidated) for Companies with Central Unions in Spring Offensive 0 9.3 3.3 30 50.5 44.1 20.9 39.0 17.1 15.6 14.3 13.0 48.5 46.0 44.4 43.4 42.2 40 20 (100 billion yen) (trillion yen) 2.8 2.6 7.3 6.1 40.8 39.3 10 0.6 0 -1.5 (20) -6.6 Sales (left axis) -9.5 Current profit (right axis) FY2011 FY2010 (30) FY2009 FY2007 FY2006 FY2005 FY2004 FY2008 -23.7 (60) FY2003 (10) (20) Operating profit (right axis) FY2002 20 10.8 10.9 6.4 8.0 -1.4 (40) 38.0 15.5 FY2012p 60 Note: US GAAP-adjusted operating profit is calculated as profit before taxes. FY2012 projections (p) are current as of February 13, 2013. Source: Company financial statements In FY2011, sales declined 3.7% year-on-year to 39.2686 trillion yen and operating profit fell nearly 30% year-on-year. As for profits and losses for this term, the slump in semiconductor and flat-screen TV businesses along with large-scale corporate restructuring resulted in a loss of 659.3 billion yen. With continued corporate restructuring expenditures expected, 2012 losses are projected to top 2011 losses at around 952 billion yen. Central unions in Spring Offensive: Hitachi, Panasonic, Toshiba, Fujitsu, Mitsubishi Electric, NEC, Fuji Electric, Sharp, Oki, Pioneer, Yaskawa Electric, Meidensha (Panasonic Electric Works included until FY2003; Sanyo included until FY2008) 5 Beautiful earth & Happy life Japanese Electrical Electronic and Information Union State of the Electrical Industry (5) Electrical Industry Performance and Management Indicators (2) 8 Profit Margin on Sales for Companies with Central Unions in Spring Offensive (consolidated) (%) 6 4 2 0 -2 -4 Operating profit margin -6 Current profit margin 営業利益率 当期利益率 FY2012p FY2011 FY2010 FY2009 FY2008 FY2007 FY2006 FY2005 FY2004 FY2003 FY2002 -8 Note: US GAAP-adjusted operating profit is calculated as profit before taxes. Source: Company financial statements Over the last 10 years, operating profit margin across the electrical industry in Japan has trended in the 2-3% range. Current income margins recovered in FY2009 and 2010 because of restructuring carried out in FY2008. However, due to the Great East Japan Earthquake, the huge yen appreciation, and the slump in TV and semiconductor production, current profit margins have begun to decline again since 2011. 6 Beautiful earth & Happy life Japanese Electrical Electronic and Information Union State of the Electrical Industry (6) Electrical Industry Imports/Exports Trends in electrical and electronics industry import and export totals 5.3 5.0 5.3 10 6.2 5 4.7 4.1 6.2 5.6 3.0 8.1 6.7 5.8 5.4 13.7 4.6 2.7 2.3 7.1 6.8 3.2 3.5 3.3 9.5 2.3 8.5 10.0 9.8 2.5 2.1 4.8 4.8 2.3 6 5.0 4.8 4.8 2.2 2.6 3.2 2.8 2.3 2.7 2.8 4.4 3.9 3 FY2011 FY2010 FY2009 FY2008 FY2007 FY2006 0 FY2005 0 9 10.2 FY2011 13.8 6.6 15.1 11.4 FY2010 16.0 10.9 FY2009 5.9 6.6 12 Electronic parts/devices FY2008 15 20.1 Information/communicatio ns equipment FY2007 16.7 18.4 Electrical machinery FY2006 20 15 <Imports> (trillion yen) FY2005 25 <Exports> (trillion yen) Source: Ministry of Finance Trade Statistics FY2011 exports in the electrical and electronics industry totaled 13.7162 trillion yen (a 9.5% year-on-year decrease) with a drop for information/communications equipment and electronic parts/devices, due to such factors as the slowdown in emerging economies influenced by monetary tightening, indirect effects from the European recession caused by the sovereign debt crisis, the worldwide downturn in informationrelated demand, and lagging international competitiveness due to the high yen appreciation. Imports totaled 9.7796 trillion yen (a 2.4% year-on-year decrease) with some increase in products related to disaster recovery efforts. 7 Beautiful earth & Happy life Japanese Electrical Electronic and Information Union State of the Electrical Industry (7) Trends in Electrical Industry International Sales Ratios 80 International sales ratios (consolidated) (trillion yen) (%) International sales (left axis) 海外売上高(左軸) Domestic sales (left axis) 国内売上高(左軸) International sales ratio (right axis) 海外売上高比率(右軸) 70 60 50 41.57 40 30 たて棒グラフエリア 20 10 27.4 FY2012 FY2011 FY2010 FY2009 FY2008 FY2007 FY2006 FY2005 FY2004 FY2003 FY2002 FY2001 FY2000 FY1999 FY1998 FY1997 FY1996 FY1995 FY1994 0 100 90 80 70 60 50 40 30 20 10 0 Source: Produced by JEIU from company press releases As a long term trend, international sales have comprised an increasingly large portion of sales for electrical companies. 2011 figures show that international sales have overtaken sales within Japan at Toshiba (54.5%), Sharp (51.9%), and Yaskawa Electric (53.4%). Overall the international sales ratio is 41.6%. 8 Beautiful earth & Happy life Japanese Electrical Electronic and Information Union State of the Electrical Industry (8) Challenges for the Electrical Industry in FY2012 (1) (1) Trends in semiconductor business Semiconductor production indices (seasonally adjusted) 200 2005＝100 Nov. 2008 400 150 300 Semiconductor inventory-sales ratio indices (seasonally adjusted) 350 2005＝100 Nov. 2008 250 200 100 150 100 50 50 0 05/04 05/10 06/04 06/10 07/04 07/10 08/04 08/10 09/04 09/10 10/04 10/10 11/04 11/10 12/04 12/10 13/04 0 Source: Indices of Industrial Production (Ministry of Economy, Trade and Industry) Periods of production increase and steady inventory Note: Semiconductor = microcontroller + logic + memory + CCD Periods of steady production and inventory increase Periods of production decline and steady inventory Affected by the downturn in demand for information-related equipment following the global recession and the drop in prices due to large supply of LCD panels and other electronic parts and devices from emerging countries, the slump in semiconductor business continues. 9 Beautiful earth & Happy life Japanese Electrical Electronic and Information Union State of the Electrical Industry (8) Challenges for the Electrical Industry in FY2012 (2) (2) Restructuring of TV business Shipment volume (flat-screen TVs) 5000 4000 Consumer price index (TVs) (x 1,000 units) 200 ←Eco Point system→ (May 2009-March 2011) 3000 Switch to digital terrestrial broadcasting 2000 (July 2011 in all but 3 prefectures) 150 ←Eco Point system→ (May 2009-March 2011) Switch to digital terrestrial broadcasting 100 (July 2011 in all but 3 prefectures) 50 1000 13/06 13/01 12/08 12/03 11/10 11/05 10/12 10/07 10/02 09/09 13/06 13/01 12/08 12/03 11/10 11/05 10/12 10/07 10/02 09/09 09/04 Source: Japan Electronics and Information Technology Industries Association (JEITA) 09/04 0 0 Note: 2005 = 100 Source: Ministry of Internal Affairs and Communications Statistics Bureau During the Eco Point promotion period, TVs shipped about 40 million units (equivalent to 2-3 years’ demand). During this period, both TVs and related parts fell in price. Companies foresaw falling product prices and future demand trends and announced restructuring of their TV businesses one after another. 10 Beautiful earth & Happy life Japanese Electrical Electronic and Information Union State of the Electrical Industry (8) Challenges for the Electrical Industry in FY2012 (3) (3) Trends in energy prices Unit prices for fossil fuel imports Fossil fuel import totals 24,000 (x 100 million yen) (yen) ガス類 Gas 20,000 Crude oil/ 原油・粗油 raw oil 120,000 Post-March 2011 100,000 Post-March 2011 Coal 石炭 80,000 12,000 60,000 40,000 4,000 20,000 0 0 10/04 10/06 10/08 10/10 10/12 11/02 11/04 11/06 11/08 11/10 11/12 12/02 12/04 12/06 12/08 12/10 12/12 13/02 13/04 13/06 8,000 石炭(円/t) Coal (yen/t) 原油・粗油(円/kl) Crude oil (yen/kl) Gas (LPG) (yen/t) ガス(ＬＰＧ)(円/t) Gas (LNG) (yen/t) ガス(ＬＮＧ)(円/t) 10/04 10/06 10/08 10/10 10/12 11/02 11/04 11/06 11/08 11/10 11/12 12/02 12/04 12/06 12/08 12/10 12/12 13/02 13/04 13/06 16,000 Source: Trade Statistics (Ministry of Finance) With the growing global demand for fuels, procurement costs are projected to increase over the long term. However, because of the future yen exchange rates and trends in overseas demand, the actual circumstances are unpredictable. Meanwhile, roughly 80% of Japan’s crude oil and LPG imports pass through the Strait of Hormuz, so we must pay attention to the situation in the Middle East and North Africa. 11 Beautiful earth & Happy life Japanese Electrical Electronic and Information Union
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