Okinawa manufacturers strive for growth by overcoming disadvantages

The Yomiuri Shimbun
A Takunan Steel Co. employee checks rebar at the company’s plant in Okinawa City on Jan. 5.

Okinawa’s tourism industry, which has long been the main driver of the prefecture’s economy, has been hit hard by the outbreak of the novel coronavirus. This has created the challenge of having to diversify the entire industrial structure of the prefecture. Its manufacturing industry is striving to grow by overcoming perceived disadvantages, such as being far from the main islands of Japan.

Many people are wondering whether the prefecture will be able to secure a foothold and make great strides this year, the 50th anniversary of Okinawa’s return to Japan.

Changing perspective

The distance from the main islands of Japan is being turned into an advantage by companies in Okinawa who have changed their perspective.

The Yomiuri Shimbun

Takunan Steel Co., the only iron manufacturing company in the prefecture, has about 200 employees. The company was established in 1956 as a rebar manufacturer using steel scraps from battleships and other structures that were wrecked in World War II.

On a visit in January to Takunan Steel’s main plant in Okinawa City, freshly manufactured rebar were being lined up.

These rebar are mainly shipped for the construction of condominiums in the prefecture.

A major concern for the company was that when a machine in the factory broke down, the firm had to ask someone from another prefecture to come and repair it, which required a lot of time. Of course, the shutdown of the equipment also affected customers who ordered the products.

As part of efforts to overcome the challenges, the company opted for doing repairs in-house. Over the years, staff at the firm have mastered the know-how required for repairs and are now able to handle most problems.

“We’ll continue to manufacture in Okinawa,” said Takunan Steel Chairman Noboru Kohatsu.

Enrich Food Manufacturers Inc. is headquartered in a special economic zone called the international logistics hub industrial cluster in Uruma. An entity in Nara moved its factory for frozen foods and other products to Uruma when it established Enrich Food Manufacturers in 2015, with the aim of strengthening exports of frozen sushi.

Although the cost to ship to other prefectures is higher, the frozen items can be delivered to Asian nations faster.

100 times less

Okinawa was administered by the United States after World War II, and returned to Japan in 1972. However, compared to other prefectures where the foundations of manufacturing developed during the period of rapid economic growth, the manufacturing industry in Okinawa has failed to grow strongly.

According to the prefecture and various organizations, the number of manufacturing establishments with four or more employees was 1,176 in 1972. The number remained nearly unchanged at 1,113 in 2019.

In 2019, the value of shipments of manufactured goods was ¥485.9 billion in Okinawa, the lowest in the nation and made up mainly of foodstuffs. The figure was roughly one-hundredth the level of top-ranking Aichi, where the auto industry has thrived.

Tourism has long led the Okinawan economy as its resorts have grown in popularity, but the pandemic has brought about a darkening of that industry.

One of the pillars to improving employment and people’s income is the pressing need to strengthen the broad-based manufacturing industry.

Okinawa has positioned the expansion of relations with developing Asian nations as a key.

Lacking in logistics

New challenges, however, have emerged in the export of manufactured products, such as the development of an international logistics network.

NanoSystem Solutions Inc. in Uruma, a manufacturer of semiconductor manufacturing equipment, transports its products over sea and land routes to Narita Airport, over 1,500 kilometers away, for export to China and Taiwan.

The distance from Okinawa to Taiwan is about 600 kilometers, but the company is forced to make this detour because it cannot export its products from Naha Airport, as there are no packaging companies for precision instruments that meet the company’s standards.

“Okinawa is not making full use of its proximity to Asia and its high potential,” NanoSystem Solutions President Hitoshi Inazumi said.

Another concern is the prolonged spread of the novel coronavirus.

According to the Naha branch of the Bank of Japan, the diffusion index of business sentiment that indicates the business confidence of the manufacturing industry in Okinawa stood at minus 20 in the December 2021 survey.

Although the index has improved by eight points since the last survey in September, the Naha branch is wary of the future.

“Companies manufacturing food products for tourists and souvenir makers will probably be affected by the spread of infections again,” said an official at the branch.

“It is difficult to bring in or increase manufacturing companies in Okinawa just because of the advantage of its location near many Asian nations,” said Tomoo Takeda, managing director of Ryugin Research Institute Ltd. in Naha. “Looking ahead to the post-COVID era, Okinawa needs to show a concrete road map for raising the overall level of manufacturing by promoting cooperation between the public and private sectors, including logistics and other peripheral industries.”

Support system

Since Okinawa’s return to Japan, the central and prefectural governments have so far compiled promotion plans for the development of the prefecture every 10 years, aiming to correct the disparity between Okinawa and the other prefectures and build an independent economy led by the private sector.

In the sixth plan, which starts in fiscal 2022, they plan to strengthen the profitability of secondary industries such as manufacturing by securing land for industrial use to expand companies’ scale.

They have also indicated the promotion of joint research by industry, academia and government to increase the rate of materials procurement in the prefecture.

In addition, the plan will support the development of food products that meet the diverse food preferences of people in other parts of Asia to promote Okinawan industries.

In December last year, the central government decided to set aside ¥268.4 billion in the budget for fiscal 2022, which begins in April, for the promotion of Okinawa, which includes capital investment in manufacturing companies with core manufacturing technologies as a new project.