With Japan scaling back its defense budget, it is important to understand how the country spends its money. One of the areas often forgotten by general observers is the sheer cost at which Japan purchases its hardware.
Japan pursues an informal policy of building whatever it can within the country, either through domestic research and development or increasingly under license. As a recent Japan Security Watch post discussed, there is a very good reason for this: it allows Japan’s defense industry to maintain and develop the skills necessary for a somewhat independent production capability. However, developing hardware for a relatively small military force without the option of exporting it to foreign armies means that the government must shoulder the cost. JSW‘s very own Kyle Mizokami explored the big difference in cost between Japanese and US equipment back in September – this post will briefly look at the general picture… and it’s not good.
Take the following table from Toshiyuki Shikata’s fantastic Omoshiroi hodo yoku wakaru: jieitai:
|Name||Approx. estimated cost (¥, circa FY2007)||Name||Approx. estimated cost (¥, circa FY2007)||Form of production|
|Main battle tank||M1A1||¥500 mil||Type-90||¥800 mil||Domestically produced|
| Tracked armored personnel carrier
||M2||¥360 mil||Type-89||¥700 mil||Domestically produced|
| Wheeled armored personnel carrier
||LAV-25||¥70 mil||Type-96||¥125 mil||Domestically produced|
||P-3C||¥4,320 mil||P-3C||¥10,000 mil||Manufactured under license|
| AEGIS destroyer
||Arleigh Burke-class||¥120,000 mil||Kongo-class||¥120,000 mil||Hull: domestically produced
AEGIS system: imported
| Fighter aircraft
||F-16C||¥3,580 mil||F-2||¥12,000 mil||Manufactured under license|
||C-130H||¥1,690 mil||C-130H||¥5,000 mil||Imported|
We can see from the table that the approximate estimated cost of a domestically produced item is generally 70% more expensive for Japan than comparable (or arguably better) products in the US. Items made under license (from US companies) generally cost 180% more than if bought by the US. While it is impossible to tell for sure how much of a premium Japan is paying simply from the items above (which might have been cherry-picked to demonstrate the disparity), they do indicate a pattern.
The US, the world leader in defense technology and production, has many more economies of scale than Japan. For the US, domestically-made products make not only strategic sense, but economic sense too. With so much capital invested in the production of defense products, the US benefits heavily from economies of scale that Japan just cannot compete with. Plus, many US-produced defense solutions will go on to be sold to third-nations, spreading the costs to the developer and adding to the research and development funds. The same cannot be said for Japan.
With a shrinking budget and a shrinking economy, this costly disparity means that every unserviceable SDF equipment carries a heavier cost relative to their US brothers-in-arms. Equipment has to last far longer to be cost-beneficial, and this leads to aging fleets (mirroring, one might say, the Japanese population in general). This is doubly true as Japan is looking to upgrade or replace a number of systems within the ASDF – airplanes don’t come cheap. This is partly why the Ministry of Defense has sought to reduce the size of the GSDF – which is generally seen as cannon fodder to the bureaucratic bean counters in the Ministry.
A former contributor to World Intelligence (Japan Military Review), James Simpson joined Japan Security Watch in 2011, migrating with his blog Defending Japan. He has a Masters in Security Studies from Aberystwyth University and is currently living in Kawasaki, Japan.
His primary interests include the so-called 'normalization' of Japanese security (i.e. militarization), and the political impact of the abduction issue with North Korea.
James Simpson has 254 post(s) on Japan Security Watch