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Economy

Dour global economy turning a corner

TOKYO -- Economic growth in the U.S. and China is slowing down. The future direction of global capital investment is therefore a major focal point for the machine tool sector. In a recent interview with The Nikkei, Yoshiharu Inaba, president of Fanuc, a major maker of industrial robots and numerical control units -- the "brain" of machine tools -- spoke about the present situation and prospects for the industry.

Q: The economy of China, the world's largest machine tool market, is losing steam. What is your take on this?

A: The performance of the Chinese market is very uneven. Demand from customers in information technology, especially smartphone makers, remains steady. The segment of medium and large-size machines underwent difficult times over the past two years though. We expect demand for such machinery to bounce back in one or two years, now that investments in infrastructure facilities such as railways have begun to gain momentum.

Yoshiharu Inaba

    

     Growth in India's machine tool sector has been slower than expected. The biggest problem in India is that the country lags behind in the development of key infrastructure, such as roads. But India will eventually grow into the world's second-largest market after China. So we are preparing for the future by expanding our Indian base quickly.

Q: Are you concerned the U.S. economy will experience temporary stagnation?

A: The U.S. is the largest market for industrial robots in the world. There is strong demand for robots from the automotive and aerospace manufacturing industries. But in parts of the U.S. where drilling operations for shale gas have been halted, the moves have had a negative impact on our performance. However, overall, U.S. demand remains fairly high.

Q: Do you think the European economy is recovering?

A: Although the economy has been in poor shape for a long time, the auto sector has recently begun to regain some vigor. German automakers Volkswagen and BMW have resumed investments in plants and equipment.

     When it comes to industrial robots, we have received a large number of inquiries from German customers and some from French and Italian companies. Most of them want to install robots on recently extended production lines. We intend to improve specifications for numerical control units used in machine tools to meet European standards. 

Q: It is difficult to determine whether capital spending by Japanese companies is steady or weak.  

A: Approximately 20% of the machine tools produced domestically remain in Japan. Until recently, Japanese companies had been encouraged to boost capital spending thanks to tax breaks that aimed to spur investment. Their increased spending has begun to translate into higher demand for machinery, this could give a bit more impetus to the machine tool market. Unfortunately, however, the domestic robot market remains almost flat, with only modest growth.

     If manufacturers of finished goods, such as automobiles and consumer electronics, shift production from Japan overseas, their parts suppliers have no choice but to follow suit by starting production abroad. Consumer electronics makers are tending to streamline production in Japan, and automakers seem to have little interest in extending their domestic manufacturing lines. In such a situation, parts suppliers find it very difficult to raise their production capacity at home.

Q: Do you think the current dollar-yen exchange rate is acceptable?

A: If the yen weakens further against the dollar, we will suffer a terrible backlash. It would be appropriate for the Japanese currency to hold steady at present levels.

Q: In the U.S. and European countries, debate is heating up over the roles and benefits of robots. Some argue that these machines enhance productivity; others say they take over human jobs.

A: Robots should be considered useful tools that can make our lives easier, richer and reduce the burden of human labor. Utilizing robots makes it possible for human workers to handle higher value-added jobs in less time than before. The notion that robots will take jobs away from humans does not make sense. There are numerous jobs that require human involvement.

Interviewed by Nikkei senior staff writer Shigeru Seno

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