Under the pressure of a rising yen, Honda ’s Chief Executive Takeo Fukui is calling on the Japanese government to act swiftly in order to stabilize the country’s currency. Fukui has warned Honda will have to take more production out of Japan and possibly even move its headquarters overseas if a solution isn’t found.
“If the government is saying, ‘We don’t care about the export industry’, then that’s fine — we’ll act accordingly,” Fukui told Japanese reporters on Friday.
He said Japanese leaders must work to keep the yen from gaining too much ground against the U.S. dollar. A year ago, one dollar bought 114 yen. Today it buys just 89 yen. This puts Japanese automakers at an extreme disadvantage when it comes to exporting vehicles made in the country.
“If the exchange rate becomes increasingly unfavorable, we would simply have to transfer more production overseas, cut more temporary workers and even start laying off permanent jobs,” Fukui explained.
“Beyond that we could switch to importing more cars into Japan, bring research and development facilities overseas, and in an extreme scenario move our headquarters offshore. It would cause nothing short of a hollowing out of Japanese industry.”
Just under a week ago, Honda announced it was slashing its earnings forecast for the second half of fiscal 2008, ending March 2009. The company also revealed several cost-cutting measures, including the cancellation of the NSX sports car. Honda indicated its operating profits will be 180 billion yen ($2 billion), down 67 percent from the forecasted 550 billion yen.
