車輸送カルテル罰金、日本郵船７１億円で合意
OK, you probably can't decipher that. The news – this headline from Yomiuri – is the latest in the supplier antitrust cases that ring the world, from Japan and Korea through the US to Germany. Even China has gotten into the act, slapping fines on firms that charge "excessive" prices for OEM aftermarket parts, though that is a reflection of price discrimination (selling for what the market will bear) rather than collusion.
Fines to date now total $2.5 billion. Even in the auto industry, that's serious money. Whether we see private antitrust suits (which in the US carry treble damages) is unclear. Will Toyota be willing to go after its suppliers, without whom it cannot produce cars? Will it tighten its purchasing operations, where likely the "ordinary" parts central to collusion have younger, less experienced purchasers?
Now at one time, 50 years ago, kickbacks were not unusual in the US industry, but the one account of the internals of the cartels – a Nov 16th scoop by Hans Greimel of Automotive News in Tokyo – carried no suggestions of suppliers getting buyers to turn a blind eye. Instead, it's the intrigue of classic cartels in the US, meetings in obscure locations, rules for who is to bid in what manner to make their behavior less obvious to purchasers.
The excuse suppliers give is that they're in a low-margin business. OK, but why should we care? Car companies need to pay enough that suppliers hang around for another model, but they're in a low margin business, too — we customers have a plethora of mid-sized cars and small CUVs to choose among, and despite all the attention TTAC readers pay to hot vehicles, in the end price does matter. Furthermore, all of us who are in one way or another in the car business (and surely no one reading this blog does without, and without owners there is no car business) – anyway, all of us want the industry to focus on their core business, not on gaming the system. We don't want management resting on its laurels, especially when they've won their prize by cheating.
Anyway, I've done my judge's reports for my portion of the site visits for this year's round of 35 PACE Award finalists. There are many suppliers out there that by the 5% of sales metric are high-tech firms; it would be bad for the industry if Japanese suppliers aren't among them. However, the gut feeling I get from the last few year's of closed-door, non-disclosure presentations by PACE finalists is that Japanese suppliers aren't in the game the way they used to be. I don't see the innovative firms I visit benchmarking themselves against Japanese suppliers, while I see bigger and bigger sales shares for these US- and Europe-headquartered firms coming from Japanese nameplates. [For a story that reflects this, see a Dec 9th article by Hans Greimel on Toyota's revamping of R&D among its closely-held suppliers.]
Demographics are at play. While more Japanese graduate from college than ever before, 40-plus years of very low fertility means their absolute numbers are down; the number of Japanese who turned 20 in 2014 is half that of 1969 – so that (mortality aside) the number of 55-year-olds, at the experienced end of their engineering careers, is twice that of those potentially taking up the profession. With the number studying abroad in sharp decline, those graduates are even less likely to have experience living in English-speaking countries than in the past. The pool of potential engineers is smaller, and with a small number of exceptions these firms have only Japanese-speaking engineers in their home office. The flip side is that the US looks increasingly good as an engineering location, with more suppliers and car company engineering centers in a day's drive from metro Detroit than ever before. In contrast, operations are scattered in Europe and China.
So while the news focuses on Takata and whether they will see a big drop in business over the next few vehicle development cycles, we really ought to look as well at the list of firms in the various cartels. Won't their customers opt when they can for other suppliers? – most of the members of the busted cartels are Japanese companies. Yes, the yen is weak, creating a "buy Japan" incentive. However, no car company wants the risk of long logistics lines; JIT (just-in-time) manufacturing is the industry norm. There's no guarantee, either, that the yen will stay at ¥120/US$, down from ¥100 in June and ¥80 2 years ago. So this is one more strike against the Japanese industry (in the sense of "Made in Japan") and against the Japanese supplier industry (since they are more domestic than their US and European rivals).
I wish them a Happy New Year – 謹賀新年. At least for Japanese suppliers, 2014 wasn't a very good one. I'm afraid, though, 2015 won't be any better.
Oh, and that headline: ¥7.1 billion in fines on [the shipping company] NYK Line in a car transport cartel…
The post Old Year And New For Japanese Suppliers [draft] appeared first on The Truth About Cars.
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