Altlantic International Partnership news: Japan's Economy Struggles for Air

With the arrival of the first real Japanese data since the tsunami struck, the immensity of the tragedy which Japan is passing through is only now gradually becoming apparent. Exports were down by a seasonally adjusted 7.7% in March over February, while imports only fell by a much more modest 1.4%, with the inevitable consequence that the trade surplus, which forms the lifeline for Japan's fragile economy, shrank sharply. In particular car production was badly hit, with output at Toyota (TM) plunging 62.7% during the month, while Nissan (NSANF.PK) reported a drop of 52.4% and Honda (HMC) put the shrinkage in its Japanese domestic production at 62.9% - adding that output would be at 50 percent of its former projections until at least the end of June.
In fact March output across the whole of Japanese industry fell at a record monthly pace of 15.3%, while household spending declined at the record annual rate of 8.5%.


Large as they are, however, these numbers were to some extent expected. More worrisome from the Japanese point of view is the fact that production may be many months getting back to earlier levels given supply chain problems and the fact that electricity generating capacity will remain problematic, leading to reductions in the level of power available.
These delays in restoring production in Japan’s auto industry at a time of substantial economic growth in potential new markets raise the prospect that some of the damage may be permanent, as some part of the Japanese market share goes to the country’s main competitors. Indeed just this point was raised by S&P recently when it cut its outlook to negative for all three manufacturers along with suppliers Aisin Seiki (ASEKF.PK), Denso (DNZOF.PK) and Toyota Industries (TYIDY.PK). In their report justifying the move S&P stated: "The outlook revisions also reflect our opinion that extended production cuts may erode Japanese automakers' market shares and competitive positions in the longer term."
Among companies that may well inadvertently benefit from Japan's ill fortune is the US is General Motors (GM), which less than two years after declaring themselves bankrupt now seems poised to reclaim the global auto sales number one spot from struggling rival Toyota. Japan's car manufacturers have also been hurt by the sharp rise in the value of the yen. After years of a weak yen boosting sales and corporate profits, the Japanese currency has steadily strengthened to 81 yen to the dollar from 112 at the end of 2007. What might have been seen as a temporary development now looks much more permanent, and strategic planning by Japanese corporates will undoubtedly be influenced by this when it comes to decisions on where to locate new plant and capacity. And in the meanwhile, they stand to loose market share in both the US and in the key growth market, China.
 http://seekingalpha.com/article/267279-japan-s-economy-struggles-for-air