Honda Motor Co Ltd's President and CEO Takeo Fukui made comments on the impact that the possible bankruptcy of the US "Big Three" could exert on Japanese automakers at the Year-end CEO Speech Dec 17, 2008.
He admitted that the impact would be advantageous for Japanese automakers over the long-term, whereas it would have a negative effect in the short term because the market could further slump depending on how they collapse.
When asked if he agrees with Nissan Motor Co Ltd's President and CEO Carlos Ghosn's recent controversial statement that the Japanese government must provide aid to the automobile industry, Fukui said, "We have things to do before asking the government for help."
He did say, however, that he expects the government to "act a little more proactively" to stabilize currency exchange rates.
Major questions and answers were as follows.
Q: If even one of the Big Three fails, what impact do you think Japanese and other automakers will suffer? And what would you say if the US government bails out the Big Three?
Fukui: There are many forms of bankruptcy, but I would say it (collapse of the Big Three) wouldn't be a good thing for any automaker anywhere in the world, including Honda. The best way is to nurture them back to health with some sort of help, I suppose. I'm sure that many approaches are being discussed in the US, but it shouldn't be a measure that results in unfair competition.
Q: Why don't you think the Big Three's failure would be a good thing for Japanese manufacturers? They are on the brink of bankruptcy as a result of the fair competition. It would rather be a great opportunity for Japanese auto manufacturers, wouldn't it?
Fukui: Basically, what you said is correct. Looking at the current circumstances, however, the significance of the US automobile market is immense. I'm saying, considering its impact (on the consumer spending), their breakdown could bring about a very undesirable situation depending on how they fall. As "the weakest always goes to the wall" on a long-term basis, it's natural that manufacturers grow if they are preferred by customers while they slide otherwise.
Q: Some say that US component suppliers will get hurt if the Big Three collapse. Honda's production in the US depends quite heavily on local suppliers. If those suppliers go bankrupt, won't it upset Honda's production in the US?
Fukui: We have been considering that risk, of course, since people started to talk about (the possible bankruptcy of) the Big Three more than a month ago. It is true that Honda is procuring components from so-called 100% US local capital suppliers for the cars we manufacture in the US. Of those tens of suppliers, we have already listed some that could fall apart if one or more of the Big Three go broke.
We can take a variety of alternative measures after holding out for a month or so, even if those suppliers fail. We can send components from Japan and other countries or transfer molds (to make components at other manufacturers in the US), for example, because we have built up a range of expertise and experience (concerning alternative measures).
Based on these reasons, I think we can ride out the storm if we can hold out for a month. Another way is to keep an extra month's inventory of certain components. We are currently discussing various measures.
Q: Do you have any intention to request the Japanese government to implement a low-interest loan and other measures as other countries do?
Fukui: The current bleak situation is a common challenge for the entire automobile industry, and I think each company has its own measures against it. However, it believe that at least Honda has things to do by itself before asking the government for help.
Source: Tech-On
He admitted that the impact would be advantageous for Japanese automakers over the long-term, whereas it would have a negative effect in the short term because the market could further slump depending on how they collapse.
When asked if he agrees with Nissan Motor Co Ltd's President and CEO Carlos Ghosn's recent controversial statement that the Japanese government must provide aid to the automobile industry, Fukui said, "We have things to do before asking the government for help."
He did say, however, that he expects the government to "act a little more proactively" to stabilize currency exchange rates.
Major questions and answers were as follows.
Q: If even one of the Big Three fails, what impact do you think Japanese and other automakers will suffer? And what would you say if the US government bails out the Big Three?
Fukui: There are many forms of bankruptcy, but I would say it (collapse of the Big Three) wouldn't be a good thing for any automaker anywhere in the world, including Honda. The best way is to nurture them back to health with some sort of help, I suppose. I'm sure that many approaches are being discussed in the US, but it shouldn't be a measure that results in unfair competition.
Q: Why don't you think the Big Three's failure would be a good thing for Japanese manufacturers? They are on the brink of bankruptcy as a result of the fair competition. It would rather be a great opportunity for Japanese auto manufacturers, wouldn't it?
Fukui: Basically, what you said is correct. Looking at the current circumstances, however, the significance of the US automobile market is immense. I'm saying, considering its impact (on the consumer spending), their breakdown could bring about a very undesirable situation depending on how they fall. As "the weakest always goes to the wall" on a long-term basis, it's natural that manufacturers grow if they are preferred by customers while they slide otherwise.
Q: Some say that US component suppliers will get hurt if the Big Three collapse. Honda's production in the US depends quite heavily on local suppliers. If those suppliers go bankrupt, won't it upset Honda's production in the US?
Fukui: We have been considering that risk, of course, since people started to talk about (the possible bankruptcy of) the Big Three more than a month ago. It is true that Honda is procuring components from so-called 100% US local capital suppliers for the cars we manufacture in the US. Of those tens of suppliers, we have already listed some that could fall apart if one or more of the Big Three go broke.
We can take a variety of alternative measures after holding out for a month or so, even if those suppliers fail. We can send components from Japan and other countries or transfer molds (to make components at other manufacturers in the US), for example, because we have built up a range of expertise and experience (concerning alternative measures).
Based on these reasons, I think we can ride out the storm if we can hold out for a month. Another way is to keep an extra month's inventory of certain components. We are currently discussing various measures.
Q: Do you have any intention to request the Japanese government to implement a low-interest loan and other measures as other countries do?
Fukui: The current bleak situation is a common challenge for the entire automobile industry, and I think each company has its own measures against it. However, it believe that at least Honda has things to do by itself before asking the government for help.
Source: Tech-On
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