Japanese car makers fear failure of Big Three

Chicago Sun-Times:

In recent years, Toyota has edged closer to overtaking General Motors as the world's biggest automaker.

But now as GM and the entire U.S. auto industry teeter on the brink of collapse, Toyota and other Japanese carmakers are hardly rejoicing. They say the bankruptcy of any of Detroit's Big Three would spell serious trouble for them as well.

Should that happen, "the damage to our business is certain to be tremendous," Toyota Motor Corp. spokesman Hideaki Homma said Monday. "The conditions for the U.S. auto market are extremely tough right now, and any additional negative is sure to make things worse."

One major problem is that Japanese carmakers in the U.S. share many of the same parts suppliers. If a Detroit automaker were to collapse, suppliers would likely follow, setting off a chain reaction that could would wreak havoc for Japanese production in the U.S., a vital market.

More broadly, the U.S. crisis could lead to huge job losses and further weaken consumer spending, especially for big-ticket items like automobiles. Together, the three big American automakers employ 239,000 workers in the United States. Counting other businesses that depend on the automakers, economists estimate that 2.5 million jobs would be lost if all three companies went out of business.

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A possible advantage from a collapse of the U.S. auto industry could come only many years later -- perhaps in a decade -- when Japanese manufacturers would compete against weaker rivals in the U.S., especially if they further exploit their lead in green technology with hybrids or electric vehicles, said Koji Endo, auto analyst with Credit Suisse in Tokyo.

"But that's for the long, long term," he said. "For now, the situation is bound to get worse for the Japanese."

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For now the foreign automakers are looking at Detroit the way the rest of the NFL looks at the Lions. They want to beat them but they don't want them to go away. Just as sports teams need other teams on the playing field to have a product to sell, the other automakers benefit from the same supply chain and the economies of scale.