Latest Japan Inc. Sales Drive Refuels Old Fires in America

From union halls to Big Three boardrooms, a long-dormant cry by US automakers is echoing again across the serrated skyline of Detroit: "The Japanese are coming!"

Japanese automakers have boosted exports to the US so much that they are loading cars onto cold-storage ships built to carry fruit and vegetables. Once stateside, the vehicles are selling faster than US cars.

Japan's latest drive threatens US jobs and profits, according to the American Automobile Manufacturers Association (AAMA). It could eventually reignite the grass-roots hostility toward "Japan Inc." that scorched bilateral relations during the 1970s and 1980s, trade experts say.

"If the Japanese continue to pick up market share, then there's a likelihood for production scalebacks and job loss," says AAMA President Andrew Card.

This latest blow is just the hardest hit from a steep fall in the value of the yen, down nearly 50 percent against the dollar since April 1995. That makes Japanese goods cheaper in the United States, hurting US makers of film, computer chips, and other goods.

"It will not just be the Big Three coming to Washington. There will be a broader array of American industries that find that the weak yen is blunting their ability to sell to Japan and providing additional competition in the United States," says Edward Lincoln, a trade expert at Brookings Institution in Washington.

The US trade deficit with Japan last year shrank 16.5 percent to $47.7 billion, with autos and auto parts accounting for 63 percent of the shortfall. Last month, though, auto exports from Japan surged 75 percent over January 1996, says the Japan Automobile Manufacturers' Association. Over the same period, sales of Japanese-made cars in the US jumped 27.5 percent, says the AAMA.

"It is certainly disconcerting, and it makes us wary about what the next several months hold for us," says Steve Beckman, international economist at the United Auto Workers union.

Until now several factors, including productivity gains by US industry, have padded US-Japan relations against harm. "The Big Three have taken big steps in improving their competitiveness by improving quality," says Takeshi Kagami, consul general at Japan's consulate in Detroit.

Also, the US economy is growing slowly but steadily in the sixth year of an expansion. Manufacturing is stable, with autos and some other major sectors in a hiring mode. "When jobs are plentiful and incomes are rising, people worry much less," says Mustafa Mohatarem, chief economist at General Motors Corp.

Meanwhile, Japan's economy is enduring prolonged stagnation. "In the past two years there has been more of a recognition that the Japanese are not supermen," Mr. Mohatarem says. "There is much less fear of Japan."

Also, the "interdependence between Japanese auto parts plants and the Big Three is very strong. They rely on each other these days," Mr. Kagami says.

Finally, Americans are more accustomed to global competition and are generally more self-confident and less hostile than during previous decades, experts say.

But the collegial relationship could chill. Economists say America is long overdue for a recession, and Japan's economy will eventually shake its doldrums.

And a sudden rebound in Japan's share of the US auto market could stir up public resentment, the experts say.

Trade friction between the world's two leading economies flared this week as the US Maritime Commission hit Japanese shipping companies with $100,000 port surcharges. The move Wednesday came in response to "unfavorable restrictive practices" against foreign ships at Japanese ports.

Similar market-access issues have been simmering in other industries. Japan agreed in June 1995 to begin opening its own auto market, after the US threatened almost $6 billion in tariffs.

But the biggest concerns today are the yen and Japan's expanding share of auto sales in the US - issues that involve American pride as well as jobs.

Japanese companies claimed 23 percent of the US auto market last year. Last month, though, Japanese firms won 24.5 percent of the market in light vehicles.

Some experts believe the yen and greenback will soon gain a better balance. The weak yen "has to be a passing trend," Mohatarem says. Japan's "trade surplus ... is increasing and yet the currency is depreciating. That flies in the face of all good economics.