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By Nikkei staff writers
Tokyo, February 2 : Japanese companies have seen their capital spending plans disrupted to the largest extent since 2011, by one measure, as a labor shortage leaves businesses that want to invest without enough personnel to carry out their projects.
The Bank of Japan’s quarterly Tankan business survey for December showed a 15% increase in planned capital expenditures for fiscal 2023 across all industries, including software spending but not land purchases.
But actual spending in the six months through September rose only 3.9%, Finance Ministry data shows. This 11-percentage-point divergence is the largest for the first fiscal half since 2011 — after the earthquake and tsunami in Japan threw supply chains into disarray — and a jump from 8.8 points a year earlier.
A dearth of workers and high material costs are major factors in the widening gap, hindering investment that accounts for roughly 20% of Japan’s gross domestic product.
Cosmetics maker Kose has pushed back the planned launch of a factory in central Japan’s Minami-Alps to 2026 from 2025. A Costco big-box store is being built in the city, and Kose’s contractor informed the company that it would be difficult to secure workers for its project.
And with the surge in prices for construction materials, Kose sees the plant potentially costing 10% to 15% more than its original estimate.
Asahi Group Holdings has delayed the opening of a brewery by three years to 2029 as rising costs for labor and imported materials are set to double the project’s price tag from the previous estimate of 40 billion yen ($270 million). The brewer had planned to close its Hakata facility, but will keep it open through 2028 to maintain production capacity.
In a survey released in March 2023 by the Finance Ministry and the Cabinet Office, 42% of small and midsize enterprises cited changing costs as a factor disrupting their spending plans, up from 32% in the 2022 survey.
“Expenses are higher than planned due to soaring labor costs and materials prices, and delays have piled up,” said Hiroshi Miyazaki of Mizuho Research & Technologies.
Projects meant to make up for staffing shortages have themselves been stalled by a lack of workers to implement them.
“There’s strong demand for digital investment, but not enough talent that can take care of it,” said a finance industry source.
Spending on software has grown more than twice as fast among understaffed companies than among those that had enough workers, according to a December paper by researchers including Shuichiro Ikeda of the Bank of Japan’s statistics department.
In particular, labor-intensive service sector businesses such as hotels and restaurants look to boost spending on software.
But “we’re in a situation where supply constraints make it difficult to relieve supply constraints,” said Toru Suehiro of Daiwa Securities.
Cabinet Office data put the “reserved period” — or the time needed for processing — for machinery orders in the 14-month range as of November, the longest since 2010.
Though this does not purely reflect domestic conditions, since it also includes orders from overseas, a Cabinet Office representative said it shows that “demand is strong, but orders can’t be fully handled, due partly to the aftereffects of past supply limitations.”
The postponed investments are expected to show up in actual spending figures eventually. But “an important condition for that is that companies maintain their expectations for future growth,” a Bank of Japan official said. Concerns remain that delayed projects will end up being scrapped.
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