Southland Firms on Edge Over Tariff Threat : Trade: Many hope that the U.S. plan won’t materialize. Some fear layoffs if it does.
The threat of a stiff U.S. tariff on high-priced cars from Japan has sparked widespread anxiety among thousands of workers at the Southern California headquarters of the Japanese car companies, at their dealerships and at the ports of Los Angeles and Long Beach.
Many are voicing hope that the Clinton Administration’s proposal to impose a hefty tariff of about 100% will never materialize--even though a decision is expected to be announced this week.
“You can’t sell many cars if the prices go up like that. I’d have to get another job,” said Rich Dailey, a 28-year-old salesman at Costa Mesa Infiniti. He is hoping that the U.S. threat is nothing more than a scare tactic.
All but one of the seven Japanese companies that sell cars in the United States are headquartered in Orange and Los Angeles counties. Together, they employ about 15,000 people in California and their dealers employ tens of thousands more. At Southern California ports, close to 300,000 Japanese cars and trucks are unloaded and prepared for distribution each year.
For example, Carson-based Nissan North America has more than 300 employees at its processing and distribution facilities at the Port of Los Angeles. A company spokesman said a tariff would probably result in layoffs.
Kurt Antonius, a spokesman for American Honda Motor Co. in Torrance, said the company’s California payroll for 1,800 employees is about $110 million a year.
“There is very serious concern here at corporate headquarters. But this is not only going to have a profound impact on American Honda,” Antonius said. “It’s pretty far-reaching.”
For example, Honda bought $642 million worth of goods from California vendors last year and spent $437 million on advertising within the state--including fees to the agencies handling its national campaigns.
The Japanese luxury franchises are relatively small. For instance, Toyota has 168 Lexus franchises among its 1,259 dealerships nationwide, and Acura accounts for 300 of Honda’s 1,600 dealerships.
However, the impact of a tariff on Japanese imports--expected to be on cars with retail prices of $30,000 or more--would not be limited to the luxury brands.
Toyota dealers sell several models, including Supras and top-of-the-line Avalons, for $30,000 or more. Mazda has three cars with base prices in excess of $30,000 and Mitsubishi has two.
A.J. D’Amato, general manager of Tustin Lexus, said a stiff tariff on the cars he sells would mean a bankruptcy that could put all 63 of his employees on the unemployment line.
“This is particularly frustrating because of the luxury tax that already exists,” he said, referring to the 10% federal tax on import cars priced at $32,000 or more.
Infiniti--Nissan’s luxury brand--sells two models with base prices of less than $30,000, but at the Costa Mesa store at least, it does not sell enough of them to keep a salesman alive, salesman Dailey said.
“Most of the people who come here are coming for the flagship Q45, with leather seats,” Dailey said, noting that that model sells for nearly $40,000.
Even some of the people who supposedly might benefit from the sanctions are not happy. “We’d be shooting ourselves in the foot,” said Theodore Jones Jr., owner of Fletcher Jones Motorcars in Newport Beach, the nation’s second-largest Mercedes-Benz dealer.
Mercedes sales might jump if Japanese luxury car prices did, but the overall U.S. economy would be hurt, Jones said.
“The business is no longer Japan and the U.S. or Europe and the U.S.,” he said. “There is too much interrelated stuff. Look at the Japanese-owned manufacturing plants here and the number of people employed by the Japanese company who would be hurt.”
Even car dealers do not work in isolation. For example, Jones’ company not only owns a Mercedes store, but several Ford and Chevrolet franchises, a Lexus dealership, two Mitsubishi lots and a Toyota dealership.
* CURRENCY CRISIS Japanese banker says the dollar is heading toward collapse. D3 *STICKER SHOCK Ford works to hold down its vehicle costs. D2
