{"id":15667,"date":"2018-11-26T11:00:25","date_gmt":"2018-11-26T11:00:25","guid":{"rendered":"https:\/\/one.sightlinemg.com\/defensenews\/uncategorized\/2018\/11\/26\/japan-at-a-crossroads-whats-keeping-its-defense-industry-from-growing\/"},"modified":"2026-08-07T21:30:57","modified_gmt":"2026-08-07T21:30:57","slug":"japan-at-a-crossroads-whats-keeping-its-defense-industry-from-growing","status":"publish","type":"post","link":"https:\/\/one.sightlinemg.com\/defensenews\/industry\/2018\/11\/26\/japan-at-a-crossroads-whats-keeping-its-defense-industry-from-growing\/","title":{"rendered":"Japan at a crossroads: What\u2019s keeping its defense industry from growing?"},"content":{"rendered":"\n

MELBOURNE, Australia \u2014 Japan is facing what appears to be an increasingly difficult choice, between a desire to keep its domestic defense industry in business, and getting more value for its defense spending while introducing much-needed capabilities by buying foreign off-the-shelf systems.<\/p>\n\n\n\n

This conundrum comes as the U.S. ally continues to warily eye nearby China\u2019s military buildup and North Korea\u2019s missile and nuclear programs.<\/p>\n\n\n\n

Japan\u2019s defense industry<\/a> came to being soon after the end of World War II, as it attempted to rebuild its shattered economy. According to Corey Wallace, a postdoctoral fellow at the Graduate School of East Asia Studies at Germany\u2019s Freie Universit\u00e4t Berlin, Japan adopted what was known as kokusanka \u2014 a conscious and systematic attempt to domesticate technologies that Japan would need for an autonomous defense-industrial base.<\/p>\n\n\n\n

Through licensing agreements and other methods of technology transfer and acquisition, the Japanese government in the post-war period identified the most important platforms it thought it needed and tried to domesticate them. Today, Japan\u2019s local industry produces all of the country\u2019s warships and submarines, albeit fitted with important systems like the Aegis combat system, radars and missiles from the United States as well as most of its land warfare systems.<\/p>\n\n\n\n

Despite these capabilities, there are a number of hurdles for Japan\u2019s defense-industrial base. Chief among these is the relatively small, domestic market that drives up unit prices as well as Japan\u2019s own set of unique requirements that sometimes create a bespoke product difficult to market overseas.<\/p>\n\n\n\n

The small, domestic market has also meant there is little competition. And when the price of a product is determined by what Japanese newspaper Asahi Shimbun calls the \u201ccost calculation method,\u201d in which a contractor\u2019s profit is added to the prime cost that also includes that of materials and labor, it can lead to \u201can open invitation for soaring costs as contractors have few incentives for suppressing the prime cost.\u201d<\/p>\n\n\n\n

An example of this is the C-2 airlifter. Since 2016, Japan has ordered a total of seven C-2 aircraft out of an eventual requirement of 40. This slow production rate means the C-2 costs about $201 million per aircraft, according to the latest budget request from Japan\u2019s Defense Ministry, which has asked to procure two aircraft in the next fiscal year.<\/p>\n\n\n\n

This, coupled with the need to focus on the expensive missile defense systems against the North Korean ballistic missile threat, has put Japan\u2019s defense budget under strain, to the point that earlier this year Japan\u2019s Finance Ministry reportedly took the unorthodox step of urging its defense counterpart to consider the option of acquiring a cheaper airlifter instead of the C-2.<\/p>\n\n\n\n

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A Japan Air Self-Defense Force Kawasaki C-2, assigned to the 403rd Tactical Airlift Squadron of Miho Air Base, takes off at Yokota Air Base, Japan, on Sept. 17, 2018. (Yasuo Osakabe\/U.S. Air Force)<\/figcaption><\/figure>\n\n\n\n

Given recent developments in the geopolitical and domestic industrial sphere, Japan has turned to what Wallace calls \u201cselectivity and concentration\u201d \u2014 the country accepts that its defense-industrial base cannot achieve absolute autonomy, particularly in areas like fighter jets and ballistic missile defense, where international cooperation is necessary in the development process.<\/p>\n\n\n\n

Foreign partnerships<\/b><\/p>\n\n\n\n

Cooperation with a foreign partner appears to be the way Japan is proceeding with two key aerospace programs: the development of a new air-to-air missile and its next fighter jet.<\/p>\n\n\n\n

Japan is developing the Joint New Air-to-Air Missile, which will marry the active electronically scanned array radar seeker of Japan\u2019s AAM-4B air-to-air missile with the European MBDA Meteor ramjet-powered beyond-visual-range air-to-air missile.<\/p>\n\n\n\n

The missile is intended for use by the Japan Air Self-Defense Force, but the program appears to be on a long timeline. Reports indicate no technical work has been done, and the first prototypes are planned to be ready for test shots after April 2022, with a decision following on whether to go ahead with the program.<\/p>\n\n\n\n

With regard to its next-generation fighter jets, following a request for information from several overseas manufacturers earlier this year, Japan is reportedly studying the feasibility of a joint development program. Local media has tracked the story, although official information is scant pending the release of Japan\u2019s five-year midterm defense plan later this year.<\/p>\n\n\n\n

It\u2019s widely expected Japan will link up with a foreign partner for the development, however some are holding out hope for a wholly domestic fighter program despite the risks and higher costs involved. Japan has not locally built fighters since Mitsubishi F-2s rolled off the line in 2011.<\/p>\n\n\n\t