"Supplier Networks and Aircraft Production in Wartime Japan"

Abstract

The Japanese aircraft industry, which operated on a very small scale before World War II, became Japan's largest manufacturing industry by the end of the war. In this paper, we explore the causes of the growth of the aircraft industry during this time by focusing on the No. 5 Works of Mitsubishi Heavy Industries Co. We find that during the war, the supply of basic inputs increased substantially: the labor force, equipment and "machinery parts" were in sufficient supply, and none of them were binding constraints on production. A binding constraint existed in the supply of "special parts." Put differently, aircraft production expanded as the supply of special parts increased. This increase in the supply of special parts and even faster growth in the supply of machinery parts came about through the expansion of supplier networks in terms of both the number of suppliers and the geographical area in which they were located. These findings imply that outsourcing played a key role in the rise of aircraft production in wartime Japan.