Factory utilization: Like other developed countries with once-mighty manufacturing bases, Japan has plenty of excess industrial capacity. Some factories have been closed for good, while others have been mothballed or have been converted to grow vegetables. Manufacturers such as Panasonic Corp. and Sharp Corp. plan to use existing sites to ramp up production in Japan. That will give a boost to policymakers’ efforts to stimulate growth in areas outside wealthy Tokyo, which seems increasingly disconnected from industrial and rural areas.
Labor: Similarly, many manufacturers have underutilized work forces, despite years of domestic job cuts, analysts say. By restarting assembly lines, manufacturers can put these employees back to work more productively. Eventually they might have to hire new workers. Because unemployment is only 3.5%, that could eventually lift wages, supporting Mr. Abe’s campaign to end deflation.
Taxes: The government recently approved a reduction in corporate taxes, beginning in April. But the move to return production to Japan could bolster tax receipts. That is because more profits would be booked, and taxed, via multinational companies’ domestic subsidiaries, rather than overseas operations.
That’s a lot of ifs, and economists say the benefits for Japan will be limited unless the “reshoring” trend gains momentum. But for the first time since the global economic crisis, when the move to overseas sites gained momentum, there are signs of hope for Japanese manufacturing.
