Section 1. The Post-bubble Japanese Economy and Domestic Market

Item 3. Taking a Leadership Role in the Economic Field

As Japan's economic woes deepened with a steep rise in the yen following on from the collapse of the bubble economy, the nation looked increasingly to the automotive industry and to Toyota to take on a leadership role in the economic field.

In postwar Japan, coal in the energy sector, textiles in the light industry sector, and the core raw material sector of iron and steel had at various times been the mainstay industries driving economic recovery. Textiles and iron and steel had been among the first to extend competitiveness to overseas markets, causing increasing trade friction with the United States from the 1960s into the first half of the 1970s. As a result, voluntary restrictions on exports to the United States had to be accepted by the iron and steel industry from 1966 and the textile industry from 1971.

In the latter half of the 1970s, these industries were replaced by the automotive industry as the greatest source of trade problems between Japan and the United States. Accordingly, following in the footsteps of iron and steel and textiles, passenger car exports became subject to voluntary restrictions from fiscal 1981 (ended June 1982). This development also indicated that the automotive industry, with its high levels of processing, had developed into a key industry underpinning the Japanese economy as a source of employment and foreign currency.

During the process of reconstruction following the economic crisis of 1950, in which Toyota Motor Co., Ltd. and Toyota Motor Sales Co., Ltd. were separated, Toyota had tended to remain aloof from the world of business and finance. However, as the significance of the automotive industry within the Japanese economy grew, TMC's top management came to see it as a necessary duty to take part in the activities of the business community. In May 1984, TMC Chairman Eiji Toyoda was appointed vice chairman of the Japan Federation of Employers’ Associations (Then, Nikkeiren, now amalgamated into Keidanren {Japan Business Federation}), and Senior Advisor to the Board Masaya Hanai was appointed vice chairman of the Japan Federation of Employers' Associations (Nikkeiren, now amalgamated into Keidanren), marking the start of full-scale participation at the center of the business world. In April 1992, TMC Executive Vice President Tatsuro Toyoda became vice chairman of the Japan Association of Corporate Executives, expanding the range of bodies in which Toyota officers were active.

In May 1999, TMC President Hiroshi Okuda was appointed chairman of Nikkeiren. Amid the worsening employment situation of the time, he identified as the guiding principles of his activity the development of "a market economy with a human face" and "an economy and society that offer many options", and warned enterprises against restructuring as an easy option. From 2000, he engaged in discussions with Keidanren Chairman Takashi Imai and at the end of 2001 an agreement was reached on the integration of Keidanren and Nikkeiren.

In May 2002, the Japan Business Federation (Keidanren) was established with TMC Chairman Okuda as its first chairman. At the press conference following his appointment, he expressed the opinion that we should aim for a society where people who have failed are given a second chance. Adopting as the guiding principles of his activity "dynamism from diversity" and "sympathy and trust", in January 2003 he formulated the so-called "Okuda Vision" as a concrete guideline.2 In his term of office up to May 2006, he pushed for action to restore sound fiscal conditions through measures such as an initiative to eliminate the deficit in Japan's primary balance as part of a reform of public finances.

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