The Profitable Japanese Small Arms Industry

sig_p220_jgsdf_9mm_pistol-tm-tfb

Japan Security Watch has noted that the Japanese government is saying exorbitant prices for its small arms compared to what the US Government and US consumers pay.

A Japanese Self Defense Force SIG 220.

They buy SIG 220 pistols for almost $1,992 each. An M9 Pistol costs the DoD less than $500 including spare parts. The National Park Service valued the SIG P220 they were given by other federal agencies at around $450 each.

The Japanese government buys Type 89 rifles for $2796 each. The more modern M4 Carbine costs the US government $673 each.

Machine guns, sniper rifles and mortars are also said to be purchased for exorbitant prices, but these are hard to evaluate. I would expect a heavy machine gun to be purchased with a number of accessories and a lot of expensive spare parts. Sniper rifles are often sold as complete systems (scopes, night vision, suppressors, rails, mounts, bipods, cases etc.). When heavy weapons are purchased, a supply of ordnance is often purchased at the same time and these numbers could have been listed together in the budget.

[ Many thanks to Albi for emailing us the link. ]


Steve Johnson

Founder and Dictator-In-Chief of TFB. A passionate gun owner, a shooting enthusiast and totally tacti-uncool. Favorite first date location: any gun range. Steve can be contacted here.


Advertisement

  • matt

    The US buys in much greater quantities than the Jap. gov’t. Gun manufacturers will often subsidize military/LEO sales either because they support what they are doing, or as a marketing opportunity, to drive civilian sales.

  • matt

    And what is your source for the $2,700 price tag? Wikipedia says:
    “According to the Defense Agency, the unit cost of the Type 89 rifle was reduced to about 340,000 yen by fiscal year 2005. Despite this, it is still considered too expensive for general issue as the ideal price required by the Japanese Government for general production is between 10,000 to 100,000 yen per unit. This is further complicated because the procurement method for the weapon is limited to single fiscal year accounting and further reductions in manufacturing process costs are currently non existent.”
    http://en.wikipedia.org/wiki/Howa_Type_89

    That would be $4,333 at todays conversion rate.

    • John

      According to Wolfram, 340,000 yen is worth between $2800 USD and $3300 USD. That’s not too far from the $2,700 mentioned in the article.

      The price could have fluctuated as well during the past 7 years.

      • matt

        I got that from google, when I search
        340,000 yen dollars

  • Gidge

    It comes down to economy of scale. Selling products in larger numbers means that production and development costs can be spread across more items. It also means that manufacturing equipment, materials and supplies can be aquired more compedatively. This all reduces the price at which an item can be sold at a profit.

    The US armed forces have nearly six times the number of active personnel, which means they buy in far greater quantities and can significantly reduce the cost per unit. The US armed forces also like to second source items, which keeps the cost down and provides alternate redundant supply chains.

    • http://www.thegunzone.com/556dw.html Daniel E. Watters

      The Japanese manufacturers also have no export market for military items. Even their market for civilian firearms is limited. I remember when Weatherby tried to offer a bolt-action handgun for IHMSA back in the late 1970s-early 1980s. Their barreled actions were made by Howa at the time, and the Japanese government threatened to block the export of all of Weatherby’s barreled actions if any more were assembled as handguns.

  • Raoul O’Shaugnessy

    It’s the additional cost of adding a bayonet mount to everything.

    • Leonard

      Every gun should have a bayonet mount ;)

      • Raoul O’Shaughnessy

        Some cultures take it more seriously than others….as evidenced by the bayonet mount on the Type 99 (http://en.wikipedia.org/wiki/Type_99_light_machine_gun)

      • David/Sharpie

        One of the older model Stens had a Bayo lug.

        I agree, guns are so much better when they’ve got a pig sticker attached.

  • Jon

    I can’t find the original source of these numbers, but my suspicion is that these numbers are the fully burdened project cost, and it’s being compared to the US Government’s direct acquisition costs. This is comparing apples and oranges.

    The example is the $2,000 toilet seat. You need to factor in things like engineering, testing, selection, quality control, audit, contract management, transportation and so forth. It costs the US government far more than $450 to field a Sig. My rule of thumb for the DoD is to multiply the number by 4-5, which places it in the $2,000 range that the Japanese are paying for.

  • D

    Probably alot of graft and corruption going on, or some kind of monopoly. I’m not surprised, but it doesn’t really matter – ain’t like Japan’s going to war any time soon, hopefully.

    • matt

      “…ain’t like Japan’s going to war any time soon, hopefully.”

      If north korea gets too uppity, they might. They do like to fire missles in Japan’s general direction.

      • Kevin

        If a new NK war starts there will be 100 or more Americans serving in the war for every Japanese. And DoD would give the Japanese anything they wanted.

  • Charles222

    I’m going with the people pointing out economies of scale. The JAGSDF is a lot smaller than the US Army, not to mention that producing things in Japan is expensive as hell; you have to import all your raw materials.

    • Avery

      Then why doesn’t the JGSDF buy directly from Colt or Fabrique Nationale instead of use an arms industry that overcharges them for military equipment? I’m fairly certain that Colt or FN would sell them guns and ship them at cost.

      I know that the Japanese are redeveloping the Type 89 rifle with a modular rail system, because of shortcomings with mounts on the rifle. They could easily buy SCARs from FN for what they’re paying for and there’s no need to rebuild those rifles.

      • charles222

        Same reason all US military firearms are manufactured (not designed) here-keeping jobs in the economy. If you were Japan, would you rather your money go directly to someone who actually lives in Japan, or some random guy in another country?

      • al

        its good for an island nation to have a few armories. if shtf they dont need to depend on foreign shipments of arms, just licensing fees; and even those can go out the window

  • Mu

    It’s apples and oranges, acquisition program cost vs. purchase price. We keep getting reports on this or that gun purchased for this or that Special Operations command. Yes, these guns cost $1,000 a pop – but the military run a $2,000,0000 test program with a company of guys in a Florida swamp for a year before deciding on it. So, if they order a thousand guns, the price per gun is $3,000 on the budget, even if the individual gun only cost $1,000. Add $500,000 for documentation and procedure development if it’s a new weapon system, a couple 100k for contracting, 50k in spare parts, a new warehouse, a new training and qualification program, and the factor of 4 – 5 mentioned above isn’t too far off.

    • HSR47

      Perhaps, but once you add all those in you’re not comparing apples to apples anymore.

      When we say “2k for Japanese Sig vs 500 for US M9″ we’re talking about the actual cost per unit, not any additional ancillary costs.

  • bob

    This has nothing to do with corruption or incompetence. Japan has draconian civilian firearms laws that prevent law-abiding Japanese from owning firearms, coupled by the fact that the Japanese government has an export ban on all defense articles, prevents its local defense industries from either selling some guns to local civilians or from legally exporting military grade infantry weapons abroad, which naturally pushes prices up due to economics of scale, constant shutting and restarting of production, low demand because their defense industry has no filler orders in between the sporadic orders of their mid-size military. Simple economics people.

    • Tuulos

      Law-abiding Japanese can actually own firearms for hunting and sporting purposes, but the law is very strict and limiting on the type of firearms they can own.

      • David/Sharpie

        Yes but not civvie versions of the military styled guns.

  • Lex

    The old $100 hammer issue. That money is going somewhere else. I’d guess a secret space program.

    • Nadnerbus

      They are going to send Jodi Foster to meet her dad on Vega any time now.

  • ragnarok220

    I guess Japanese Government believes that it’s necessary to keep skilled workers and manufacturing capabilities of small arms.

  • MarcW

    What makes the M4 more modern than the Type 89?

    • Lcon

      @ MarcW. The Rail system and stock
      Although There are now modifications for fitting rails too the type 89 at this time they are still bolt on and can damage the handguard well the M4 is a all rail all the Time carbine now. The Stock on the 89 is also a Fixed polymer type well most carbines are going too telescoping types.

      • DW

        There exist a folding stock varient of the Type 89

  • Nooky

    As a big fan of the P220, I would fancy myself that Japanese made Sig. Great piece for a collector, too bad it’s probably impossible to get under current laws.

  • Pepin the Short

    Heel release? Really?
    If you’re gonna spend $2000 on a pistol, it should at least have a button release.

    • Charles222

      I’d suggest the smaller-framed typical Japanese male has an asker time of it with a heel release.

  • Lance

    With prices like that which are twice as expensive as the real weapon there copying I doubt they will be competitive in the future.

  • Tony

    I can see two reasons for its high cost

    1. High labor cost in Japan
    2. Scale of production is limited. Japan cannot export weapons.

    Its Type 90 tanks cost 8 million dollars a piece.
    Its Aegis missile destroyers cost over 1 billion dollars a piece

    However to maintain its dosmetic arms manufacturing capabilities it is essential keeps these companies alive.

    Just like the ship builders in the US, if it wasn’t for the US Navy, none of them would survive in today’s global market.

    • 032125

      Monopsonies are riddled with problems, just as monopolies.

  • John

    If they don’t like it, perhaps they shouldn’t buy foreign. They used to be famous for making good products, why not firearms?

    • Lance

      I dont see Japanese firearms making far from Japans shores in service for a few reasons. 1. US, Russian, and German firearms are better quality cheaper and easier to get accessories for. 2 the Type 89 isn’t known to be the best 5.56mm rifle out there the the M-4, G-36, M-16, AK-74, AUG, and HK 33 are far more popular and in some cases cheaper than the Type 89. 3 Chinese will make far cheaper 5.56mm rifles for the Asian market the CQ and Type 97 and Type 56 in 5.56mm are alot cheaper than a type 89.

      • Avery

        I don’t know, I’ve heard the Type 89 is functionally a good rifle. It’s based off the AR-18 design and the JGSDF has had few problems with it, outside it’s the need for mounting optics and what not. It’s probably one of the few guns that’s actually worth something outside of the Japanese arms industry.

    • Burst

      Making certain products would require an update (or a more liberal interpretation) of the Japanese nonaggression pact.

      That said, Japan DOES make a lot of it’s own weaponry in house.

  • Denny

    Just wonder where Yakuza is buying their guns. I suppose no trade restrictions apply.

    • Anonymoose

      The Yakuza gets the majority of their firearms from Red China- or at least that’s the accepted stereotype in the Japanese media. However, in Japan you’re far more likely to be mugged with a knife (or even a sword) than a gun. Also, there are trade restrictions on all guns in Japan. You cannot legally export military firearms from Japan, to export civilian firearms they have to be in pieces, and to import civilian firearms is even more difficult.

      Also, what is with the author’s “the M4 is more modern than the Type 89″ crap? The Type 89 is an extremely reliable design based on the AR-18, while the M4 is little improvement over the the CAR-15 carbines of the 1960s. Heck, if you slapped some rails on a Type 89, it would be on par with the HK G36 and HK416.

      • Denny

        I do no know much about model 89 in detail, but I suppose it is pretty generic AR. As far as I remember, the previous service rifle in Japan was version of M14, albeit with slightly less powder charge. That’s almost like saying: give us an intermediate round. They have gotten instead the ‘minibore'; good for them.

        If they have conscript army, which I belive is the case, they need something ‘lighter’. In Thailand (conscription in place) guys do what they can to avoid the service – they do not like gun’s kick.

    • Kalashie

      @Denny: The JSDF is all-volunteer, and there hasn’t been conscription, or even registration for conscription since 1945. It’s expressly prohibited in the constitution. Also, Japanese men aren’t too different in size from the average American, although the women tend to be smaller, so recoil isn’t as much of an issue these days.

  • myernkir

    There’s no competition in the Japanese defense industry. Japanese companies dont focus on one industry. All the suppliers for defense equipment are small departments within giant corporations that pretty do everything. The Japanese government effectively subcontracts rather than buys a military product.

  • David/Sharpie

    It’s all about the fact the civvies can’t own military style firearms.

    Ronnie Barrett once said in an interview that if civvies in America were not allowed .50 cal rifles (M82A1 was used as an example in this interview) the cost of an M82 would be closer to $100,000 and not $7000 (I’m not sure what they go for)

    • HSR47

      Really, it’s about offsetting the cost of R&D, and keeping an even manufacturing load. The 100,000 vs 7,000 pricepoint difference is an example of this.

      Basically, because they can sell to us mere plebeians, they end up with a significantly larger market (economies of scale), and a much more even demand (no need to incur drastic costs to ramp up production for a ‘large’ contract).

  • W

    This is a pretty damning case to support private ownership of firearms in the United States. Banning civilian ownership, in my opinion, stifles the innovation, quality control, and R&D of military small arms.

    The best examples are Britain and India. H&K, Glock, FNH, and other comparative companies market in the United States for a very damned good reason.

  • SCW

    The japanese government is merely finger pointing. Take P220 for example, the annual order size is just around 200. Even with those ridiculous high unit price, the company which makes them is not really making a lot of money as a whole. The japanese domestic market is too small to for any kind of self-sustainable firearm business. If you want really cheap firearm, the only way out is to buy off-the-shelf and forget about making them locally in japan.

    • Fmonk

      And there is the most obvious part, the value of the yen.

  • idahoguy101

    The Japanese are manufacturing their 9mm P220’s in the original European specification with the magazine release on the heel. If they are only manufacturing 200 pistols domesticity then $2000 each isn’t any surprise.

    It’s reported that Japanese Special Opertion units do have imported weapons.

    The M4 Carbine for the Army’s “Japanese Special Operations Group”.

    The Navy’s “Special Boarding Unit” uses the MP5, the P226, the M4A1, and HK 416, for counter piracy and dealing with those pesky North Korean ships offshore.

    I haven’t seen a weapons list of what the Civilian Police SWAT/Counter Terrorism units use but I’d bet that they have budget authority to buy whatever they need from outside of Japan.

    • Anonymoose

      Some of the Japanese SWAT teams supposedly have HK PSG1s, MP5s, P9s, and USPs, SIG P226s and P228s, M4s, Rem 700s, and Mossberg and Remington shotguns, but most of the police officers are just armed with S&W 37s, which they keep in rear-waist holsters when they’re on the beat. They used to not carry guns at all most of the time, but there has been a massive influx of illegal guns smuggled in from the US, China, Thailand, and other places in Southeast Asia over the last 2 decades or so. Howa M1500s and many FN-licensed guns are made in Japan, and those are a damn good deal considering their relatively-low price (in America) and the outstanding quality of Japanese manufacturing. I’m guessing because the Japanese government expects HK, FN, and SIG to charge them even more ridiculous amounts to import their guns, they usually stick to their home-grown or license-produced weapons no matter what Howa, Sumitomo, Minebea, etc. wants to charge them, or they may have self-imposed trade restrictions which cause foreign-made HKs, FNs, and SIGs to cost them horrendous amounts of money.

  • dunadan

    The US has a huge civilian market which maintain the R&D and their production capability to great standards. They can also count on economies of scale when it comes to equip an army of 1.5 million active personnel. Which explains the low costs.

    Moreover the Japanese, which have a very prohibitive gun control legislation, are just safeguarding their industry and maintaining their skillset in weapon manufacturing. In case of war, being an island with hostiles at your doorsteps, you surely want to keep your dependance on foreign suppliers to its minimum.

    I guess knowing a bit Japan and how they handle their debts, they surely prefer to keep their money inside their borders as much as they can as well. The downside being that the lack of competition leads to little to no innovation and more expensive products.