Japan auto companies triple Mexican pay rather than move to US
Nikkei -- Jun 28
The new North American free trade agreement that goes into effect Wednesday was touted by U.S. President Donald Trump as an engine of American job creation. But Japan's automakers are largely opting instead to keep operations in place and pay Mexican workers more or even just pay tariffs.

The US-Mexico-Canada Agreement requires 40% or more of parts for each passenger vehicle be manufactured by workers who are paid at least $16 per hour as a condition to make them tariff free in the region. Trump hailed that feature as a way to boost production in the U.S., which has a higher hourly rate than Mexico.

However, this looks to be wishful thinking. The ratio of US-Canada parts among Mexican-assembled vehicles sold in the U.S. was 13.5% in 2018, according to the U.S. Department of Transportation Highway Traffic Safety Administration. Trump's theory was that U.S. production would inevitably increase to meet the 40% requirement, but Japanese automakers, which had already positioned their production bases according to the old NAFTA regime, are not simply willing to pull up stakes and redeploy.

One reason is the cost of moving production. Honda Motor-affiliated parts maker Keihin will raise the hourly wage of employees at a factory in Mexico to $16 by next month -- triple the average rate of a parts factory in Mexico, but still cheaper than making a move. Because the pandemic has hurt earnings, the cost of the moving production will likely be too burdensome over the foreseeable future.

Auto component maker Piolax, will also raise the hourly wage at its Mexican plant to $16 within the year. The company is also installing robots to mitigate rising labor costs, President Yukihiko Shimazu said.

Toyota Motor, which built a new plant in Mexico in 2015, is not finding it easy to change plans either. The new plant started full-scale production of pickup trucks in February. The trucks are popular in the U.S. and would be subject to a 25% tariff if they do not meet the content requirements of the USMCA. But if Toyota does not operate the factory, it cannot recover its investment.

News source: Nikkei
Jul 12
More Japanese companies are using stocks as part of executive pay, seeking to shift management's focus to strategies that will increased share prices over the long term. (Nikkei)
Jul 11
The operator of Muji stores announced on Friday that its US unit filed for Chapter 11 bankruptcy, joining a list of retailers that have collapsed as a result of the coronavirus pandemic. (NHK)
Jul 11
A court in China has ruled that a Chinese filmmaker must compensate a Japanese production company for infringing on its copyright by using the firm's "Ultraman" character. (NHK)
Jul 11
ANA Holdings said Friday it will end its recruiting activities for fiscal 2021 as the prolonged pandemic makes planning for the future difficult. (Nikkei)
Jul 11
Japan's three major convenience-store operators are reporting a sharp drop in profits, as the coronavirus keeps customers at home. (NHK)
Jul 09
Struggling businesses and other clients have left Japanese banks with record outstanding loans for a third straight month. (NHK)
Jul 09
Carlos Ghosn, the former Nissan Motor Co chairman, wired $862,500 last year to a company managed by one of the two men who later helped him escape from Japan, U.S. prosecutors said in a Tuesday court filing. (Japan Today)
Jul 08
Torrential rains in southwestern Japan forced more plants to close Tuesday as floodwaters poured into factories, knocked out power and threatened to cover roads. (Nikkei)
Jul 08
Japan's labor ministry says over 32,000 workers have been discharged by their employers or faced contract nonrenewal amid the coronavirus pandemic. (NHK)
Jul 08
Whenever people want to sell their car for any reason, they wish to go through the process of selling as smoothly as possible. During this marketing process of their car, people make common mistakes again and again that costs them in the low-profit margin. Enlisted below are 5 common mistakes done by the people in selling their vehicle. (newsonjapan.com)