Ghosn On Crusade Against Japanese Yen

If anyone again mentions that the Japanese manipulate their currency to get an unfair advantage in international markets, then I will strangle him. Or make him pay my Tokyo restaurant, taxi, and even subway bills in converted dollars. Strangling would be the more humane punishment.

Nissan CEO Carlos Ghosn has an even more painful option in store: He’ll leave the island. “If the Japanese government wants to really safeguard and develop employment, then something has to be done,” Ghosn told Reuters editors Paul Ingrassia and Kevin Krolicki in an interview in New York.

Ghosn is on a worldwide crusade against the “abnormal” yen. Last week in Kyushu, Ghosn announced a rethinking of Nissan’s production presence in Japan if the yen hasn’t returned to an (unspecified) normalcy six months from now. A week later in New York, Ghosn said:

“We have been talking about this as an industry for a while. Unfortunately, it keeps happening. It looks like whatever effort has been done so far has not delivered results.”

“We have to make investment decisions all the time. This is one of the factors that we have to consider when we look at a project and say are we going to do it in Japan or are we going to do it in another country?”

The yen doesn’t seem to listen. A dollar buys you 76 yen, and 76 yen will buy you next to nothing in Japan. Attempts to bring down the yen have failed.

Investment decisions are made on a long-term basis. It appears as if the decisions have already been made at Nissan, and Ghosn is simply softening the blow that is soon to come.

Already, Nissan and other Japanese manufacturers are growing their capacity abroad with no expansion at home. Percentage-wise, the Japanese capacity shrinks. Nissan had made commitments to keep Japanese production at 1 million units. Toyota had committed to 3 million units. Even that is no longer sacred. Both have made noises that either the yen drops or their Japanese production will. At some point, moving production abroad will also mean that engineering follows. Engineering without attendant production is like surgery without a body.