Will Toyota Become A Trade War Scapegoat ?

Sometime in the coming year, Toyota will surpass General Motors to become the largest carmaker in the world and executives at the company are afraid that event will serve as an excuse for the anti-trade forces to make Toyota a scapegoat in the continuing debate over interenational trade:

Toyota Motor Corp. is bracing for possible political and consumer backlash caused by its rapid U.S. growth, according to an internal report obtained by the Free Press.

Toyota executives have publicly downplayed the importance of predictions that the Japan-based company will pass General Motors Corp. this year as the world’s largest automaker. But the Toyota report says the company could face criticism because its U.S. sales are increasing while Detroit’s automakers are losing sales and shuttering plants.

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In the briefing to other Toyota managers, Sudo cited political and social risks. The report, left unsecured on computers at the company’s Georgetown, Ky., complex, said Toyota could come under fire for:

• Selling vehicles to U.S. customers with high proportions of foreign-made parts. Less than half of all content of Toyota vehicles sold in the United States is made in the United States or Canada.

• Not including enough minority-owned businesses in its supplier base. The Rev. Jesse Jackson, leader of the Rainbow PUSH activist group, has asked Toyota to improve diversity efforts.

• Leaving a vacuum in U.S. communities as GM, Ford, Chrysler and their suppliers shed plants and workers.

“A Democratic Congress, particularly those members with districts hit by Big 3 and supplier plant closings, may call for further oversight of the industry and Japanese companies in particular,” the presentation said.

And it would appear that those fears are well-founded:

Toyota’s concerns are not far off the mark. With a new Democratic majority in Congress, Michigan’s Democratic lawmakers have pledged to press harder on trade and other issues where Detroit automakers say Japanese companies have an unfair advantage.

Last week, two Democratic House members from Michigan — Levin and Rep. John Dingell of Dearborn — sent a letter to Treasury Secretary Henry Paulson, urging him to press Japan over the value of the yen during a meeting of world economic powers.

Dingell, Levin and two other congressmen said that a weak yen had helped Japanese automakers increase their exports to the United States by more than 30% in 2006. Detroit automakers and their congressional allies say the yen bestows up to a $4,000-per-vehicle benefit for Japanese automakers.

Instead of looking to international monetary markets for the blame, perhaps Congressman Dingell and Senator Levin need to ask themselves this question —- isn’t it just possible that Toyota is succeeding because it makes better, more reliable cars ?