General Economic Background- Measured by purchasing power parity basis, Japan stood as the fourth-largest economy in the world following the EU, the U.S., and China in 2012. A sharp downturn in business investment and global demand for Japan's exports beginning in late 2008 pushed Japan further into recession. Government stimulus spending helped the economy recover in late 2009 and 2010, but the economy contracted again in 2011 as the massive 9.0 magnitude earthquake in March disrupted manufacturing. Estimates of the direct costs of the damage - rebuilding homes, factories, and infrastructure - range from $235 billion to $310 billion, and GDP declined 0.4% again in 2012. Debate continues on restructuring the economy and reining in Japan's huge government debt, which is approaching 240% of GDP. Persistent deflation, reliance on exports to drive growth, and an aging and shrinking population are other major long-term challenges for the economy.

Wood Products Trade Data - Japan’s wooden housing sector remains the second largest in the world, following the United States.  This fact is particularly significant since the population of Japan is about 127 million; equal to about 42 percent the population of the U.S.  As a result, Japan continues to be a major consumer of wood construction materials and furniture.  The residential housing sector accounts for an estimated 85% of the wood use in Japan, and this percentage approaches 90% if wood used in all forms of construction is included.  This critical construction market segment therefore dominates the wood products trade performance. Housing starts increased by 5.8% in 2012.

SWOT Analysis

Strengths: The US has been a softwood supplier to Japan for years. Relationships have been built and solidified. The  proximity of US west coast producers to Japan is good. US products have the reputation in Japan of being high quality and consistent with a sustainable supply. More and more Japanese buyers are demanding US species like Douglas fir.

Weaknesses: The Japanese market requires specific sizes of lumber, and some mills aren't able to cut to those measurements. As the housing sector is on the rise in the US, sawmills are refocusing their efforts domestically.

Opportunities: Diverse and high-value market niches such as Do-It-Yourself, Post and Beam traditional style houses, remodeling and renovation are all an opportunity for American softwood lumber. There has been a decreased interest in Canadian SPF because of blue stain from Japanese end users and importers.

Threats: As with all markets, Japan is price sensitive. Less expensive wood from other countries (Russia, Europe Canada, New Zealand) continues to be a threat to American softwood lumber. Other countries have put exporting as a top priority, which make them a competator to the US, who too many times has viewed the export market as a 'bonus.' US softwood logs are exported to Japan, and they are remanufactured in Japan. This practice is a threat to the US softwood lumber exporters.


SEC maintains an office in Japan (http://www.americansoftwoods.jp/) to assist members in their export efforts.