The juggernaut that's not: Japan [View all]

[DainBramaged]

The Japanese auto export machine that once appeared ready to decimate U.S. auto manufacturing is in decline



SAYAMA, Japan -- Thirty years ago, Japan Inc.'s formidable battery of domestic auto plants seemed ready to conquer the world. A nervous U.S. industry watched as the Japanese export machine devoured American jobs. Consultants trumpeted the supremacy of the Japanese business model.

But in a dramatic reversal, the Japanese are tensely witnessing the decline of the auto industry on their own turf. Much of the lost production is moving to North America. Domestic sales are in a downward spiral, and exports continue to sink. The distraught Japanese have even coined a term for the malady: kuudouka, or "hollowing out."

Here is the reality of kuudouka in the new Japanese auto industry, where industrial cannibalism has frantic managers fighting each other for work:

A year ago, Honda was desperate to use excess capacity at its plants in Japan. Exports were falling, and the yen was near record highs. A long-planned assembly plant was ready to come on line, which would exacerbate the overcapacity problem.



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