In economics, a strong currency usually means good things for a nation's economy. When the dollar is strong, for example, the buying power of American businesses and individuals ramps up, making most of us pretty happy. The notable exception is with exports: when the dollar is doing well, it's harder for buyers with weaker currencies to purchase what America has to sell.
This conundrum has now hit Japan, where the yen is on a winning streak. Not only does that hurt exports, but it also means that much of the revenue Japanese manufacturers generate in foreign countries gets devalued when it's translated back into yen. Add to that the slumping global economy, and things start to look pretty bleak. (Did we mention that Toyota lost money for only the second time ever
Well, after slicing and dicing his company's profit forecast, Honda's CEO, Takeo Fukui, has had just about enough. He's asking the government to help weaken the yen--or else:"If we go beyond (100 yen), we would simply have to transfer more production overseas, cut more temporary workers and even start laying off permanent jobs," he said. "Beyond that we could switch to importing more cars into Japan, bring research and development facilities overseas, and in an extreme scenario move our headquarters offshore. It would cause nothing short of a hollowing out of Japanese industry." [emphasis mine]
Yes, folks, you read that correctly: he's threatening to pick up his toys and go. Mr. Fukui, I can't say for sure, but there might be a few sites in Detroit that'll be coming on the market soon. Stay tuned. -- Richard Read
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