Detroit looking to deepen ties with Japanese businesses amid strong yen

Kyodo

The head of a major business lobby in Detroit expressed hope recently that the appreciation of the yen to historic levels may provide Japanese exporters with more opportunities to tie up with U.S. companies.

Sandy Baruah, president and CEO of the Detroit Regional Chamber, said during an interview in Tokyo that the strong yen “allows the Japanese companies to lower their costs” abroad and eases their access to the North American market.

The situation will also allow American companies “to build stronger relationships with the Japanese companies,” said Baruah, who visited Tokyo to attend a meeting of business and political leaders from the U.S. Midwest region and Japan.

He added that U.S. companies had experienced difficulties developing relationships with Japanese businesses in the past as “they were not using many U.S. suppliers.”

The appreciation of the yen, which has been trading around the ¥76 range against the dollar, has raised concern about the impact on Japanese manufacturers, although the government has also encouraged Japanese businesses abroad to accelerate mergers and acquisitions by taking advantage of the yen’s strength against its major counterparts.

Baruah said that while Japan has quickly recovered from supply chain disruptions triggered by the March 11 earthquake and tsunami, the disasters made companies aware they should “have supply chain entities located close to where the final assembly is going to take place.”

The business leader from Detroit, which hosts units of Toyota Motor Corp. and other Japanese automakers, indicated he hopes Japanese carmakers will increase the local content of vehicles produced in the United States.

“The chips that will go into the North American vehicles, perhaps it might be best for more of that production to take place in North America,” he said.

“It is critically important for the world and for the United States for the Japanese industry to remain strong,” Baruah said.

He also cautioned that the quality difference between Japanese products, especially automobiles, and those of U.S. or other Asian companies is rapidly diminishing, and Japanese automakers may face further challenges over design and other factors.

Japan-U.S. Midwest ties

Business leaders from Japan and the U.S. Midwest reaffirmed their strategic alliance Tuesday while calling on Tokyo and Washington to promote the Trans-Pacific Partnership regional free-trade initiative.

At the end of the 43rd annual meeting, the Japan-Midwest U.S. Association and its U.S. counterpart adopted a joint statement that said, “Promoting the innovative development of technology as well as management innovations that include strategic alliances is key to business success.”

The statement emphasized the importance of promoting a free-trade pact such as the TPP.

During the two-day gathering of some 300 participants, including senior corporate officials and governors, numerous U.S. and Japanese participants spoke of the necessity of promoting the TPP.

“If Japan and the United States join the TPP framework, it would function as a place to discuss various obstructive factors and subsequently lead to expansion in investments,” Junichi Ujiie, senior advisor to Nomura Holdings Inc., said during a session discussing investment between the two countries.