Ford's Hinrichs Accuses Toyota of Profiting From Currency Manipulation
In a speech given to an Economic Club of Chicago luncheon held in conjunction with the Chicago Auto Show media preview, Ford Motor Company’s president for the Americas Joe Hinrichs criticized Japan and Toyota in particular for benefiting from currency manipulation. Hinrichs said Ford would “urge Congress to oppose a TPP [Trans-Pacific Partnership currently being negotiated.] if it does not include strong currency disciplines.”
Speaking to Automotive News after his talk, Hinrichs said
“When Toyota came out and said half their profits are due to currency change of the yen, that’s a big deal. When [Toyota President] Akio [Toyoda] came out in support of [Japanese Prime Minister Shinzo] Abe saying we need a weaker currency, that’s a corporate policy statement.”
The yen has lost almost a quarter of its value against the U.S. dollar over the past year. Toyota estimates that for every yen of value the Japanese currency loses against the U.S. dollar its operating profit goes up by 35 billion yen.
Better profiting from FX markets than by (further) decontenting.. And Ford? "If you coulda, you woulda."
When I read stuff like this, I wonder if Ford is really still just a giant clusterf--- about to get out of control again. Fields is an empty suit not sweating the recalls much, the marketing/sales head who's Chris Farley's cousin tells customers our vehicles are watching you, they don't appear to know what to do w/Lincoln and now this whiny statement. Is Mullaly starting to let the inmates run the asylum? My F stock wonders.
The US has been doing basically the same thing as Japan has done with our quantitative easing policies. The difference being that the dollar is a reserve currency and the world economy has been weak. Thus, the value of the dollar has remained relatively stable compared to most currencies despite our best efforts. Japan has been in a deflationary funk for nearly two decades, it had to be done. The Japanese economy needed this shot in the arm just as ours did. I find it hard to fault another country for trying to fix their problems. Lets not forget that Japan is one of our most important allies as well. Having an economically healthy Japan is in our best interest, even if it means Toyota gets a boost from the exchange rate. Now, if Toyota, Nissan, etc start dumping cars in the US (via export or domestically made cars) to pick up market share, thats when I would raise the red flag. Nissan is discounting cars pretty heavily, Toyota is on certain models, but I would not say it is out of hand.
This problem is two-decades old. Everyone in business accepts it as fact and trades accordingly to profit from Japanese currency manipulation. For the past 20 years, everyone in government vehemently denies Japanese monetary malfeasance because they need Japan to stabilize geopolitics in Asia, and they don't want to upset the continuous (but remote) possibility that a trans-pacific trade deal can be struck with Japan. I don't know what Ford is trying to gain, besides eroding consumer support for Japanese car brands. However, Ford build many cars outside of the US so the strategy would probably backfire.