Just about everybody realizes that the economy in Asia isn't so hot these days.
Any company that expected to sell in the Asian markets has had a very unpleasant experience recently. Business is bad, and there aren't many prospects for improvement anytime soon. The home markets are just as bad for domestic producers as they are for importers.
In the car business, that's really bad news. The two markets that pop up as export alternatives to Asia are North America and Europe. However, a flood of Asian automobiles shipped to the United States would very quickly strain international trade relations.
It would be tough for the Japanese to increase shipments to the United States simply because they have become such large U.S. producers. A couple of weeks ago, Automotive News held a seminar in Nashville, Tenn., that acknowledged the importance of the international manufacturers.
In the last 15 years, a huge manufacturing base has been established from South Carolina to Kentucky, Alabama, Tennessee, Illinois, Indiana and Ohio. With car manufacturers and suppliers firmly established, it would be very difficult for most major Japanese manufacturers to shift production back to Japan. Some models are even single-sourced in the United States.
It is far more likely that other nations, most notably Korea, would slash prices and increase car shipments to North America. That would be a real shame. Relations among North American and international producers have been pretty good lately. With Mazda now run by Ford, GM becoming more involved with Isuzu as well as exporting thousands of Opels to Japan and Chrysler becoming more active selling Chrysler products in Japan, there is a fragile peace. With BMW and Mercedes now producing in the United States for overseas markets - and Chrysler and Mercedes talking about combining operations - it is quite normal for offshore companies to have U.S. production.
Any huge increase in Asian exports to North America would create tension.
It will take a great deal of restraint and discipline for Asian manufacturers to maintain constant exports to North America while sales plummet in Japan and Korea. But the alternatives are very unpleasant, so Asians must take the long view.
The Japanese are so much a part of the North American industry that it would be a shame to put up roadblocks to the congeniality among European, U.S. and Japanese manufacturers.