STOCK MARKET WATCH -- Monday, 19 January 2015

[Demeter]

17. Japan in Depth / Major firms bringing production home because of weaker yen

http://the-japan-news.com/news/article/0001864027

The weak yen is prompting some Japanese firms to bring overseas production back home, raising expectations the “reshoring” trend may slow down the ongoing industrial hollowing out of Japan.

The yen’s weakness is due to Prime Minister Shinzo Abe’s Abenomics economic policy package. The yen’s depreciation made the costs of manufacturing products for the Japanese market in other countries higher than production costs in Japan.

Electric appliance manufacturers are evidently moving to shift some overseas production back to Japan. For instance, Sharp Corp. has been manufacturing household air purifiers and ion generators at its plant in Yao, Osaka Prefecture, on an experimental basis since last December ahead of plans to move some of its air purifier and refrigerator production in China to the Yao plant. The Yao plant, which started operations in 1959, was once a central site for the production of refrigerators, washing machines and air conditioners. But production was gradually moved to China in the 2000s, when labor costs were lower. Sharp stopped domestic production of air conditioners and washing machines in 2007 and 2008.

But the yen’s value, which reached record highs at around ¥75 to $1 in 2011, dropped to about ¥120 to $1 in December last year. The weak yen neutralized the cost-reduction effects of production in China because yen prices of such products go up after they are exported to Japan. The moves have also been prompted by wage hikes for Chinese workers. According to the Japan-China Economic Association, wages in China increased more than threefold in the last 10 years.

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SO, ALL WE HAVE TO DO IS LET THE $ REACH ITS TRUE VALUE....WORKING ON IT!