	economic spotlight japan builders recovery japan s ailing building industry plans to refloat itself in a few years from the twin rocks of recession and a strong yen through capacity and workforce cuts and greater use of computers industry sources told reuters the salvage measures which include a government sponsored rationalisation program are aimed at clawing back some of the market which japan the world leader has lost to south korea through currency and labour cost disadvantages they said the sources said south korea s yards are now some pct more competitive than japan s due to such factors the government plans to help the industry shed pct of current capacity within two years through mergers and regrouping under legislation put before parliament this month and likely to be approved by may or june the sources said they said from september a semi government body will assure repayment of about billion yen in liabilities incurred through job losses and the sale of excess capacity and another billion for buying unneeded land and equipment last friday the builders association of japan applied to the fair trade commission to form a cartel to slash tonnage built to about half of total capacity for a year from april the commission has held several hearings with the industry and approval should be given this month the sources said a clampdown on output over one or two years combined with a planned cost cutting and streamlining program and state support should help japanese yards recover their international competitiveness they said under the cartel proposals yards each capable of building s of more than gross tonnes would build a maximum of three mln compensated gross registered tonnes cgrt in this is about half of total capacity this will ease the cut throat competition which forced most yards to sign orders below cost the sources said the industry is likely to seek to renew the cartel for as the transport ministry sees new orders falling to mln cgrt in from mln in they said the rationalisation program includes a cut of to of the estimated workers in the industry between and japanese yards topped world order books at end december followed by south korea and taiwan according to lloyd s register of ping however falling orders and declining international competitiveness due to the strong yen led to heavy losses in the industry the sources said four of japan s six major heavy machinery and building companies reported current deficits in the first half of the year to march and five of them are expected to report current deficits for the whole of they said the building companies streamlining program will raise productivity to compete with south korean yards which have also been hard hit by declining orders and low  prices in recnt years the sources said in japan no single yard leads the industry resulting in fierce competition and slow progress in reducing capacity the two largest firms mitsubishi heavy industries ltd mith t and ishikawajima harima heavy industries co ltd jima t account for only pct of s built the sources said world owners hope japanese yards can manage to ride out the recession as their technology is the best in the world said an official at a major japanese ping company the japanese merchant fleet the largest after liberia s has no intention of shifting to other countries to buy s and this will encourage japanese yards the sources said reuter 
