From Fortress Rabaul: The Battle for the Southwest Pacific, January 1942-April 1943, by Bruce Gamble (Zenith, 2010), Kindle Loc. 3191-3213:
The fallout from Midway affected both services. A planned invasion of New Caledonia, Fiji, and Samoa, known as FS Operation, had been scheduled to begin in mid-July but was postponed for two months. Soon after that decision was made, the operation was abandoned altogether. Among the reasons for scrapping it: a newly published report from the Imperial Navy citing several problems in the South Pacific.
The ten-point position paper, submitted by the navy’s Operations Section on July 7, revealed multiple concerns. First, the service frankly admitted that the New Guinea campaign had degraded “into a war of attrition.” Navy leaders also acknowledged that they faced “a huge challenge” in replacing the four hundred plus aircraft lost during the Coral Sea and Midway battles. As of late June, land-based fighter units averaged only 54 percent of their full complement. Reconnaissance units were at 37 percent, medium bombers at 75 percent, and seaplanes at 80 percent. The Tainan Air Group, now divided between Rabaul and Lae, was a prime example. On paper, it had a nominal strength of more than fifty pilots and was allotted forty-five Zeros; but from May through July of 1942, the air group averaged only about twenty combat-worthy fighters. The supply line for replacements was described as “very sluggish,” namely because not enough new aircraft were coming from the factories. The monthly output of all naval aircraft was only slightly ahead of attrition levels, and the navy was particularly disappointed in the slow delivery of fighters—less than ninety aircraft per month in the spring of 1942.
Yamamoto and the Combined Fleet Staff should not have been surprised by the deficiencies. Mitsubishi Heavy Industries built the majority of its Type 0 fighters at the Nagoya Aircraft Works, a huge factory in the densely crowded port city of Nagoya. The plant had recently been enlarged to more than 1.6 million square feet and boasted a workforce of some thirty thousand people, but for all that, it did not produce complete airplanes.
Due to a combination of industrial congestion and inconceivable shortsightedness, the aircraft factory had been built miles from the nearest airfield. As a result, the plant was restricted to producing subassemblies rather than whole planes. The engine, wings, fuselage, and tail section all had to be transported thirty miles to an airfield big enough for assembly and testing. There were no rail lines available, and the streets of Nagoya were too narrow for large trucks. Horse-drawn wagons had been tried, but their speeds over the narrow, rough roads caused too much damage to the aircraft components. Thus, the Japanese resorted to using primitive oxcarts to haul the subassemblies of their modern fighter to Kagamigahara airfield. It took twenty-four hours for each team of lumbering oxen to cover the thirty miles through the crowded streets. No improvements were made to the roads, which deteriorated as production rates increased and more oxcarts were employed. Determined to build more Zeros, the Imperial Navy contracted with another aircraft manufacturer, Nakajima, whose plant eventually exceeded Mitsubishi’s in monthly production; but even at their highest output, the two factories averaged only 140 fighters per month.