BookTitleToyota Tsusho 70-Year History

Summary

Toyota Tsusho 70-Year History

Section 2 Conversion to Stable Growth1 The Oil Crises and the Collapse of the Rapid Growth MythIn the mid-1970s, the Japanese economy reached a turning point. Theintroduction of a new economic policy in the U.S. by President Nixon in 1971resulted in the so-called Nixon shock, and this was followed by the first oil crisisin October 1973. Crude oil prices soared so high that Japan appeared to sufferfrom runaway inflation. In 1974, the rate of increase reached 23%. The oil crisishad significant effects on society, giving rise to phenomena such as ordinarycitizens frantically trying to corner the market on goods that were not related to theprice of crude oil, symbolized by the Toilet Paper Panic. The impact on corporateperformance was significant, as was the impact on the Japanese economy, whichin 1974 saw negative growth of 1.2% for the first time since the war ended.A second oil crisis occurred in 1977, and the two oil crises compelled theJapanese economy to transition to slow growth. The myth of ceaseless rapidgrowth for Japan had collapsed. And the circumstances of the oil crises forcedindustry to implement belt-tightening and energy-saving measures worldwide.2 Intensifying Trade FrictionRapid economic growth played a role in improving Japan’s international status.From the 1960s through the 1970s, overseas exports expanded, and Japan’sshare of the worldwide production of materials, such as steel and aluminum,and of industrial products, such as ships, electrical appliances, and automobiles,increased. Even during and after the oil crises, Japanese industry put its bestefforts into exports as means of survival and began diverting industrial productsintended for the domestic market to export markets.Japan’s increase in exports, however, brought increased trade friction withthe regions and countries to which products were exported. The U.S., whichsaw an increase in its trade deficit with Japan, took a particularly harsh stance,and demands for restrictions on exports of textiles, steel, TVs, semiconductors,machine tools, and automobiles to the U.S. gathered strength. It became necessaryto find a way to deal with the trade friction that accompanied internationalization,including trade friction with Europe.The Toilet Paper Panic caused by the oil crisesPhoto: Yomiuri Shimbun / AfloJapan-US trade friction causes voluntaryrestrictions on exports of Japanese carsPhoto: Mainichi Shimbun / AfloUS-Japan trade friction demonstration in the U.S. Photo: AP / AfloHistory49