Bailout Watch 363: Japan Just Says No. For Now.
Remember the good old days when the US was committed to free trade, and constantly complained about Japanese protectionism? Those days are long gone, as the US is now a world leader in national bailouts and it has become Japan’s turn to stand on free-trade principle. Detroit News‘s Christine Tierney reports that Japan has no interest in joining China, Germany, France, Russia and the US in subsidizing either production or consumption of vehicles. “We regard the auto industry as very independent from the government,” said Noriyuki Shikata, director of the Second North America Division at Japan’s Ministry of Foreign Affairs. “Our government hasn’t extended massive subsidies to companies. A company like Toyota has accumulated some cash and should be able to survive.”
And this, despite the fact that bailouts tend to justify yet more bailouts, as demonstrated by German Chancellor Angela Merkel’s decision to abandon anti-handout principle in the face of a US bailout. “Of course, we won’t be able to just stand by and watch how the American auto industry is kept alive by billions of dollars,” Merkel has said. But not only is Japan not jumping on the bailout bandwagon, the land of the rising sun is remaining gracious in the face of serious challenges to the free trade regime. “We understand that there needs to be a major effort to save the domestic American automakers. We are not in a mood to oppose such efforts,” says Shikata. “In principle, measures shouldn’t be discriminatory. We have to be careful about the implications … and make sure that protectionism isn’t widespread in the global economy, particularly given the global downturn.”
The Japanese banks will continue to loan money to their auto industry at near zero interest rates. Exactly how do they make money doing this without the govt's backing? Check out Toyota's financials and how little they spend to service their significant debt.
They've been providing subsidies in the form of currency manupulation, interest free loans, etc. for 30 years, so this commentary is laughable at best. I also wonder what kind of tarrifs, if any, they impose on American-made vehicles, and other products? I seem to remember that Chevy tried to sell the Cobalt (or Cavalier) over there and it somehow ended up costing the equivalent of $35k by the time they hit the ground?? It was a lot of beers ago, but there were a lot of roadblocks if I remember correctly. Not that they could have sold any for US-level prices either, but still... It's not Japan Inc's fault at all, it's their right to do so, and I blame the US Gov't for not having the balls to stand up for domestic companies when they should have. Trade is only "Free" when it's a level playing field, and it just isn't. We've let Japan, Korea, et al, step all over us when it comes to trade, and now we (taxpayers) are paying for our spinelessness. Why do we always have to be the "good guy"? All those cheap imported goods are going to cost you in one way or another people.
Fortunately for Ohno (Taiichi Ohno, Toyota Production System guru), his assignment from Eiji Toyoda to "catch up with Ford's productivity" didn't mean competing head-on with Ford. He just had to focus on improving Toyota's manufacturing within the protected Japanese market — a daunting assignment nonetheless. --from "The Toyota Way" by Jeffrey K. Liker, page 22 The Machine That Changed The World makes the same point: Japan's automakers matured in a protected market. Little has changed since. Japan's Ministry of Foreign Affairs might regard Japan's auto industry as independent, but Japan's Ministry of Economy, Trade, and Industry is the real authority in this matter.
This would be more interesting if the Nikkei hadn't been unable to recover after peaking in the late 80's. The Nikkei on the decline and their domestic car sales tanking big time suggest that maybe Japan.inc isn't as good as their marketing smoke and mirrors claim.