Critics say Japan's gesture paves way for more profits

CAR EXPORT CAP PUTS U.S. UNDER PRESSURE

March 20, 1992|By Gilbert A. Lewthwaite | Gilbert A. Lewthwaite,Washington Bureau Knight-Ridder News Service contributed to this article.

WASHINGTON -- The first Japanese cutback in auto exports in seven years, announced yesterday, is not the good news it might seem for the Big Three U.S. carmakers.

Auto analysts say the Japanese move is as much a reflection of recession-depressed demand and increasing production at Japanese plants in the United States as it is a response to recent "Japan-bashing."

The Japanese are poised simply to shift production to their U.S. manufacturing plants as soon as the economy rebounds, keeping the level of competition intense and their U.S. profits high.

The export cutback is better news for autoworkers at the Japanese-owned plants here and could also be a boon to U.S. auto parts producers, which are becoming increasingly competitive. "The Big Three aren't worried about what is going on in terms of imports. They are worried about transplants," said Diane Swonk, economist and auto industry analyst with First Chicago.

"It's not good news for the Big Three," she said. "It's not helping them. They are still going to lose market share to the Japanese."

Mary Anne Sudol, automotive analyst with Fitch Investors Services in New York, said: "I don't know it's materially significant, but it is a gesture nonetheless. Maybe the name-calling will abate, if not stop."

In its announcement yesterday, the Japanese government said it would cut its voluntary ceiling on auto exports to the United States, imposed in 1985, from 2.3 million to 1.65 million.

But the reduction is less dramatic than the figures suggest. Imports from Japan have been falling steadily over recent years: 2.05 million in 1988; 1.94 million in 1989; 1.87 million in 1990; 1.76 million in 1991.

The Japanese said they ordered the cutback to 1.65 million for the fiscal year, beginning April, because the "healthy development of the automobile industry in both countries is vital to advance further the good relationship between the two countries and maintain the overall free trade system."

Japan has been under intense pressure recently from the Bush administration to open its markets to U.S. products, including autos, and to increase its purchase of U.S.-made auto parts. Its reluctance to do so has provoked a wave of "Japan-bashing" here, with calls for boycotts of Japanese-made products.

Linda Cooper, spokeswoman for the Japan Automobile Manufacturers Association, said: "I think the current environment has a lot to do with the fact that they did lower it as a means of trying to sort of smooth over the tension they have been feeling."

In Detroit, the Big Three automakers expressed disgust yesterday with the Japanese government's decision.

"This won't do a thing to help the trade balance," said Ford Motor Co. Chairman Harold "Red" Poling in a statement. "All that has happened is that the Japanese government has proposed a voluntary level for 1992 at about the same volume their automakers imported into the United States from Japan in 1991. So where is the reduction?"

General Motors Corp., in its statement, said the long-term solution to the chronic U.S.-Japan trade imbalance requires opening Japanese markets and more evidence that Japanese cars are not being sold here for less than the cost of producing them.

Chrysler offered the mildest reaction, calling the reduction "a small step in the right direction," but suggested that a limit of 1 million imports would be meaningful.

Earlier this week, Alan Gilmour, president of Ford's worldwide automotive group, said that a limit of about 1.3 million imported cars would be "something that starts to reverse the trend."

United Auto Workers President Owen Bieber called it "yet another hollow gesture."

House Majority Leader Richard A. Gephardt, who introduced legislation in December to restrict Japanese auto imports, called yesterday's cutback the "wrong action."

"I'm not interested in limiting the American consumers' ability to buy whatever car they want, but I want Japanese consumers to have the same right to buy whatever American goods they want," he said. He called on Japan to open its markets and to stop the "predatory practices here in the U.S. that have put our workers on the unemployment lines."

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