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.
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.
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?
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.
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.