Now Hitachi has joined the ranks of Toyota and Sony as Japanese companies who admit to losing money in the U.S. market.
Hitachi Ltd (6501.T), Japan’s biggest electronics maker, warned of a record $7.8 billion annual loss, hit by slumping sales, a stronger yen and costs to restructure its sprawling operations.
Their citing a “stronger yen” as one of the key factors in their loss is an admission that they’re losing money in foreign markets – the U.S. being the biggest. Previously, Toyota and Sony announced the same thing.
Regardless of how you feel about “free” trade, even its most die-hard supporters agree that “dumping,” the practice of selling products at a loss in a foreign market, is an unfair trade practice that cannot be tolerated. It’s banned by the WTO (World Trade Organization).
The time has come for the U.S. to crack down on this situation. It should immediately lodge a complaint with the WTO, demanding that Japanese companies raise prices significantly. If they do not, or if the WTO fails to act swiftly, then the U.S. would be entirely within its rights to impose tariffs on Japanese products.
Some of you, oblivious to the fact that our trade deficit (which now totals $9.2 trillion since 1975, the year of our last trade surplus) is directly responsible for our economic collapse, are probably thinking to yourself, “this guy is nuts.” “At times like this, we should be encouraging Japan to cut prices, not raise them.” If so, you’re forgetting that consumers and workers are one and the same, and are only thinking of yourself as a consumer. That’s the mental trap used so successfully by the purveyors of globalization. They want you to think only in terms of low prices and forget about the downward pressure on wages caused by the loss of manufacturing jobs.
If forced to raise their prices, Hitachi, Toyota, Sony and others will be faced with a choice: surrender U.S. market share or move their manufacturing to the U.S. to avoid tariffs or the currency exchange rate issue. If they opt for the former, someone else will surely fill the void and swoop in to build factories in the U.S., fueling a demand for labor that will drive wages higher than prices. You have to understand that it is a strong demand for labor that drives purchasing power higher. A weak demand for labor will erode purchasing power every time.