Nissan. Coming Soon To A Factory Near You?

Cammy Corrigan
by Cammy Corrigan
nissan coming soon to a factory near you

As the Japanese Yen reaches new highs against the US Dollar, so does the anxiety in Japanese boardrooms. How does an export-heavy country like Japan cope with an ever appreciating currency? That’s the topic of conversation at Nissan HQ. The Wall Street Journal reports that Nissan’s COO, Toshiyuki Shiga, is concerned. Extremely concerned.

“We can’t adequately express our concern about the sharp yen rise on our earnings by simply saying…we are worried about it. The company is now working with a sense of crisis,” said Mr Shiga at a press conference. He kept quiet, however, when asked whether Nissan would change its assumption for the US dollar for the fiscal year. Right now, Nissan have assumed that the US dollar is worth 90 Yen. At time of writing this article, it’s just over 81 yen. There was some good news, however, as Nissan has already earned half of the operating profit it expected to make for the fiscal year in its first quarter. So barring a disastrous 3 quarters, Nissan should be fine for this fiscal year. But then came more bad news. Mr Shiga said that not only are they decreasing exports from Japan and increasing imports, but they want to speed up moving production abroad for the long term. Oh dear. Is that the sound of worried Japanese unions and government officials I hear? On the plus side, Nissan’s factory in Tyne and Wear in the UK is viewed very favourably by Nissan’s top brass. Also we’ve got a weak pound against the Euro at the moment. Any extra production would be gratefully received. Every cloud…

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  • L'avventura L'avventura on Oct 26, 2010

    Japanese companies expanding overseas is an inevitability, and has actually been happening for years. Nissan builds the Leaf in the US, EU, and Japan, the new Micra is built in Thailand. As far as Japanese unions, Japanese manufacturers don't need to worry about them as much as their US and European counterparts. During the their growth in th 80s Japan has made large efforts to insure that industry-wide Unions don't emerge. So there may be a Nissan union, or Toyota union, but not a UAW in Japan. Moreover, most Japanese manufacturing relied heavily on temporary labor, and unions themselves kept their numbers in check (to insure safety for existing members). So union jobs won't likely get cut, but temporary jobs will. Currency risks are a reality of the new world as export-driven developing countries devalue their currencies and compete for natural resources. Japan's current buckwheat crisis (connected with Russia's), and S. Korea's kimchi crisis should be lessons of global competition for resources. Japan needs to keep its yen high to acquire the resources they need, but they need to forfeit this export-centric growth. Everything from buckwheat, fish, to lithium requires a strong yen to acquire competitively. Its not going to be easy, but Japan's unwillingness to take broad moves to competitively devalue their currency is the right thing to do. It'll lower the amount of Japanese-made cars, but it'll mean more globally competitive Japanese companies.

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    • L'avventura L'avventura on Oct 26, 2010

      Glad you brought this up... JAW is a 'rengō', and is NOTHING like the UAW. Each company, including suppliers, has their own union, JAW is a 'enterprise' union that groups different company unions together to coordinate. However, JAW has little to no negotiation power since each union has to negotiate contracts individually and can't make broad industry-wide decisions. From the page you linked above (JAW's site): "Nissan Motor Co., Ltd. and Toyota Motor Corp. each have their own individual and independent labor unions. However, not only manufacturers but also parts makers and sales dealers have their own separate labor unions within the company. These labor unions conduct their own independent negotiations and discussions." What this means in practice is that Japanese unions are very fragmented and have little negotiation leverage. For instance, when Carlos Ghosn first took over in the 90s, and had very little confidence from Nissan employees at that time, and laid off 21k people, JAW stood silent. It was only Nissan's own labor union, the NGU, that actually negotiated contracts, and they largely failed stopping Carlos' axe.

  • Some Guy Some Guy on Oct 26, 2010

    Will Nissan now be vilified in their home market because they are viewed as greedy since they are shipping their jobs overseas where labor is cheaper? How about the other Japanese manufacturers?

    • Mercennarius Mercennarius on Oct 26, 2010

      No. Honda/Toyota actually outsource their automobile production even more then Nissan. Its been a current Japanese trend for several years now and will continue to grow as the Yen/Dollar ratio widens. In Japan, Nissans actually viewed very favorably for retaining most of its jobs that were threatend in the late 90s.

  • PlentyofCars PlentyofCars on Oct 26, 2010

    Building a car plant is a long-term commitment. I hope they are not making those type of decisions based on short-term currency swings... It does makes sense to make cars locally for whatever local market it is. Then the currency does not matter. Toyota builds plants where they sell lots of cars, not where it is cheapest.

  • Mtypex Mtypex on Oct 27, 2010

    Will Nissans start to fall apart like the bad old days of Austin and Rover? Bad things happen to industrial sectors in island countries with overvalued currencies.

    • Tricky Dicky Tricky Dicky on Oct 28, 2010

      Not a sensible comment. The fact that Nissan, Toyota and Honda have all had plants in the UK since the late 80s/ early 90s (several full model lifecycles since then), show there is no comparative quality issue. I think mytpex, you are still living in the 70s (when the bad old days were at their 'baddest').