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Despite claims, Toyota #1 Importer in US

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Once Again We’re Driving What’s Not Made Here
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By LOUIS UCHITELLE | September 30, 2007 | Link to Original Article @ New York Times

NOW that the Big Three automakers are shrinking their labor costs — removing what they have so frequently described as the biggest obstacle to selling more cars in this country — they should be able to regain market share. Right?

Well, not exactly. The game has changed. The foreign companies against whom the Big Three compete are selling more and more cars that are not made at their factories in the United States, making labor costs here less important. They are importing again — in fact, quietly importing almost as many cars as they did in the 1980’s when Japanese vehicles flooded the market, provoking an outcry, and also import quotas.

Back then, the Japanese responded by putting factories in the United States. “Transplants,” they were called. So did the Germans and other Europeans and, most recently, the South Koreans. They are all still building factories here, expanding “domestic” production and paying their nonunion labor $25 to $30 an hour less in wages and benefits than the Big Three’s workers.

The Big Three for years have blamed that cost disadvantage for their sinking market share in the United States. Their cars were too expensive to make, they said. The tentative contract that General Motors negotiated with the United Auto Workers last week would lower the cost spread by shifting retiree health insurance obligations to a stand-alone trust fund administered by the U.A.W. and by lowering the wage scale for new hires.

But imports are once again rising, and the message is that shrinking labor costs within the United States won’t be enough. In a global economy, there are too many ways to gain market share. Marketing Toyota’s hybrid Prius, made only in Japan, as a fuel-efficient, ecologically friendly vehicle is one example.

“I don’t think anyone at Ford, Chrysler or General Motors believes their own rhetoric that they are going to gain market share just by reducing their labor costs,” said Daniel Luria, an economist at the Michigan Manufacturing Technology Center in Ann Arbor, Mich. “What they are trying to do is reduce their labor costs in a new U.A.W. contract while at the same time import more cars” — but their own.

The foreign auto companies are already well ahead on that score. Imported vehicles — coming now especially from Japan, Germany and South Korea — accounted for 23.4 percent of the vehicles sold in the United States this year through August, according to a compilation of government data by Moody’s Economy.com.

That has risen gradually from 11 percent in 1996. The numbers don’t include imports from Mexico and Canada, considered part of the domestic North American market. Even so, the import share is approaching the high of 27 percent in 1987. But this time, in sharp contrast to the Japan bashing of the Reagan years, there is silence.

“When you get outside Ohio, Michigan and Indiana, I don’t think there is any real view anymore of what is American and what isn’t,” Mr. Luria said. “Most people would say that most Toyotas, Hondas and Nissans are made here. The idea that the Big Three are American and the others are foreign, that is less and less meaningful.”

The Big Three seem to be absorbing that view. They struggled in the 1980s to get the foreign manufacturers to locate in the United States, thinking initially that it would be easier to compete with them here. But now Chrysler and General Motors are already either importing vehicles from Europe, China and Australia for sale as American models, or arranging to do so, making labor costs at home less relevant.

Such trends do not sit well with Alan Tonelson, a research fellow at the United States Business and Industry Council, which favors tariffs. He argues that the Big Three lift the rest of the national economy more than the transplants do. Specifically, he says, nearly every study shows that vehicles manufactured here by G.M., Ford and Chrysler contain a “considerably higher” percentage of American-made parts than cars rolling off the lines at the transplants.

Senator Carl Levin, a Michigan Democrat, is also vexed. Citing Census Bureau data and his staff’s calculations, Mr. Levin argues that “immense barriers” erected by Japan and South Korea keep down vehicle exports from the United States to those countries. Car, truck and parts imports from Japan, for example, reached $60.2 billion last year, he said, while similar exports to Japan from the United States were a tiny $2.3 billion. He put the Korean imbalance at $12.4 billion versus $751 million.

“What we should do with Korea is insist that the free trade agreement guarantees openness in their markets,” he said of the pact signed by the countries last June and now before Congress. “This agreement does not do that.”

Apart from trade issues, other factors are lifting vehicle imports. The Japanese are the leaders at making smaller, fuel-efficient cars in their home factories — and that is paying off at a moment when $3-a-gallon gasoline is raising the popularity of such cars here.

Some argue that the rise in imports, especially small cars, is a natural market response to that demand. “The transplants are generally large-car plants,” said James Doyle, president of Level Field Institute, a research group partly financed by American automakers. “So even a Toyota or Hyundai can’t make small cars profitably in the United States.”

Largly because of the Prius, Toyota is turning out to be the biggest single importer so far this year, accounting for roughly one in every five vehicles coming into the country. Although the Japanese company is adding factories in the United States, 45.7 percent of its vehicles sold here through August were imported, up from 40 percent in 2003.

Trina Ewald, a spokeswoman for Toyota Motors North America, says the company has no choice. “We are operating our North American plants at full capacity,” she said. “We are building as many vehicles as we can locally.”

That is not true in Japan, where Toyota and other auto manufacturers have built new factories, only to find that domestic sales are not enough to keep them operating at full capacity. Exports have helped to do this. So has the weak yen — weak for most of this decade, reducing the cost of production, measured in dollars, and thus the profitability of exports to the United States.

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It's only going to keep going up with Prius sales rising and the increased capacity and Japanese plants.

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This is why I hate "jap" $h!. They bombed peral harbor, I will never forget!

guess you don't like the germans, italians, british and people from the south.

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guess you don't like the germans, italians, british and people from the south.

Well, in fairness, it was only the Japanese that outright attacked the US. Perhaps they were unwitting pawns in a more complex scheme but they awoke the sleeping Giant. Everyone else has been dealt with in one manner or another...thats of course considering they can be found. :lol:

No one had a gun their heads. Talk about the original suicide bombers. How times have changed........

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And the bait and switch comes full circle...

For years we've heard the various arguments in favor of the 'transplants about how 1) They provide jobs, 2) They contribute to the economy and 3) They're actually american and 4) More plants will come.

But the reality is 1) The jobs provided aren't as plentiful or well paying. 2) They hardly contribute anything to our economy in comparison to the big 3. 3) Now the 'transplants' are billed as american, but by god, you let the domestics import something (Like the Equinox motors) and it's front page news that the product isn't american. 4) Despite all this; Toyota has actually SCALED BACK their plans for expansion in the U.S. (This happened right after they officially 'broke' GM this year as #1 automaker)

But here's the kicker... We have been the receivers for so long that our culture is apathetic to the whole situation. It's very possible that the Japanese will eventually destroy this industry just like they did small electronics. Unlike the 80's, when america was a culture less divided, you will see NO backlash from americans when this series of events happens either, because even the most staunch DETROIT fans have been 'influenced' by the press that Detroit is 'getting what it deserves' (Look no further than this board for evidence of the constant negativity -- Even the dealers are turning on the company)

It sure is fun watching our country fall!!! [/sarcasm]

P.S. As for Pearl Harbor... We should never forget the significance of that day and how it relates to our country. Forgiveness is entirely different though; thus the point of my signature... Japan has been FORGIVEN for commiting one of the largest atrocities ever toward the citizens of this country, yet this country cannot forgive Detroit for making a few 'less than stellar' products.

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guess you don't like the germans, italians, british and people from the south.

na theres a difference... its just plain offensive, to have your ambassodor send telegrams of peace, as your fleet is on its way... sure its tactics... but if it fails... it is asking for a lifetime + of discrimination...

hey Fog, do you know who's winning the 2007 anual sales? seemed like at the 2nd quarter it was tied up 1 quarter to gm, the other to toyota... but when is 3rd quarter global sales coming in>?

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