By on February 7, 2014

Dollar vs Yen

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.


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33 Comments on “Ford’s Hinrichs Accuses Toyota of Profiting from Currency Manipulation...”

  • avatar

    What did he have to say about this:

    “U.S. Customs Calls Ford’s Importing Transit Connect As Passenger Vehicle ‘Manipulation’ of Chicken Tax Tariff”

    Or about how Ford seems to be one of the worst manipulators of EPA mpg tests? Ecoboast anyone?

  • avatar

    Oooh, I’m looking forward to what is surely going to be a measured and restrained discussion in the comments…

    This is one of the few things I believe Bertel was right about. While the Yen has weakened recently, historic comparison shows it’s nowhere near cheap:

    Just a year ago Japanese manufacturers were thinking about reducing production in Japan due to the overly strong Yen back then…

  • avatar

    Supposedly: as the US Dollar weakens it makes building in America cheaper for Japan, and the Germans. Naturally, for them, it means outsourcing jobs they’d normally have kept safe at home…

    …now they can build their boring, lifeless, mundane econoboxes in Mississippi.

  • avatar

    Bernanke said it all. Good catch on the Ford/Transit “Chicken Tax” deal. We need that ridiculous tax to go away.

  • avatar

    Stay classy Hinrichs, stay classy.

    Whether it is true or not saying it very publicly like that makes you look like a whiny jerk.

  • avatar

    If Ford can built a part in North Korea to save a buck, they would. The only supplier components they seem to source to plants with viable quality operating systems are parts that when they fail, they cook their customers alive.

    If you’re making injection molded trim for FoMoCo and you’re in the states, you are king sh1t of f*ck mountain when it comes to lean. Purchasing has already tried to bring you to your knees to kiss the ring.

    Of course Ford supports TPP even if it helps Toyota. TPP will deregulate trade between many more low cost nations that will aid them in making the next Fiesta viable through their Taiwan operation. I guess Hinrichs didn’t notice that the Japanese are backing out of TPP. Ford will continue to off shore their supply chain faster than any other OEM for better or for worse. Hinrichs can shove it up his 4ss, Toyota employs way more blue collar Americans than FoMoCo ever will.

    • 0 avatar

      What companies like Tenneco/Monroe go through with Ford sometimes makes it seem like its just not worth it.

      • 0 avatar

        There is a history of suppliers that went bankrupt rather than deal with FoMoCo BS. Dayco Rubber components is one. Healthiest Tier 1 to file for bankruptcy. The owner essentially made Ford buy a power steering plant and give it to Yokohama.

        Magna Decoplaste is another Ford relationship that I got to witness first hand Purchasing having to dig their way out of a pile of sh1t that they made for themselves. I always asked myself it if was all worth it. Purchasing can be blamed for a lot of initial quality woes, but no one will admit to it. Being cheap hurts.

        • 0 avatar

          “Purchasing can be blamed for a lot of initial quality woes”

          Translated into Spanish: J. Ignacio Lopez

        • 0 avatar

          They’ve been less cheap with tires since the Firestone debacle, so they have to make up for it everywhere else.

          • 0 avatar

            the B&B prepared me for my launch experience I had there as I had already done my internet research.

            I had no idea I would see as much cost cutting as I did.

            Edit, wrong reply button. As for the tires, believe that Firestone wasn’t the ones to blame. The PSI spec and camber of the suspension was more suspect. I never really dug for any info on that fiasco for good reason.

          • 0 avatar

            The Firestones may not have been to blame, but Ford throws excellent tires on their vehicles for the most part now. It was an aftertought back then. Now, a Focus can be had with supercar level tires.

          • 0 avatar

            My understanding is that with the 1990 Explorer, Ford wanted to market its traditional soft, floaty ride out of swing axles designed for a Ranger.

            The resulting Firestone Wilderness tires had poor transient response and weren’t up to heavier demands. Making it worse were how most Americans don’t check their tire pressure.

            The outcome was tragic and predictable. People loaded up the family truckster with a high center of gravity, a full load of extra weight, and 20 psi tires that had poor transient response to begin with. We know the rest.

  • avatar

    LOL,the Fed takes a backseat to no one when it comes to manipulating currency.

    • 0 avatar

      Somehow, their manipulation always ends up with the dollar buying less. What was the purchasing power of the dollar when the Fed was established in 1913, compared to 100 years before then and (now) 100 years afterward?

  • avatar
    Dr. Kenneth Noisewater

    Better profiting from FX markets than by (further) decontenting..

    And Ford? “If you coulda, you woulda.”

  • avatar

    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.

    • 0 avatar

      It’s just a speech. It means nothing.

      As for Lincoln, Ford’s strategy is wiser than GM’s. The Cadillacs might be better cars, but Ford is making the smarter, more cost-effective business decision.

  • avatar

    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.

    • 0 avatar

      To be fair, Japan does have a history of trying to manage exchange rates in an effort to support exports.

      (The US tried to do the same thing under Reagan, but that effort fell flat. Since then, the US allows the currency to float without consideration for trade.)

      But this time is different. You and Bernanke got it right — Japan needed to have its own form of QE, and that will necessarily reduce the exchange rate. The Japanese have been in recession or near-recession for most of the last two decades, and something had to be done.

  • avatar

    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.

    • 0 avatar

      Ford wants the American buying public to forsake Toyota and buy more Ford vehicles, like the Fusion instead of a Camry.

      There’s no doubt that Toyota is profiting from currency manipulation and if Ford could do it, they would do it too, in a heartbeat.

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