From sushi robots to farm drones: Japan Inc. innovation thwarts BOJ's efforts

A worker at the Andersen bakery outlet at Ueno station in Tokyo uses a checkout scanner to calculate the price of pastries. REUTERS/Kaori Kaneko Bakeries in Japan deploy cash registers that ring up pastries by reading their shape and colour, construction robots scurry to lay out the next day's building materials in the dead of night and machines churn out sushi rice balls.

These innovations are helping companies navigate the nation's tightest labour market since the 1970s and minimize wage increases. That's frustrating the Bank of Japan, which is struggling to understand why years of moderate economic growth has not translated into higher inflation. The central bank has argued that stubbornly low inflation will eventually accelerate as demand increasingly outstrips supply in the economy. As growth picks up, the bank says, sales will increase, companies will raise wages, consumers will spend and prices will rise in a self-sustaining cycle.

While Kuroda has praised labour-saving innovations, the BOJ's failure to get close to its 2% price target in six years is forcing a rethink. Even with the jobless rate at the lowest since the early 1990s, businesses have wrung more value out of their workforce while wage growth has been subdued. The average worker added $68,000 of value to the economy in the 2017-18 fiscal year, the last year for which data is available, up 11% over five years. For the same period, inflation-adjusted wages fell 3.8%.

A bakery situated in Tokyo's busy Ueno district is instructive. The outlet, operated by bakery chain Andersen, looks like any other, its glass walls luring pedestrians with displays of baguettes, croissants and sweet pastries. But instead of ringing the treats up by hand at the register, an employee places the order below a scanner that recognizes the items by shape and colour and rings them up automatically. With the BakeryScan machine, the outlet halved the number of cash registers and the time it took to process purchases, according to the company.

"It's innovative and great," said Junko Kuroda, a 68-year-old housewife, who marvelled at the shopping experience. "Things are quicker this way." On construction sites, Shimizu Corp's Robo-Carrier delivers construction supplies overnight to the proper spots for the next day's job, saving workers time hauling the materials in the morning. Other robots work during daytime welding or installing ceilings.

For now, Shimizu estimates the labour savings are just 1.1%. But the company expects the impact of the robots to rise as it expands the range of tasks they perform. Robots can do sushi, too.

Suzumo Machinery Co. makes robots that can churn out 4,800 rice balls an hour and others that plop rice into bowls, measured to the gram. This cut costs by reducing waste involved with dishing out the rice by hand. Shutoko Engineering Co., which inspects the hundreds of kilometres of toll highways in and around Japan's capital, is conducting feasibility tests on whether vehicle-installed 8K cameras, which take 33 million-pixel images, could inspect the walls and ceilings of tunnels for cracks. And Japan's farmers, rapidly ageing and facing a flight of their children to big cities, are experimenting with drones to analyze rice stalks, gauge how much pesticide and fertilizer the plants need and spray the crops.

BOJ Deputy Governor Masayoshi Amamiya has said that such "enthusiastic" labour-saving efforts have helped keep his bank's 2% inflation target out of reach. "The large room to raise productivity and the technological progress in recent years have allowed firms to constrain price rises as much as possible," he said last August. 

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)