YOKOHAMA, Japan -- What's hurting Nissan more than weeks of lost production, millions of dollars in factory damage and a shattered supply chain from Japan's spring earthquake?
CEO Carlos Ghosn says the yen's surge against the dollar is even more painful than the months of chaos triggered by the record 9.0-magnitude temblor and killer tsunami of March 11.
"In 2011, the biggest problem we face is not the tsunami. It is the strengthening of the yen," Ghosn said at a press event today to unveil new environmental programs.
"When we are hit by something when all of a sudden your costs go up by 20 to 25 percent, something that is beyond your power, that is much more damaging," he said.
In an animated warning about the impact, Ghosn stressed that the exchange rate was not only forcing Nissan to put off new investments in Japan. The next step would be leaving Japan.
Ghosn said starting new projects in Japan was out of the question with the exchange rate at today's level of around 75 yen to the dollar. A year ago, it was 81 yen; a year earlier: 91 yen.
"Unfortunately, the solution to this is building more cars and sourcing more cars outside Japan," Ghosn said. "It's hurting investments. It's hurting employment."
"With this level of the yen, there is no way we can justify new projects in Japan," Ghosn said, before repeating the phrase "we can't" no less than three times to drive home his point.
Without doubt, the yen -- which is bobbing around post-World War II highs against the dollar -- is broad-siding the profitability of Japanese brands' domestic operations.
While Nissan is perhaps the most vocal about the pain, it's hardly the only company thinking -- or worrying, or strategizing -- about what many see as the inevitable hollowing out of Japan.
The question is what the government, or anyone, can do about it.
On this matter, Ghosn didn't give any clear guidance. But with no sign of the yen weakening soon, the Nissan CEO was very clear about how he would have to react.
"At this level of the yen, Japan has lost all its competitiveness," Ghosn said. "We're going to end up hollowing out a lot of activities to outside Japan. And frankly we don't want to do this."