There was an interesting & thought provoking article in Reuters this past week that focused on challenges for Japan’s manufacturing industry. With manufacturing being a key element of the Japanese economy, anything that moves a bit in that sector can be cause for concern.

The article focuses on the lack of growth and development in the workforce which in turn looks like it is affecting the structure of the manufacturing industry. While the issue of human talent development is something all industries are concerned about these days, it appears this may be a foundational, structural issue in Japan.

To understand the impact here, we took a look at the Global 5000 data for the manufacturing industry across the globe and then specifically for Japan and it is clear that Japan relies on manufacturing than most of the world.

Here’s the picture (in numbers):

  • Across the rest of the globe (non-Japanese located companies), for the Global 5000 database companies, manufacturing represents 17% of the companies and the revenue.
  • For the Japanese based firms, manufacturing represents 37% of the revenue and 26% of the companies.

Data shows us 2 things — manufacturing means more to Japan’s industry and it is the big firms that drive that revenue.

Therefore any shaking of the foundation can have significant ripples throughout the country.