Hitachi Dumping Products on U.S.

January 30, 2009

http://www.reuters.com/article/ousiv/idUSTRE50T2F920090130

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.


Is Sony “Dumping” on the U.S.?

January 13, 2009

http://www.reuters.com/article/ousiv/idUSTRE50B7LN20090113

First it was Toyota announcing a loss.  Today it’s Sony.

Japan’s Sony Corp (6758.T) will likely suffer an annual operating loss of about $1.1 billion, its first such loss in 14 years, due to sluggish sales and a stronger yen, a person with knowledge of the matter said.

The mention of a “stronger yen” is a critical point here.  It’s a clear indication that Sony lost money in the U.S., its biggest market.  “So what?” you may be wondering.  “It’s a tough economy.  Everyone is losing money.”  That’s true, but there’s a huge difference between foreign and domestic companies.  It’s a violation of international trade rules for a company to sell products at a loss in a foreign market.  It’s a practice known as “dumping” and is expressly forbidden.  It does’t matter whether it takes place in a good economy or in a recession.  It’s still dumping. 

The U.S. should immediately insist that Sony raise its prices.  If they don’t, the U.S. should lodge a complaint with the World Trade Organization.  And if the WTO doesn’t take swift action, the U.S. would be entirely within its rights to slap tariffs on Sony products, Toyota products, Toshiba products (also expected to post a loss) and any Japanese company that is selling products at a loss in our market. 

“That wouldn’t be very nice,” you may be thinking.  “We wouldn’t want them to treat us that way.”  Think again.  That’s exactly how the Japanese treat us, and even worse.  Japan sustains a $100 billion per year trade surplus in manufactured goods with the U.S.  by refusing to buy from us as much as we buy from them.  That’s approximately 1.34 million high-paying manufacturing jobs they’ve taken from our economy. 

“But we don’t want prices raised,” you may also be thinking.  “I can’t afford things as they are now.”  You can’t afford things because the downward pressure on wages caused by the trade deficit has driven down incomes more than prices have been held in check.  If the prices of imports were raised, the profit potential needed to justify manufacturing in the U.S. would be restored.  Wages would rise faster than prices.  This would be true even if you work in a field not associated with manufacturing, as job-seekers vying for your job would be pulled out of the pool of available labor and put to work in factories. 

For decades the U.S. has blamed currency valuations for our trade deficit and Japan has been a master of manipulating the yen-dollar exchange rate in its favor.  Now the global economic melt-down has overwhelmed their ability to prop up the exchange rate, and the table has turned in our favor.  It’s time to strike and force actions that will restore a balance of trade.  It’s time to stop being played for a sucker in the global trade game. 

One final comment on a quote from the article:

The company has assumed the yen at 100 yen per dollar and 140 yen per euro, compared with the current dollar/yen level of 89 yen and euro/yen level of 119 yen. A firm yen cuts into the value of its profits and makes its products less competitive in overseas markets.

A strong yen only makes Japanese products less competitive if they adjust the dollar price higher in response to the exchange rate.  Have you seen any evidence of that?  Of course not!  If anything, they’ve been cutting prices to try to prop up sales.  That’s dumping!!


Toyota “Dumping” Cars on U.S. Market

December 22, 2008

http://www.reuters.com/article/ousiv/idUSTRE4BL0EM20081222?sp=true

As the Bush administration chides the domestic auto industry and demands that they come up with a plan to be profitable by March 31st of next year, it stands idly by while Toyota “dumps” its cars on the U.S. market.  “Dumping” is the unfair trade practice of selling products at a loss in an export market.  By its own admission (see the linked article), Toyota is, in fact, operating at a loss and dumping vehicles. 

Toyota Motor Corp forecast a first-ever annual operating loss, blaming a relentless sales slide and a crippling rise in the yen in what it said was an emergency unprecedented in its 70-year history.

Toyota, the world’s biggest automaker, had been expected to issue its second profit warning in less than seven weeks after domestic rival Honda Motor Co also cut its outlook again last week, but the downward revision was bigger than predicted.

Of course, this is a new development resulting from the rapid slide in the dollar vs. the yen but, nevertheless, it puts Toyota in violation of international trade rules.  If Toyota fails to immediately raise their prices, the U.S. should file a complaint with the WTO (World Trade Organization).  If that doesn’t yield swift results, the U.S. should quickly impose tariffs on imported Toyota cars and parts.  And it should take the same action if other Japanese exporters report operating losses. 

“This is very, very, very bad,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments. “There’s a chance they could fall into the red in the next business year as well.

“This is also not just a problem for Toyota. What is good for Toyota is good for the Japanese economy.”

Remember when the same was said of General Motors and the American economy?  It’s still true, regardless of what other economic segment du jour  the free trade cheerleaders offer up as our latest and greatest economic salvation.  One day it’s high tech.  The next day it’s services.  The day after that it’s health care, as though we can have a thriving economy by everyone getting sick and nursing each other back to health. 

The truth of the matter is that there is no way to gimmick an economy back to health that has been sickened by the loss of one of its key segments.  Naturally, giving away our manufacturing sector through misguided trade policy has helped the “global economy” but it has weakened our own.  For decades we have tried to prop it up by enhancing other segments – first “high tech,” then services and finally the construction segment of the economy – but it was all doomed to collapse.  An economy needs all segments to remain healthy, including manufacturing.  It’s time to reclaim that segment and it’s time for nations like Japan to stand on their own two feet instead of scavenging the economy of the U.S.


Is Toyota Guilty of “Dumping?”

December 13, 2008

http://www.reuters.com/article/ousiv/idUSTRE4BC0FS20081213

The linked article reports that Toyota is likely to report a loss in their 2nd half (the October 2008 – March 2009 time frame).  This begs the question:  if Toyota is selling cars at a loss, isn’t it guilty of “dumping,” the practice defined by the World Trade Organization as selling products below cost?  Shouldn’t the U.S. immediately file a complaint with the WTO?  Shouldn’t the WTO immediately either force Toyota to raise their prices or authorize the U.S. to impose tariffs on Toyota vehicles? 

Some may protest that the domestic automakers are also operating at a loss.  True, but that doesn’t violate any international trade agreements.  No other nation can take a case against the Big Three to the WTO because no one imports American-made cars, for all intents and purposes. 

But none of this will happen.  WTO rules are for the U.S. to follow and no one else.  We’ll simply give Japan time to dump yen and buy dollars, manipulating the dollar-yen exchange rate back to where they can easily make a profit.