Japan Inc. struggles with yen rise, Thai floods
By Isabel Reynolds
TOKYO (Reuters) - Japan's biggest corporations are facing an ever tougher fight to keep up with their nimble Asian rivals as the soaring yen and Thai flooding hit manufacturers already battling consumer gloom in Europe and the United States.
From Nintendo to Panasonic, Sony and Honda, Japan Inc. is struggling to fend off competition from the likes of Samsung and Hyundai, which have been steadily nipping at their heels, as the soaring yen and supply disruptions undermine their recovery attempts.
"To put it bluntly, we're really in a tough spot," said Fumihiko Ike, chief financial officer at Honda Motor Co after the company declined to give its annual forecast in an unusual move. "We're in a much more difficult position because our car factory (in Thailand) is inundated."
Even after a slide in the value of the yen triggered by what appeared to be another round of government intervention on Monday, the Japanese currency stood at about 79.2 yen against the dollar, after a relentless rise from more manageable levels of about 100 yen three years earlier.
Attempts by many Japanese manufacturers to sidestep the yen and other high domestic costs by shifting production to Thailand have also run into difficulties.
Japan sold the yen on Monday for the second time in less than three months after it hit another record high against the dollar, pushing the U.S. currency up more than 4 percent against the yen to above 79 yen.
"Frankly, my reaction was, 'finally, they intervened.' But I'm also aware that a solo intervention has a limited impact," Honda's Ike added. "Will we able to keep these levels? I'm not all that hopeful."
This month's disastrous flooding has forced many firms to close plants that are either under water or lack necessary parts, in an echo of the supply chain woes that threw Japan's manufacturing into chaos following the March 11 earthquake and tsunami. Continued...