What is manufacturing? Explaining its outline and types

This time, we will explain the fairly basic content of “What is the manufacturing industry ?” You probably know that it refers to a business that makes things, but I think there are surprisingly few people who know it deeply. In this section, in addition to the fundamental content of what a manufacturing industry is, we will also introduce the classification of manufacturing industries.

What is manufacturing?

Simply put, the industry that creates (creates) and sells things is called the manufacturing industry. For a more detailed understanding, the definition of manufacturing industry posted on the Ministry of Economy, Trade and Industry’s website is quoted below.

manufacturing industry

Generally referred to as “industrial”, it is defined as a business establishment that meets both conditions (1) and (2) below.

(1) Business establishments primarily engaged in the manufacturing and processing of new products

(A “new product” here does not mean a “remanufactured product.” A remanufactured product is a product that has been put on the market and returned to its original state. Also, a new product does not necessarily mean a product that has not been completed. It does not only refer to products, but also includes, for example, as-cast machine parts.

(2) Business establishments that primarily wholesale new manufactured and processed products.

In this survey, “wholesale” refers to the following operations.

• Selling to wholesalers or retailers.
• Selling products in large quantities or in large quantities to industrial users (factories, mines, construction companies, corporate agriculture, forestry and fisheries businesses, various companies, government offices, schools, hospitals, hotels, etc.).
• Selling products that are primarily used for business purposes.
  “Products primarily used for business” include office machinery and furniture, equipment for hospitals, beauty salons, restaurants, hotels, etc., industrial machinery (excluding agricultural equipment), and construction materials (wood, cement, plate glass, etc.). , Kawara, etc.).
• Handing over products to other offices belonging to the same company (other factories, sales offices, etc. of the same company).

According to this definition, not only making products but also “selling products” are essential functions of the manufacturing industry. There are no companies that just make products and don’t sell them, so this is only natural.

Position and importance of manufacturing industry in Japan

Japan’s GDP (gross domestic product) is approximately 537 trillion yen (2017). In other words, it is the profit from products and services produced by Japan over a certain period of time. Of this, the manufacturing industry accounts for around 20% of GDP. Wholesale trade, retail trade, real estate industry, construction industry, etc. each account for around 10%, so one-fifth of the profits generated by Japan as a whole is concentrated in the manufacturing industry.

Furthermore, of Japan’s approximately 65 million workers, more than 10 million are engaged in manufacturing. Based on this, it is no exaggeration to say that the manufacturing industry is the center of the Japanese economy.

Manufacturing industry classification

Even though it is simply called the manufacturing industry, there are a wide variety of fields. Japan’s economy is supported not only by automobiles and televisions, but also by all kinds of manufacturing industries. Generally speaking, the manufacturing industry is divided into three categories. There are three types: “basic materials industry,” “processing and assembly industry,” and “life-related industry.”

Basic material industry

• Wooden structures and wooden products manufacturing industry
• Pulp, paper, and paper products manufacturing industry
• chemical industry
• Petroleum products/coal product manufacturing industry
• plastic product manufacturing industry
• Rubber product manufacturing industry
• Ceramics/earthstone product manufacturing industry
• steel industry
• Non-ferrous metal manufacturing industry
• Continuous service product video industry

Processing and assembly industry

• General equipment manufacturing industry
• Electric appliance manufacturing industry
• Transportation equipment manufacturing industry
• Precision equipment manufacturing industry

Life-related industry

• food manufacturing industry
• Beverage, tobacco, and feed manufacturing industry
• textile industry
• Clothing and other textile manufacturing industry
• Furniture and equipment manufacturing industry
• Publishing/printing related industries
• Tanned leather, similar products, and fur manufacturing industry
• Other manufacturing industries

As you can see, there are a wide variety of classifications in the manufacturing industry.

What are the challenges faced by the manufacturing industry?

Japan is famous around the world as a manufacturing powerhouse, and in the past, only the products that received the highest praise in the market were distributed. However, the situation is changing rapidly. The reason for this is that due to technological innovation in developed countries and reductions in manufacturing costs in emerging countries, low-priced, high-quality products have flooded the world market, and Japan’s high-priced, ultra-high-quality products have been in trouble. It is being done.

In the past, having a product made in Japan and with ultra-high performance was a sign of status. However, with the entry of countries such as China into the market and the launch of many low-priced products, the industrial structure is about to change dramatically.

Among modern consumers, in addition to those who want high-priced, ultra-high-quality products, there is also a certain segment of consumers who want products that fit them at low prices.

So, what are the challenges faced by the manufacturing industry under these circumstances?

The list of challenges is endless, but I would like to introduce two of them first.

Shortage of human resources due to decreasing working population

As the birthrate declines and the population ages, Japan’s working population will decline. The manufacturing industry is directly affected by this. Many manufacturing industries are having difficulty securing human resources. It is easy to imagine that a shortage of human resources in the manufacturing industry that supports Japan will become a social problem.

There are several ways to solve these problems in the manufacturing industry, such as hiring foreigners and relocating factories overseas, but all manufacturing companies need to fully understand the importance of utilizing IT and decide how to improve their own processes. It is important to think about what to include. Furthermore, it is believed that the key to stopping the problem of human resource shortages lies in the use of IT.

Japan’s lagging IT utilization means it may be left behind in overseas markets

Alarm bells have been ringing for some time about Japan’s lagging behind in IT utilization. However, Japan’s IT utilization is still slow due to pride in its technological capabilities and concerns about IT implementation costs. Overseas manufacturing industries, whether large or small, are actively incorporating the latest technologies such as AI and IoT . As a result, more and more low-priced, high-quality products will be created, and Japanese manufacturing may be left behind in overseas markets. Furthermore, the manufacturing industry itself is moving in the direction of shifting from goods to services overseas. The challenge for the manufacturing industry in the future is whether it can keep up with these changes.