Japanese brands rush to add North American plants
Japanese automakers are building new North American assembly plants at a breakneck pace to regain lost U.S. market share and reduce their dependence on a homeland that's become prohibitively costly.
Japan's dwindling workforce and seemingly endless recession provide more reasons for automakers to move work offshore.
“Five years ago, nobody expected this kind of manufacturing shift to North America,” said Haig Stoddard, WardsAuto analyst. “Replacement of Japanese imports with North American production is the main driver.”
Hundreds of thousands more Japanese-brand vehicles will be built in North America by 2014. German automakers are also expanding in the United States and Mexico.
“I wouldn't be surprised to see some Japanese manufacturers virtually cease vehicle production in Japan” over the next several decades, said Jim Hall, managing director of 2953 Analytics.
WardsAuto forecasts at least 10 vehicles imported from overseas will go into production in North America by 2016. Several more all-new models will add to the production boom.
For Americans, the likely results are:
• Greater competition here as U.S. sales rise and Europe and Japan stagnate.
• Higher exports to the rest of the world from Japanese-owned plants in the United States, Canada and Mexico.
“North America is a competitive manufacturing base,” said Michelle Krebs, senior analyst at Edmunds.com. “It makes sense to build more cars here, especially when it's expensive to make them at home and U.S. sales will grow more than Japan.”
Mexico has been the biggest beneficiary. Honda, Mazda and Nissan all plan to open plants there in 2013 and 2014. A number of Japanese and German plants in the United States are also expanding.
“It's a feel-good story,” said Rebecca Lindland of consultant IHS Automotive. “It speaks to U.S. competitiveness and reinforces the economic comeback here. The U.S. has also become friendlier to small cars. That makes North America a better base for exports to the rest of the world.”
Japanese automakers are reducing exports from home because the strong yen has slashed profits on cars shipped from Japan to America. That's a major problem for small cars involving tough new competition from Korean and Detroit Three compacts and subcompacts.
“Japanese automakers are not able to charge premium prices for their small cars anymore,” Krebs said. Mexico is a particularly attractive site for new small-car plants because it has rising sales, low wages and free-trade agreements with the Western hemisphere's biggest markets: the United States and Brazil. The potential downside is over-capacity if investment outstrips demand or Brazil limits imports from Mexico.
Japan has a demographic time bomb: Its workforce is shrinking and aging. While its automakers expand and build factories in North America, Japan may have to figure out whether it can continue to be a manufacturing country.
“Statistically, the Japanese working class is disappearing,” Hall said. “That's the main reason for all the new assembly plants.”
Mark Phelan is the auto critic for the Detroit Free Press; email@example.com.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Consol Energy, Range Resources report 2Q losses, plan deeper cuts
- Plummeting natural gas prices slash revenue of Marcellus shale producers
- U.S. Steel joins major producers in new dumping complaint
- Ambridge’s PittMoss takes off with help from TV show, Mt. Lebanon native Cuban
- Leisure, hospitality lead Pittsburgh area job gains
- Muni bond funds stressed
- U.S. Steel to debut oil, gas pipeline connector
- Bayer sets sights beyond aspirin
- Alcoa among 13 firms in $140B carbon-footprint pledge
- Pitt to start Energy Law and Policy Institute
- Israel’s Teva drops bid for Mylan, buys Allergan for $40.5B