July 15, 2011

JAMA and CJAWU Comment on Current Forex Rate Levels

Toshiyuki Shiga Chairman, Japan Automobile Manufacturers Association
Koichiro Nishihara President, Confederation of Japan Automobile Workers・Unions

Recent foreign exchange rate movements have resulted in the Japanese yen reaching its highest level against both the U.S. dollar and the euro in four months.  This surge in value exceeds the capacity, at the corporate level, to address such drastic appreciation through cost-cutting and other measures.

In addition, with the July 1st signing of the free trade agreement between South Korea and the European Union, and with Japan lagging behind in the area of such bilateral agreements, the rise of the yen and the fall of the South Korean won against the euro further undermine the business environment for Japan’s automotive industry.

A protracted continuation of these forex trends will put into jeopardy the ability to maintain the domestic foundations supporting Japan’s manufacturing craftsmanship, which has long been the basis of its competitive strength.  The fears are well-founded that such conditions would force employment throughout Japan’s auto industry, including parts suppliers and other stakeholders, into even direr straits.  Moreover, such a scenario would, inevitably, adversely affect Japan’s recovery and reconstruction in the aftermath of the March 11 earthquake and tsunami, just as those initiatives are finally gaining ground.

Taking these realities into account, and in the interest also of preventing the hollowing out of Japan’s domestic manufacturing sector, JAMA and the CJAWU call on the Japanese government to take prompt and decisive action aimed at rectifying the current strength of the yen.