Automotive industry has suffered the most from the economic crisis and no matter how healthy a company was, the current situation is just getting worse.
Toyota today warned it would post its first-ever operating loss in the wake of the financial crisis. It blamed falling sales and a surge in the value of the yen and it expects to lose 150 billion yen (£1.1 billion) in operating profits – down from a 2.27 trillion yen profit in 2007.
Honda Motor Co. President Takeo Fukui has rapped the government's "slow" response to the yen's sharp appreciation, saying further rises by the currency would hollow out Japan's auto industry through lost jobs and a shift of manufacturing, research and other activities overseas.
Last week, the No. 2 Japanese automaker announced its third downward revision of its group earnings forecast for fiscal 2008, slashing its net profit projection by 62 percent from the previous estimate to ¥185 billion due to plummeting global auto sales and a sharp rise in the value of the yen.
For the latest earnings projection, Tokyo-based Honda assumes the dollar exchange rate will average ¥101 in fiscal 2008, instead of ¥103 in its October estimate. On Friday, the dollar hovered around ¥88.
For Honda, a rise of every ¥1 slashes its annual operating profit by ¥18 billion.
To cope with the yen's surge beyond 100 to the dollar, Honda is cutting domestic production and jobs, Fukui said, and the automaker may have to shift not only production bases overseas but also other activities like research and development if the yen stays above 90.
These moves would "accelerate the hollowing out of Japan," he said. "But this is what a company should do" to survive such a situation.
Honda is cutting about 1,200 nonregular jobs at its domestic production bases by early February from around 4,500 in late November.
"If things do not change, the number (of temporary jobs) will fall to around zero," Fukui said.
Honda is projecting its global vehicle sales to fall 7 percent from a year earlier to 3.65 million units in fiscal 2008.
It had earlier planned to boost sales to over 4.5 million units in fiscal 2010. But given the current business environment, Fukui said, "The scenario has changed totally."
Sources: Car magazine, The Japan Times
Toyota today warned it would post its first-ever operating loss in the wake of the financial crisis. It blamed falling sales and a surge in the value of the yen and it expects to lose 150 billion yen (£1.1 billion) in operating profits – down from a 2.27 trillion yen profit in 2007.
Honda Motor Co. President Takeo Fukui has rapped the government's "slow" response to the yen's sharp appreciation, saying further rises by the currency would hollow out Japan's auto industry through lost jobs and a shift of manufacturing, research and other activities overseas.
Last week, the No. 2 Japanese automaker announced its third downward revision of its group earnings forecast for fiscal 2008, slashing its net profit projection by 62 percent from the previous estimate to ¥185 billion due to plummeting global auto sales and a sharp rise in the value of the yen.
For the latest earnings projection, Tokyo-based Honda assumes the dollar exchange rate will average ¥101 in fiscal 2008, instead of ¥103 in its October estimate. On Friday, the dollar hovered around ¥88.
For Honda, a rise of every ¥1 slashes its annual operating profit by ¥18 billion.
To cope with the yen's surge beyond 100 to the dollar, Honda is cutting domestic production and jobs, Fukui said, and the automaker may have to shift not only production bases overseas but also other activities like research and development if the yen stays above 90.
These moves would "accelerate the hollowing out of Japan," he said. "But this is what a company should do" to survive such a situation.
Honda is cutting about 1,200 nonregular jobs at its domestic production bases by early February from around 4,500 in late November.
"If things do not change, the number (of temporary jobs) will fall to around zero," Fukui said.
Honda is projecting its global vehicle sales to fall 7 percent from a year earlier to 3.65 million units in fiscal 2008.
It had earlier planned to boost sales to over 4.5 million units in fiscal 2010. But given the current business environment, Fukui said, "The scenario has changed totally."
Sources: Car magazine, The Japan Times
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