September 2009 will go down as a major inflection point in Japanese history.
The country's voters just overhauled the Diet (legislature) by breaking the Liberal Democratic Party's 50-year grip on power.
New Prime Minister Yukio Hatoyama promises his Democratic Party of Japan will bring economic revival to a "people-oriented society" and align the world's #2 economy more closely with the top dog, the United States.
What will Japan's growth engine be? Well, it looks like an international campaign to export locomotives, switches, and other components of the national Shinkansen "bullet train" system may be the thing that gets the country's economy back on the rails.
Just this week, leading bullet train operator JR Central touched off a worldwide rail revolution in which Japanese train technology may become as prevalent as Toyota and Honda on the global market.
Japan Knows How to Export Transport
The Financial Times reported on September 14 that JR Central tech execs have been in London, boasting not only individual components of the Shinkansen but the entire system could be marketed to national and local governments worldwide.
"It's the system that supports the Shinkansen and its whole track record we want to sell," JR Central technology division head Tsumotu Morimura told the FT.
That's a break from component sales that have dominated international rail transport transactions for the past several decades. With different geographic and population-based needs, train network development is pretty parochial.
Yet there are already companies like Siemens (NYSE:SI) in Germany and Alstom (Euronext:ALO) in France that have inched into more integrated system sales in places far from their respective headquarters.
Swiss engineering conglomerate ABB (NYSE:ABB) produced switches for the light rail trains that run just down the street from the Green Chip headquarters in Baltimore.
JR Central wants to take on these companies directly, eating away at total global market share by moving into growth markets in North America and the Middle East, where Gulf petrocracies want to increase mobility while limiting their soaring oil usage so they can maximize exports.
I'll risk another transportation pun here and say that Japan's got a great track record when it comes to moving transportation products for profit.
Consider the statistics that reflect the status quo:
- The United States and Japan are the world's top 2 economies.
- Transport machinery is Japan's #1 export.
- The U.S. is Japan's #1 export destination.
- Japan ranks #2 in the world for rail passengers per year — just behind Switzerland and right ahead of France, another country with high-speed rail.
- U.S. travelers don't even crack the top 20 for rail usage. . .
- Americans log the most air travel by far — over 1 million passenger-kilometers per year more than second-place China!*
*all of the above from the Economist
While these statistics can't capture the entire market scenario JR Central is looking at, $8 billion in U.S. stimulus fund dollars are stoking interest from international companies that want to make their mark on an American-dedicated high-speed rail network.
U.S. Rail Should Move More People
You see, the U.S. is actually out in front in worldwide rail rankings. Even Russia, which straddles two continents, has only 40% of the track mileage that criss-crosses America from coast to coast. . .
But freight dominates in the States, and everything from track width to right-of-way needs to be re-thought and re-engineered for high-speed rail to bring air travel numbers out of the stratosphere. Even if short trips like Kansas City to St. Louis, or Cincinnati to Cleveland, could be brought down to ground level with fast trains. . . we could put a major dent in airline emissions, car travel to and from airports, and especially the hassle time it takes to get through the whole security routine that comes with air travel.
As I pointed out in a series of articles back in June, there is a rail infrastructure crisis in the United States that many consider inexcusable for the world's #1 economy. . . especially when our nearest GDP competitor has a world-class rail system it wants to share.
October 2 is the deadline for state transportation authorities to apply for stimulus funds to improve local high-speed rail networks, and JR Central will be watching the U.S. process closely.
We'll also be watching as the stimulus-fed infrastructure buildout grows to attract more foreign companies eager to share their success and bring returns to investors.
Regards,
Sam Hopkins
International Editor
By the way. . . Nick Hodge and I are strong believers that good ideas know no boundaries. The U.S. stimulus can't work with tired old thinking, and some of the best projects will be founded on foreign expertise. As Green Chip International readers know, the benefits of border-free thinking can be phenomenal. We're sitting on 453% in one single stock, and more are running at the same time! Learn more here.
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We are currently crippled with 19th century design and union shackles on railroad operations and infrastructure.
1. All of the world's leading rail passenger sysatems are gov't subsidized/operated.
2. High-Speed Rail requires dedicated right-of-way---no intersections at grade, no competing freight traffic. Emminent domain for passenger rail probably required.
3. Population density Europe and Japan much greater than U.S. (shorter rides).
4. As energy costs and shortages continue to rise, airplane travel will fade, even with more and more subsidies. The only viable alternative is rail.
Physics rule out dual freight and passenger use. Freight just can't share with passenger---slower and longer starting, acceleration and deceleration and stopping; even in off-peak passenger hours.