Japan losing its competitive edge?
That's the dire forecast coming from two auto industry heavyweights in the embattled country, as they call for decisive action to rectify the strength in the yenAn open letter penned by two auto industry movers and shakers in Japan – the manufacturing association boss and workers’ union head honcho – has delivered a blunt message to the nation’s federal government: the country’s competitive edge is being eroded in the current foreign exchange climate.
Toshiyuki Shiga, the Chairman of the Japan Automobile Manufacturers Association, and Koichiro Nishihara, the President of Confederation of Japan Automobile Workers’ Unions, are calling on the Japanese government to take prompt and decisive action aimed at rectifying the current strength of the yen, which has recently seen it reach its highest level against the US dollar and Euro in four months.
The duo believe the “surge in value exceeds the capacity, at the corporate level, to address such drastic appreciation through cost-cutting and other measures”.
And the letter continued: “In addition, with the July 1st signing of the free trade agreement between South Korea and the European Union, and with Japan lagging behind in the area of such bilateral agreements, the rise of the yen and the fall of the South Korean won against the euro further undermine the business environment for Japan’s automotive industry.
“A protracted continuation of these forex trends will put into jeopardy the ability to maintain the domestic foundations supporting Japan’s manufacturing craftsmanship, which has long been the basis of its competitive strength.
“The fears are well-founded that such conditions would force employment throughout Japan’s auto industry, including parts suppliers and other stakeholders, into even direr straits. Moreover, such a scenario would, inevitably, adversely affect Japan’s recovery and reconstruction in the aftermath of the March 11 earthquake and tsunami, just as those initiatives are finally gaining ground.”
As of today, July 19, 2011, one US dollar buys about 79 yen, compared to a peak of about 85 on April 8. And one euro buys 111 yen, compared to a peak of 122, as on April 8. The Aussie dollar is now buying 84 yen.
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