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Ford warns on impact of weak yen

  • Ford (F) is getting louder with its protests about the impact of a weaker yen on the industry.
  • Joe Hinrichs, one of Ford's top execs in North America, notes U.S. workers will miss out to Japanese counterparts if capacity needs to be increased globally to meet demand.
  • The yen had dropped roughly 12% against the dollar this year to give Japanese automakers (NSANY.OB, TM, HMC, MZDAY.PK, SZKMY.PK) a distinct advantage.
Comments (12)
    , contributor
    Comments (1944) | Send Message
    That's why you get long TM in addition to F.
    When Subaru cant keep up w/ demand and is setting records every month, you know automakers have strong tailwinds at their back. they will all do well but I think TM & F are best in class
    23 Aug 2013, 08:19 AM Reply Like
  • benbolp
    , contributor
    Comments (55) | Send Message
    Honda just released the best lineup of cars for 2014 in terms of resale value and design. Honda has been investing on growth of the middle class in North America, South America, Europe, Sub Asia and India... i think they are quietly winning the battle.


    That said, this market current is useless. Japanese companies like Toyota and Honda make cars sold in the U.S in the U.S effectively getting rid of any currency savings.


    What a devalued Yen will do is cause Yen Holders to further sell their yen and buy equities (like Honda or Toyota).


    Long $HMC - a bet on cheap valuation and the best products.
    23 Aug 2013, 10:16 AM Reply Like
  • Tdot
    , contributor
    Comments (3453) | Send Message
    Ben - you are mistaken about the exchange rate being irrelevant because they "make cars sold in the US in the US". It doesn't matter where the cars are built, they still win the match.


    But first of all, they do import certain models. Only a select few high volume vehicles get build in the US with US parts.


    The main point is, Honda and Toyota and their Japanese Ilk build cars in the US precisely because when the dollar was weak and the Yen was strong, it was cheaper to build cars in America than importing them. They took advantage of US inflation and exchange rates when the Yen was stronger than the dollar


    Now with the Yen artificially weakened some 25%, it is cheaper (more profitable) for them to resume importing than to expand production in the US to meet demand. There is a tipping point in the exchange rate where they would just shut down the US factories and build everything in Asia and ship them here on super-cargo liners. Think that won't happen?


    But wait - it is even worse than that. With a 25%-plus profit bonus on the sale of every car just from the exchange rate, regardless whether they are built here or there, there is a strong incentive for them to slash prices 20% or more. That would undercut the US automakers, resulting in a catastrophic global price war, which the Japanese will win, specifically because their government unjustifiably slashed the value of the Yen and made the US dollar and other currencies too strong.


    Meanwhile there is runaway inflation in Japan, but it is OK because those US dollars from foolish Americans are rolling in by the shipload.


    Think the US government won't do something about Japan if Japan starts a price war?
    24 Aug 2013, 10:18 AM Reply Like
  • cbroncos
    , contributor
    Comments (873) | Send Message
    I am not sure if they have any built in profit and that is because of the high price of oil. Japan would have to ship these cars across the mighty Pacific Ocean. I think that shipping cars from Japan would be very costly now as the price of oil has increased from around $25 per barrel to over $100 per barrel.
    25 Aug 2013, 10:45 AM Reply Like
  • Lakeaffect
    , contributor
    Comments (978) | Send Message
    For the past 50 years we've been preached to by the intelligentsia that the American Labor force is to become "knowledge" workers. All this nasty manufacturing is to be shipped overseas where foreign laborers are better equipped to handle the dirty work. American laborers instead would focus on intellectual labor and doing each other's laundry in the service sector.


    American economic, energy, educational, taxation, business and social policy was geared to that overarching strategy. Ford was a willing participant and still is.


    Foreign competitors laughed at and took advantage of America's stupidity as they hollowed out it's manufacturing base and stole it's technology.


    It would be nice to think that the American people would wake up and realize what has been done to their livelihoods, but more likely is they'll stay home and use their food stamps and unemployment checks to purchase People Magazines and to watch Dancing With the Stars or Duck Dynasty.
    23 Aug 2013, 09:23 AM Reply Like
  • cbroncos
    , contributor
    Comments (873) | Send Message
    So by what you wrote I am hoping you mean throw out the republicans as they are holding back the re-building of America.
    23 Aug 2013, 10:56 AM Reply Like
  • Lakeaffect
    , contributor
    Comments (978) | Send Message
    What's it got to do with Republicans? Neither party has politicians that have any idea how to fix this, nor the desire to fix this, nor the guts to stand up and do what needs to be done. This has been going on for half a century, under both republican and democrat administrations. Politicians are only interested in what's in it for them and in their own longevity in office.


    We have no statesmen, just political hacks.


    You are delusional to believe there is some one party that has suddenly surfaced that will turn around five decades of destruction and corrosion of our economy.


    Go back to your magazines and cable TV.
    23 Aug 2013, 11:46 AM Reply Like
  • mobyss
    , contributor
    Comments (1840) | Send Message
    Yeah, when you have Democrats in office you get all those "shovel-ready" jobs, that a few months later are reassessed as not so shovel-ready after all.


    BTW, which party is holding up the building of a large cross-country energy pipeline? You know - infrastructure?
    23 Aug 2013, 01:02 PM Reply Like
  • cbroncos
    , contributor
    Comments (873) | Send Message
    There were and still are many shovel ready jobs. Bridges have been falling down all over the country. Obama has asked Congress for $50 billion to re-build bridges and other structures. He has also asked Congress to lower the tax rate to 20% for companies that build products in the USA. That would create millions of good paying jobs. But the republicans would rather vote on getting rid of the Affordable Care Act as they have done 41 times. And do they really think that Obama would approve of that bill?


    Now I know that republicans and democrats have been bad on trade. After all the worst trade bill (NAFTA) was signed by Clinton.
    24 Aug 2013, 10:27 AM Reply Like
  • Engineer&Far
    , contributor
    Comments (106) | Send Message
    I share your 'depression' Mr Lakeaffect. I've watched our economy being hollowed out over decades, with our politicians (of all stripes CBroncos) aiding foreign countries in this HUGE transfer of wealth. Why do we accept Japanese cars being imported to the US, mostly - with no or a minimal tariff when Japan insists on testing every one of our cars individually for safety....costing approximately $12,000 each. We could adopt a reciprocal tariff policy which reflects every countries barriers to our own exports. But our country is run by lawyers, who have mostly sold out (aka Ron Brown) the rest of us.... A fool and his money will soon be parted.
    23 Aug 2013, 12:17 PM Reply Like
  • cbroncos
    , contributor
    Comments (873) | Send Message
    The HUGE transfer of wealth has gone to the rich in this country.
    24 Aug 2013, 10:28 AM Reply Like
  • Engineer&Far
    , contributor
    Comments (106) | Send Message
    You ARE the problem.
    30 Aug 2013, 12:05 PM Reply Like
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