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A yen for conversation

3rd April 1982, Page 33
3rd April 1982
Page 33
Page 33, 3rd April 1982 — A yen for conversation
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Which of the following most accurately describes the problem?

Do Japanese light commercial vehicles provide the same threat that cars do? Would there be a flood if voluntary controls were lifted? John Durant has been to hear what the SMMT has to say

DO the Japanese pose the same threat to the United Kingdom light commercial vehicle market hat they do to the car market?

Hugh Cownie, economics advisor to the Society of Motor Manufacturers and Traders SMMT), has visited Japan 'ourteen times since 1975 for talks with the Japanese ekutomobile Manufacturers ekssociation (JAMA). He told me: "We can't really stand up to the `ull force of competition in ..lommercial vehicles; we have 3xplained our sensitivity to our :riends the Japanese and within -eason they have been inderstanding of our industrial )nd political pressures, axercising prudence as they -lave in the case of cars."

As in the car market, Japanese manufacturers of light :ommercial vehicles agreed to imit their exports to Britain to "a igure very close to 10 per cent )f our market".

However, last year, Japanese ight commercial vehicle sales in 3ritain approached 19 per cent the market.

As a result, talks were held !gain with JAMA in November, 'I think they went away )ersuaded," said Hugh, "and in act they admitted that there had )een a misjudgment in the leg ree of exporting.

"In 1982 we will see a notable eduction in penetration of the ight commercial market. In fact, n the first two months of this fear shipments of light :ommercial vehicles represent a all of 58 per cent compared with he last two months of last Tar."

With cars, Japanese penetration of the market here eached 12 per cent. The aim is 0 per cent for 1982. So the igure for cars never approached he magnitude of the light ommercial's (3.5 tonnes gross rehicle weight and under) 19 per ent.

With larger-weight vehicles, apan has for years assured the ;MMT it will not export vehicles irectly to the UK. That ssurance was repeated in lovember. The Japanese Idustrialists realise that, with le imbalance of trade the way it s and three million nemployed, the protectionist )bby in Britain is very strong — ut that, nevertheless, British idustrialists are intent on mulating the competitiveness f the Japanese.

As Hugh Cownie pointed out to me, it is not just the British manufacturers who cannot withstand the competition. In Benelux countries and even Germany, penetration by the Japanese in the light commercial and car market significantly exceeds 20 per cent; in EFTA countries it has reached 30 per cent.

"The Japanese are victims of their own success," said Hugh Cownie. "They are very good businessmen, but fortunately realistic commercially . . . and they are statesmen."

The General Agreement on Tariffs and Trade (GATT) and other international trade agreements can survive only if all parties see that there are mutual benefits. Otherwise, the agreements fall down. And a country such as Britain, he said, needs to preserve free trade as a vital interest. Where there has been a cause for friction from our side has been in the Japanese failure to buy UKmanufactured components.

Our exporters have been facing tough times. Much praise is due to those UK specialists who are making progress.

The SMMT has never thought that it could persuade the Japanese to limit exports to other markets where the UK has been strong traditionally — say, the old Commonwealth. "It was when we saw them eating into the home market, at a time when we were faced with industrial strife, mistaken government policies, and, perhaps some management mistakes, that we said to the Japanese: 'We need your understanding of our difficulties'."

The trade talks were started in 1975 when the Japanese had achieved nine per cent penetration of the car market. The figure has hovered around 11 per cent ever since. "Many people would say that, but for these talks, Japanese penetration would be at least double."

The talks are here to stay for the foreseeable future, he added. They have become a permanent feature of our relations. Prudent marketing will last well into this decade, unless there is a significant change in relative competitiveness.

The fact is that Japanese manufacturers export from a wonderfully secure home base. In 1980 car exports to Japan amounted to only £16m (worth £38m including components); 538 trucks and nine buses were imported.

It is in the after-markets for components that Hugh believes that there is scope for British firms. In some of the denigratory comments about UK components there has been "a PR element". In fact, he said, the Japanese have a healthy respect for UK component design, innovation and quality.

And so we came to Hino, described by Hugh as "this diversion of trade from Ireland".

In 1981 there were 94 Hinos exported to Northern Ireland and mainland UK. "If trade built up we would look at costings — how can commercial vehicles be exported, unpacked, assembled, and shipped to Britain at a competitive price? — and see if there is a case for a complaint of dumping."

Hugh Cownie admires the Japanese as fierce businessmen who are also proving realistic towards the ideals of free trade. "How would it be," I asked, "if the boot were on the other foot?"

"They are showing statesmanship," he replied. "Not many countries would show the same statesmanship!"

Nissan is on its way

NISSAN MOTORS is expected by the late spring to make an announcement concerning its plan to build a car manufacturing plant in Britain and given no last minute snags the decision will be yes.

The Japanese ambassador, Tsuyoshi Hirahara, dismissed suggestions (The Times March 16) that Nissan may be dissuaded by the state of industrial relations in the UK. Twentyfive Japanese enterprises had set up in this country, he said, and all were "quite satisfied" with their labour relations.

Last year a Japanese delegation made a special visit to the North East to study industrial relations there (CM December 19, 1981).

Nothing has been said about the likelihood of a Nissan plant in the UK producing a car-derived van, but it sounds so likely if everything goes right as to be virtually inevitable. Although a consideration at present, it could become important in time, particularly as a launching pad for sales to other European countries where Japanese sales are on the up. These include exports to vehicle producing countries, for instance, Sweden, and to those without a home industry. Japanese penetration of the "goods vehicle market" in 1980 in Sweden was 13.1 per cent, says the SMMT (1981:13.4 per cent).

In the "van market" in 1980, Japanese penetration in Norway was 46.7 per cent (1981: 51.5 per cent); in Denmark the comparable van market figures were 1980: 33.5 per cent; 1981: 38.6 per cent.

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