NEW YORK -- Every move U.S. President Donald Trump makes rivets market attention.
Trump on Thursday welcomed the news that South Korea's Samsung Electronics may build a plant in the U.S., tweeting "Thank you, Samsung!"
With only days left before his first meeting with Japanese Prime Minister Shinzo Abe at the White House, however, he has yet to mention Toyota Motor's announcement that it would create 400 jobs in the U.S. state of Indiana.
Over the past few days, Ford Motor executives have made comments that could be seen as Japan bashing. One representative of a U.S. automaker said, however, that it is nothing new.
He was right. A Ford executive did accuse Japan in February 2014. Joe Hinrichs, executive vice president and president of Ford's Americas unit, told reporters: "When Toyota came out and said half their profits are due to currency change of the yen ... and Akio [Toyoda] came out in support of Abe saying we need a weaker currency, that's a corporate policy statement."
Back then, the yen had weakened against the dollar due to the Bank of Japan's aggressive monetary easing, announced in April 2013. In fact, Toyota's performance was remarkable; it became the world's first automaker whose global annual vehicle production crossed the 10 million mark in the 2013 calendar year. It also reported a record net profit for the first time in six years in the fiscal year ended March 2014.
Ford, on the other hand, saw its profit increase in 2013, but it expected a full-year profit decline at the beginning of 2014. The executives of the two automakers provided contrasting views at press conferences; a Toyota executive said the weak yen was a tailwind, while a Ford counterpart said the yen's weakening against the dollar was bad for them.
"Closed" Japan
Painful memories seem to have been shared by Ford executives. At a ceremony in China in June 2013, then-Ford CEO Alan Mulally told reporters that Japan is "absolutely" manipulating its currency. He even added: "It's just the most closed market in the world." That marked a stark contrast with his remarks praising China as the best market.
Trump's confidence in Mulally was demonstrated in the fact that Mulally was chosen among the picks for secretary of state late last year. Mark Fields, the current Ford CEO who is also harsh on Japan, recently told U.S. media that he has forged a friendship with Trump by exchanging handwritten letters concerning Ford's planned investment in Mexico.
That said, many market watchers are skeptical about Ford's criticism of Japan. The problem is that 90% of the automaker's profit comes from the U.S. market. Even when the yen's value was strong for a long time after the 2008 global financial crisis, Ford was unable to outpace Japanese automakers in tapping overseas markets. Accusing the weaker yen ignoring the fact can be seen as hardly convincing.
Nevertheless, Ford's logic is convenient for Trump's campaign promise of creating jobs. If Toyota and Nissan Motor lose steam and Ford can create more jobs, more American jobs will be created. If not, he can use it as a bargaining chip to urge Japanese automakers to boost investment in the U.S.
With the growth of U.S. new car market expected to slow for the first time in eight years this year, Trump and Ford are likely to join forces to fight against their common enemies.
Easy target
Given the friction between Japanese and American automakers, a focal point will be whether Japanese automakers can create jobs in the U.S., rather than how to handle non-tariff barriers. And in that case, Toyota will likely become an easy target.
Toyota has pledged to keep producing 3 million cars a year in Japan in an effort to protect local jobs and help the supporting industries remain competitive. Since domestic sales are only about 1.5 million units, the remainder will be shipped overseas. The U.S. is the largest export market, and accounts for 40% of imports. Ford was also attacking the structure.
The two countries are likely to lock horns over jobs.
