News Japanese companies employing second-oldest equipment in G7

[thomas]

According to a study by the Cabinet Office, Japanese companies rely on some of the oldest equipment among the G7 economies, underscoring the need for fresh investments to enhance productivity. As of 2019, the average age of Japanese capital stock, which includes factory equipment and software, stood at 11.8 years. This figure was the second-highest among G7 nations, trailing only Italy's 13.3 years. In contrast, the United States boasted the newest capital stock within the group, with an average age of 9.7 years. Interestingly, Japan's capital stock was once the most modern among the G7, averaging 7.9 years back in 1991. However, following Japan's asset-price bubble burst, Japanese companies became cautious about borrowing money for capital expenditures.

Of domestic investments planned by Japan's leading manufacturers in fiscal 2023, 26.5% were going toward maintaining and updating existing facilities, the Development Bank of Japan reports. This figure has grown over the decades, from 9.4% in fiscal 1990 to 14.8% in fiscal 2000. [...] Sluggish investments also have led Japan's capital equipment ratio -- the value of capital stock per worker -- to shrink, even with the country's population declining. According to Cabinet Office data, the figure came to $225,000 as of 2019, the lowest among the G7. It had been trending upward into the early 2000s but began to fall after reaching $242,000 in 2009. In comparison, the 2019 figure in France came to $345,000, while the U.S. stood at $272,000. Rising material and labour costs are hampering Japanese investment. Some companies are suffering delays in planned construction projects due to worker shortages.

Paywall alert:

Japanese companies stuck with second-oldest equipment in G7

Productivity breakthrough hinges on fresh burst of capital spending

asia.nikkei.com