Financial Times (London)
February 29, 2000, Tuesday Surveys FTA1
HEADLINE: SURVEY - FT AUTO: Difficult times as the going gets tougher:
JAPAN & KOREA
by Alexandra Harney and John Burton: The car manufacturers in both
countries continue to feel the pinch with rationalisation on the cards
When Yoshifumi Tsuji, chairman of the Japan Automobile Manufacturers'
Association, delivered his annual New Year's speech last month, the
greeting bore an uncanny resemblance to those in previous years.
"The past year was highlighted by the implementation of new economic
stimulus measures by the Japanese government. These measures led to the
emergence of clearly brighter prospects for the economy, yet consumption
still did not recover to normal levels.
"As a result, the automobile industry confronted a difficult business
climate throughout the year," said Mr Tsuji, the former president of Nissan.
The prolonged slump in Japanese consumer spending has dampened spirits at
the country's once-proud carmakers. Nissan has joined forces with Renault
after a brush with bankruptcy. Mitsubishi Motor has effectively bundled its
truck division with Volvo's and is negotiating with partners about a deal
on passenger cars.
Even Mazda, until recently the darling of automotive analysts for its
restructuring drive, issued an unexpectedly large profits warning earlier
this month.
A similar scenario is unfolding in Korea, where the prospect that two of
its three carmakers may soon be acquired by foreign owners could result in
the most dramatic change for the local car industry.
The possible takeover of insolvent Daewoo Motor and its Ssangyong Motor
subsidiary by one of possible four overseas suitors - General Motors, Ford
Motor, DaimlerChrysler or Fiat - and Samsung Motors by Renault will break
open Korea's closed car market.
With foreign carmakers here to stay, the Asian automotive market will never
be the same. In Japan, it is already forcing carmakers to cut costs and
trim excess labour and loss-making subsidiaries and to revamp their
research and development and marketing activities.
Renault has pressured Nissan to implement 21,000 job cuts, including 16,500
in Japan, and reduce the number of suppliers by 50 per cent.
But this is not the only headache for Japanese carmakers. With the outlook
for the domestic economy uncertain, most analysts are expecting car and
truck sales of about 5.9m units this year, only slightly above the 5.88m
vehicles sold in 1999.
The combination of foreign competition and sluggish demand is deepening the
divide between winners and losers, one that even an economic recovery is
not likely to erase. Toyota and Honda, with strong finances to fend off
potential foreign buyers and healthy business in the US, have emerged in
the winner's circle.
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Louis Proyect
(The Marxism mailing list: http://www.marxmail.org)
