Again and again, Japanese automakers had been warning that they cannot stomach the strong yen, and that it will eventually cost jobs. Today, the yen stood at 76.6 to the dollar, and Japanese carmakers are packing.
Mitsubishi originally wanted to sharply increase Japanese production to make up for lost volume due to the tsunami. The company now “suddenly halved its plan to hire about 800 temporary workers by the end of September, as the yen’s appreciation has been eating into the profitability of its exports to Europe,” says The Nikkei [sub]. Mitsubishi’s President Osamu Masuko told reporters in a press conference today:
“We are fighting to adjust ourselves to the currency’s levels. But these efforts sometimes get wiped out in a single day. Don’t you think there is a growing sense of futility?”
Mitsubishi tried to slash costs as much as possible by becoming leaner and by buying parts abroad. “But the room for reducing costs further is getting smaller,” said Masuko.
A few weeks ago, Nissan’s CEO Carlos Ghosn had warned that a Yen that is not going back to “normal” “will provoke a rethinking of our industrial strategy.”
Some of this rethinking became effective today.
As expected, Nissan announced today at the governor’s palace in Rio de Janeiro that it will plunk down 2.6 billion Brazilian reais ($1.5 billion) for a new plant in Resende, near the ports of Itaguai and Rio de Janeiro.. When completed 2014, the plant is expected to crank out 200,000 units per year.
Nissan plans to introduce 10 new models to Brazil before 2016.
With only approximately 25 percent of its worldwide capacity in Japan, Nissan should be the least affected of Japan’s majors.
“Just as Nissan has demonstrated in China, Russia and India, we are investing in the regions with the most potential for growth,” said Carlos Ghosn. And that’s not Japan.