A model of the next-generation fighter jet being jointly developed by Japan, the UK, and Italy. (©Hidemitsu Kaito)
The Japanese government is moving to ease its restrictions on defense equipment exports as early as the spring of 2026. If implemented, this shift could open doors to greater investment and broaden overseas markets for the domestic industry.
Japan's sharp rise in defense spending has also translated into higher sales for key industry players, solidifying the defense sector as a stable field of growth.
Still, hurdles remain. Chief among them are securing personnel amid chronic labor shortages and competing with large overseas corporations.
Defense Sales Soar
"Orders for defense projects have more than doubled compared to fiscal year 2022," said Hiroyuki Nagano, head of NEC's Aerospace and National Security Business Unit, during an online briefing in November.
NEC, the Japanese multinational IT corporation, identifies defense segments such as aviation radar and air defense systems as key growth areas.
By 2025, the company seeks to expand its defense workforce by 1,600 employees compared with fiscal 2020 levels — 400 more than originally planned.
Mitsubishi Heavy Industries, which produces aircraft and missile systems, recorded defense and space orders of over ¥1.8 trillion JPY (about $11.5 billion USD) in both fiscal 2023 and 2024.
That figure is more than three times the ¥557.1 billion (about $3.6 billion) posted in FY2022.
For FY2025, revenue is expected to reach around ¥1.2 trillion (about $7.7 billion), sustaining a level more than double that of 2022 and earlier.
Global Gains, Structural Limits
The Stockholm International Peace Research Institute announced on December 1 that three Japanese firms — Kawasaki Heavy Industries, Fujitsu, and Mitsubishi Electric — have joined Mitsubishi Heavy Industries and NEC in the ranking of the world's top 100 defense contractors by revenue for 2024.
If restrictions on defense-equipment exports are eased, sales channels currently confined to the domestic market could expand overseas. That would create new opportunities for profit growth.
Meanwhile, sales by Japanese defense firms still fall far short of those of the top ten industry giants. Persistent labor shortages, along with the challenge of securing highly skilled personnel, continue to pose major constraints.
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Author: Takehiko Nagata, The Sankei Shimbun
(Read this in Japanese)
