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   Vol. 69/No. 27           July 18, 2005  
 
 
Conflict sharpens between U.S., Japanese
auto bosses over share of market
 
BY ARRIN HAWKINS  
Japanese auto manufacturers that are expanding production and sales in the United States have expressed fears of a protectionist backlash by U.S. business if General Motors and Ford slide further toward collapse. The bond rating of the two U.S. auto giants was reduced to junk status in May and their share of the U.S. auto market has continued to decline in face of competition from Japanese companies.

GM and Ford have indicated, however, that they will not seek new trade restrictions on cars manufactured by Japanese companies. Rather, they will count on a yen that is overvalued against the dollar to help them boost their own exports.

Hiroshi Okuda, Toyota chairman and head of the Japan Business Federation, underscored the concern of Japanese auto bosses about an economic nationalistic campaign in the United States. "GM and Ford are symbols of U.S. industry, and if they were to crumble it could fan nationalist sentiment," he said. Toyota, which has five manufacturing plants in the United States and is scheduled to open another facility in San Antonio, Texas, this year has cornered 13.4 percent of the U.S. auto market, according to the Reuters news agency. Meanwhile, General Motors, the world’s biggest automaker, lost $1.1 billion in the first quarter of this year.

GM and Ford announced June 8 that they were not proposing trade restrictions on Japanese imports, unlike during the early 1980s when U.S. pressure led to an agreement by Japanese auto makers to limit exports.

Instead, U.S. auto companies seek to change the exchange rate between the yen and the dollar. They claim the Bank of Japan has intervened in currency markets to weaken the yen and give Japanese automakers an edge over their U.S. rivals. The U.S. rulers themselves deliberately weaken the dollar relative to the currencies of their rivals to undercut sale of their goods on the world market.

Despite the rivalry between the U.S. and Japanese auto manufacturers, they share a tacit agreement in dealing blows to the United Auto Workers (UAW) union. For more than a decade, Japanese and Korean auto companies have been building manufacturing facilities in the United States in order to avoid high tariffs on imports. These plants, based largely in the U.S. South, are all nonunion, and organizing efforts so far have failed to win union recognition. In UAW-organized plants, the auto bosses are pushing for concessions, forcing more of the health-care and pension costs onto workers.  
 
 
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