U.S. Makers Battling Japanese Car Parts : Latest Pact Fails to Get Pledge to Use More American Supplies
Just as an uneasy truce has cooled hostilities between U.S. and Japanese car makers, a new fight is brewing over imported car parts the American industry claims are closing plants and costing jobs.
Japan has voluntarily limited car exports to the United States and the rise of the yen against the dollar makes them more expensive, all to the benefit of American car makers. But there has been no slowdown in car parts flooding the U.S. market, chiefly from Japan, industry officials say.
The United States and Japan recently ended talks in Tokyo with an agreement that Japan would supply data on a regular basis on how many parts their car makers--in Japan and elsewhere--were buying from U.S. suppliers.
However, it stopped short of satisfying U.S. demands that Japan pledge to import more U.S. parts and buy more U.S. parts for cars they make at their American plants.
May Press Congress
United Automobile Workers President Owen Bieber called the agreement “a dismal failure.” He added in a statement: “This measurement of purchases is in no way an acceptable substitute for specific commitments to increase purchases of auto parts from U.S. companies.”
Lee Kadrich, the director of legislative affairs and international affairs of the Automotive Parts & Accessories Assn., said: “The production of data will be a standard of measurement of success or failure to increase U.S. sales.”
“It will keep the visibility high,” said Kadrich, who was an industry adviser at the Tokyo talks.
He added that his association, a trade group, and other U.S. part makers would have preferred a Japanese commitment for more purchases.
The part makers’ next step is to press Congress to help them win greater access to the parts market in Japan and other nations where Japan makes cars and to slow the growth of Japanese parts used in the United States.
In 1982, the United States exported $10.6 billion in car parts to all countries and imported $9.1 billion, generating a surplus of $1.5 billion. But now it is a far different picture, Kadrich said. He said 1986 exports rose to $13 billion, but imports rose more, to $21.2 billion, producing an $8.2-billion deficit. Japan alone accounts for $3.6 billion of the shortfall.
Kadrich said U.S. makers sent about $203 million in parts to Japan last year, but the United States imported $3.8 billion, for a deficit of $3.6 billion.
He said the deficit did not include another $2 billion in parts sent by Japanese part makers from Japan to their assembly plants in foreign trade zones in the the United States, which reduce tariffs on the parts.
Kadrich said the number of car parts coming in from newly industrialized countries, including Taiwan, South Korea, Brazil and Mexico, is also rising.
Of particular concern to U.S. part makers, he said, were the new Japanese car plants being built in the United States. He said that 80% of the content of Japanese cars manufactured in the United States comes from Japan. In addition, big U.S. car manufacturers are buying an increasing amount of parts from Japanese makers.
Among the industry’s demands are an end to what they call the U.S. subsidies to foreign car companies setting up plants in the United States. Kadrich said these include the foreign trade zones that give lower tariffs on imported parts used in cars assembled.
The Automotive Parts & Accessories Assn.’s vice president for government affairs and international trade, Linda Hoffman, described how U.S. firms are locked out of Japanese markets: “We’re asked to make bids on lots so small that we can’t be competitive with their family suppliers because we can’t get the same economies of scale.”
“Part distribution channels in Japan are controlled by the auto makers,” she said.
“The service industry there is afraid to use U.S. parts in car repairs for fear that the government will fail the cars come inspection time,” she added.
