Steel town to space world: Restructuring and adjustment in Kitakyushu city

Heavy industries such as steel, chemicals, shipbuilding, and other forms of metal fabrication played a critical role in propelling economic growth in Japan between the 1950s and 1970s (Kosai 1986). Annual steel production, for example, grew from 10 million metric tons in 1955 to 120 million tons in 1973, while the gross tonnage of ships built jumped from 829,000 to 15.7 million over the same period. I As domestic and export demand for the products of Japan's heavy industries expanded in the immediate postwar decades, there was massive investment in new plant and equipment. Government (especially MITI-the Ministry for International Trade and Industry) was closely involved in the reconstruction, development, and expansion of these industries (Johnson 1982). However, heavy industries in Japan have now undergone, or are undergoing, fundamental restructuring. In steel, shipbuilding, aluminum, and chemicals, a first wave of adjustment began in the 1970s in response to higher energy prices, the emergence of competition from developing countries, and the general slowdown of economic growth in Japan (Saxonhouse 1979). Heavy industries experienced excess capacity and declining profits, leading to transfers of existing employees to other companies, reductions in new hires, and cutbacks in temporary workers. In the 1980s, further phases of adjustment occurred. Protectionism in export markets grew, domestic demand patterns shifted, and competition from other Asian countries intensified. The sharp increase in the value of the yen in 1986 (endaka) further compounded the problems facing heavy industries, raising the relative costs of production in Japan vis-a.-vis other countries. Throughout Japan, areas of heavy industry have experienced plant rationalizations and employment reductions. One of the areas most affected by heavy industry restructuring is Kitakyushu, an industrial city of just over 1 million people located in northern Kyushu (the most western of the four main islands of Japan). Kitakyushu City was formed in 1963 through the merger of five smaller cities: Moji, a port city and one-time gateway to the island of Kyushu; the former castle town of Kokura, founded around 1600; the industrial city of Yawata; the coal port of Wakamatsu; and the industrial city and port of Tabata. Kitakyushu is home to the huge Yawata Steel Works, originally built by the Japanese government at the turn of the century and now owned by Nippon Steel, the world's largest steel company. Other material-processing and resource-intensive industries in the city include chemicals, cement, glass, ceramics, and fabricated metals (Table 10.1). Kitakyushu's boundaries extend 32.5 kilometers east to west and 33.5 kilometers north to south, but much of the southern part of the city is taken up by low, undeveloped mountain ranges. To the north and east are flatlands facing the sea. Heavy industrial and port facilities have been developed in the northern coastal zone, often on reclaimed land (see Map 10.1). The residential sector lies between the coastal industrial zone and the mountains to the rear, stretching in a narrow east-to-west line. Kokura is the main commercial hub; smaller commercial districts are found in the cores of the four other formerly independent cities and in the newer suburbs that have developed in the south and west. Kitakyushu and its surrounding region is known as the North Kyushu Industrial Zone and is one of Japan's four major industrial districts, the others being Keihin (Tokyo-Yokohama), Hanshin (Osaka-Kobe), and Chukyo (Nagoya) (Noh and Kimura 1989). In recent years, the North Kyushu Industrial Zone has declined in importance due to the faster growth of industrial areas elsewhere in Japan, including other cities and "greenfield" technology centers in Kyushu. A generation ago, Kitakyushu was the largest employment and population center in Kyushu. But over the last two decades, the prefectural capital of Fukuoka City, about fifty kilometers to the southwest, has gained a greater share of the region's new jobs in light manufacturing industries, business services, and administration and now easily surpasses Kitakyushu in population. 2 Kitakyushu has developed diversified general machinery, electrical machinery, and food-processing industries, and has attracted a few hightechnology electronics and robotics factories. But the city still largely depends on its traditional heavy-industrial and materials base. As heavy industries have undergone restructuring and reductions in labor force, Kitakyushu's employment foundation and economic position have been weakened (Shimodaira 1989). Kitakyushu's largest employment declines have occurred in the old, heavy-industrial core districts of Yawata, Moji, Tobata, and Wakamatsu (Table 10.2). By far the largest industrial employer in Kitakyushu-and the source of the city's greatest loss of jobs-is Nippon Steel. The company's Yawata Works, which include the original Yawata plant, the newer and nearby Tobata plant, and accompanying processing, storage, and dock facilities, dominates the center of the city (Map 10.1). An extensive network of smaller companies and contractors in Kitakyushu support, and rely on, Nippon Steel. This essay explores Nippon Steel's restructuring strategies and their effects on the Yawata Works, its work force, suppliers, and the city. Five major topics are discussed: The development of the Yawata Works; subcontracting at Yawata; Nippon Steel's restructuring strategies; work force and supplier adjustment; and implications for the Yawata Works, Kitakyushu City, and local economic development. Nippon Steel is pursuing a mix of restructuring strategies, including the'rationalization of capacity, reinvestment in new technologies, and diversification into new areas of business. These strategies have resulted in cutbacks in employment at the Yawata Works and among suppliers, as part of an overall corporate reduction of the labor force. While unionized workers have been spared involuntary redundancies, they have experienced early retirement and transfers to other companies and locations. Nonunion and subcontract workers have had far less protection. Unemployment has increased in Kitakyushu, although joblessness has not reached anything like the massive levels seen in similar cities in the United States or Europe (e.g., Pittsburgh or Sheffield) during the restructuring of their heavy industries in the early 1980s. Kitakyushu's experience suggests that the worst fears in the period immediately following endaka about the demise of Japanese basic industry and the "hollowing out" of the economy have not been realized. But older, peripheral heavy-industrial areas such as Kitakyushu have been disproportionately affected by industrial restructuring. There continue to be serious concerns about the economic and social consequences of industrial change in Kitakyushu, and it is by no means clear that central, local, and private economic strategies are succeeding in developing good new jobs to replace lost industrial employment. © 2009 by Temple University Press. All rights reserved.