Factory closures soar in Japan

The manufacturing sector's troubles have prompted job losses

Economic stagnation is prompting a growing number of factory closures in Japan, a survey has said.

The number of plants closed or mothballed in the first nine months of 2002 surged by more than one half to 187, research by the Nihon Keizai newspaper said.

The closures, by 105 firms, reflected the struggle by Japanese manufacturers to cope while the yen remains stubbornly high despite the country's economic malaise.

"The hollowing-out of the domestic manufacturing industry is advancing, causing job losses," the Nihon Keizai said.

Worst hit

The poll, of listed and unlisted firms with sales of at least 100bn yen, revealed that manufacturers of industrial materials and parts had seen their situation worsen most dramatically.

The number of firms in the sector shutting plants rose to 39, compared with 18 last year, with 79 factories shut or identified for closure in the January to September period.

The overall factory closure total also reflects the growing willingness of Japanese firms to consider moving production abroad, to areas where labour costs and overheads are lower.

"The number reflects a shift to China by makers of electronics and information and technology, who have been facing severe global price competition," the newspaper said.