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Innovative ICT Industrial Architecture in East Asia pp 79–97Cite as

Offshoring of Engineering Labor in Japanese Manufacturing SMEs: Evolution of the “Comprehensive Offshoring” Model

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Part of the book series: New Frontiers in Regional Science: Asian Perspectives ((NFRSASIPER,volume 17))

Abstract

While offshoring provides a significant opportunity for industrial development in emerging economies, it has been a quite controversial issue for developed economies mainly because of its impact on employment, especially of knowledge-intensive jobs. Although some data show the increase of the amount and extent of work that is relocated from Japan to emerging economies, little is known about the offshoring of high-value-added jobs including engineering labor. It is in this context that this chapter addresses two related questions by examining Japan’s die and mold industry: (1) To what extent do Japanese firms relocate jobs to emerging economies, and (2) why are Japanese firms engaging in offshoring more than ever? We argue that the offshoring practice has been evolved from partial offshoring to comprehensive offshoring and explore forces behind this evolution.

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Notes

  1. 1.

    I follow the definition of “offshoring” given in Chap. 1 (Hirakawa) of this volume. Offshoring is divided into “captive offshoring,” in which work is relocated to foreign affiliates of that company, and “offshore outsourcing,” in which work is relocated to other firms located in foreign countries. According to Tomiura (2014), 39.1 % of offshoring by Japanese firms consisted of captive offshoring in 2007.

  2. 2.

    Fragmentation itself is not a new phenomenon and has significantly influenced the international division of labor since the 1970s. For example, Frobel et al. (1981) analyzed how and why manufacturing activities in advanced economies have relocated to latecomer economies and how this relocation affected advanced economies.

  3. 3.

    Brown et al. (2011) defined digital Taylorism as “translating the knowledge of managers, professionals, and technicians into working knowledge by capturing, codifying, and digitalizing their work in software packages, templates, and prescripts that can be transferred and manipulated by others regardless of location” (p. 72).

  4. 4.

    In the analysis, engineers predict possible problems that might arise when the dies and molds are used to produce parts, during which CAE tools are used (Aoyama 2011).

  5. 5.

    Competent engineering firms are much more densely populated in Japan than in Vietnam. In a survey conducted by the Japan External Trade Organization (JETRO), while 22.9 % of the respondents answered “yes” when asked whether they would decide to invest in Thailand because of the dense clustering of engineering firms, only 1.9 % answered “yes” when the same question was asked of the investment in Vietnam (JETRO 2013, A Survey on Business Activities of Japanese Firms in Asia and Oceania).

  6. 6.

    This case is comparable to that of the semiconductor foundry firms in Taiwan. Tokumaru (2005) argued that they were not merely low-value-added, cheap manufacturers, but high-value-added integrators between design and production. Although it was true that they specialized in manufacturing chips and chips were designed by customers, they also had the design capabilities to provide customers with design services that were completely adapted to their manufacturing technologies. It is in this sense that they provided not only the production capacity but also integration capacity, which was needed because the decoupling between design and production was far from perfect in the semiconductor industry then, as in the case of the die and mold industry.

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Authors and Affiliations

  1. Nagoya Institute of Technology, Nagoya, Japan

    Norio Tokumaru

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  1. Norio Tokumaru
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Correspondence to Norio Tokumaru .

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Editors and Affiliations

  1. Kokushikan University , Tokyo, Japan

    Hitoshi Hirakawa

  2. Osaka City University, Osaka, Japan

    Nobuhiro Takahashi

  3. Temple University, Tokyo, Japan

    Ferdinand C. Maquito

  4. Nagoya Institute of Technology, Nagoya, Japan

    Norio Tokumaru

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Tokumaru, N. (2017). Offshoring of Engineering Labor in Japanese Manufacturing SMEs: Evolution of the “Comprehensive Offshoring” Model. In: Hirakawa, H., Takahashi, N., Maquito, F., Tokumaru, N. (eds) Innovative ICT Industrial Architecture in East Asia. New Frontiers in Regional Science: Asian Perspectives, vol 17. Springer, Tokyo. https://doi.org/10.1007/978-4-431-55630-5_4

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