The Industrial Destructuring of the Japanese Aluminum Industry

Abstract

THE JAPANESE ALUMINUM INDUSTRY is in serious trouble. Its accelerating deterioration, and the resulting reordering of the industry throughout the Pacific basin, have been underway for nearly a decade. Curiously, this has received scant attention in Western media awash with accounts of the Japanese economic miracle. Unctuous eastward bows toward Japanese production methods, social organization, and industrial policy too often block the commonsensical recognition that the Japanese-like any others-can pick losers, suffer from significant failures of coordination, and fall prey to forces beyond their control. Indeed, the vaunted reputation of Japan's Ministry of International Trade and Industry (MITI) is built in part upon its ability to direct impartially the elimination of failing industries. The case of the aluminum industry has proved an excellent test of both MITI's wisdom and power. In this brief article, I shall discuss the source of the crisis in the Japanese aluminum industry, identify the actors and institutions mobilized to cope with that crisis, and outline both the strategic and tactical responses that have been fashioned through the politics of the publicpolicy process. It is not difficult to understand why Japanese aluminum smelters are in such serious financial straits. In spite of the fact that they are the world's most efficient producers of ingots (as measured in kilowatt hours per ton produced), their electric power costs are, by far, the highest in the world. Bayer-Hall smelting technology, the world's commercial standard, makes the primary production of aluminum among the most electricity-intensive industrial processes. Japanese process innovation and production efficiencies are more than offset by Japan's most oft-