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Toyota plays good cop-bad cop currency kabuki

TOKYO -- Telling corporate theater unfolded at the latest Toyota earnings announcement.

And it featured President Akio Toyoda and his CFO in the roles of good cop and bad cop on the divisive issue of the surging yen and its impact on Japanese manufacturing.

Toyoda, scion to the automaker’s founding family, was naturally the good cop.

The soaring yen makes it nearly impossible for a company like Toyota to do business in Japan, he said. But as one of the country’s biggest employers, he is trying his best to keep payrolls intact.

CFO Satoshi Ozawa played the hardboiled sidekick. Toyota has reached its breaking point and has no options but to look overseas. He’s sorry, but he’ll have to take action.

The back-and-forth, repeated several times during the question-and-answer session at this month’s full-year earnings announcement, was so predictable it seemed almost scripted.

“How to protect this industrial base and employment base in Japan is something always at the top of my mind and is why I constantly insist on manufacturing in Japan,” Toyoda said.

Ozawa immediately countered: “Frankly speaking as a CFO, the current exchange rate of around 80 yen to the dollar represents the limit of continuing to conduct manufacturing in Japan.”

“Creating a level playing field is something that is needed,” Toyoda continued.

Ozawa amplified: “Some people may argue for locating production outside of Japan … To avoid such hollowing out, I sincerely hope appropriate countermeasures and policies be taken.”

The not-so-subtle currency kabuki was clearly aimed at jolting Japan’s government into action to stem the yen’s rise against the dollar and euro, which makes Toyota’s exports less profitable.

Akio loathes the thought of off-shoring, but business is business, after all…hint, hint.

The yen has surged 13 percent against the dollar in the last 12 months and 23 percent since May 2008. All the while, Toyota -- and other Japanese automakers -- complained about the pain.

We heard similar protests when the currency was at 100 yen to the dollar, at 95 yen to the dollar and 90 yen to the dollar. But they’ve always managed to find a way to tighten their belts and remain profitable at any exchange rate.

Today Ozawa says Toyota can operate profitably at 85 yen to the dollar.

So does 80 yen represent the real point of no return? And will Toyota -- the self-styled defender of Japan Inc. -- actually pull up some of its Japanese roots? I’ll believe it when I see it.

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