Title: Globalisation and the reorganisation of Japan's auto parts industry

Authors: Ulrike Schaede

Addresses: School of International Relations and Pacific Studies (IR/PS), University of California, San Diego, La Jolla, CA 92093-0519, USA

Abstract: One prominent feature of Japanese automobile manufacturing in the postwar period was a system of sourcing parts from closely affiliated smaller firms in long-term, stable relations. Changes in the global automobile industry have made that system too expensive. Increasing competitive pressures resulting from global excess capacity in the early 2000s have forced a transformation in the business model of the automotive industry. Modularisation and a switch to |global best sourcing| for standard parts have turned the previous logic of Japanese subcontracting on its head, as first-tier suppliers become even closer partners of large assemblers, while small firms become replaceable. Mergers and joint ventures have changed the structure of Japan|s auto part industry, resulting in larger firms that compete globally. Undergoing a transformation toward cost-cutting and increased technological capabilities in the late 1990s and early 2000s has afforded these firms a fortuitous head start in preparing for the global auto crisis of 2008/2009, which is threatening to wipe out smaller parts markers around the globe.

Keywords: subcontracting; globalisation; modularisation; transaction cost economics; TCE; Japan; automotive components; automobile industry; mergers; joint ventures; global sourcing.

DOI: 10.1504/IJATM.2010.032628

International Journal of Automotive Technology and Management, 2010 Vol.10 No.2/3, pp.270 - 288

Published online: 09 Apr 2010 *

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