TOKYO -- Canon will build a new digital camera plant in southwestern Japan as part of an effort to bring back production from abroad, the company said Friday.
Many manufacturers have shifted production out of Japan to capitalize on cheaper labor abroad and in the face of a strong yen, which erodes the profitability of exports from the country. Advanced automation technology is seen as key to moving production back home.
The new plant, to be situated in Takanabe, Miyazaki Prefecture, will require an investment of about 23 billion yen ($213 million). Construction is scheduled to begin next August, with a targeted opening a year later.
The facility, largely automated with robots and artificial intelligence, will make single-lens reflex and mirrorless digital cameras. This is the company's first mass production facility to be built in Japan in 10 years or so.
"We had been honing production technologies so we could return [to Japan] in the future," CEO and Chairman Fujio Mitarai said in a press conference Friday evening in Miyazaki, highlighting the company's decade-long automation efforts finally coming to fruition.
Canon positions an Oita Prefecture plant, which Mitarai calls "the brain," as the hub of automation. More than 70% of the processes there are estimated to be handled by robots. The company plans to apply the technological expertise nurtured there to other facilities in Nagasaki Prefecture and elsewhere. The new Miyazaki plant will boast a more complete version of automated facilities.
Many Japanese manufacturers are now focusing on bolstering production at home, as rising labor costs in other parts of Asia make producing abroad less attractive. Even amid the headwind of a strong yen, domestic output supported by robots and AI could yield adequate profits.
In an interview with The Nikkei, Mitarai said the main purpose of shifting production back to Japan is to maintain employment.
"It is vital to enhance production technologies in order to survive the wide swings of foreign exchange rates," he said, noting that the company now makes around 40% of digital-camera models in automated facilities and seeks to expand this to all models by around 2020.
Canon currently makes 64-65% of its cameras in Japan, and the new plant will raise the figure to around 70% Mitari indicated, adding that the remaining 30% are entry-level models. The electronics company had previously made high-end models in Japan, and the mid-range varieties are now coming back home. "The technologies we have now enable us to generate enough profit even when the forex rate is 100 yen per dollar," he said.
Manufacturers around the world are taking similar steps. Sportswear maker Adidas, for instance, is building cutting-edge automated plants in the U.S. and its home country of Germany to move some production from Asia.
Because of the high level of precision required, digital cameras is a segment that has generally lagged in automating production. Canon appears to be the only manufacturer that widely employs mechanized processes.