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Jan 9 (Reuters) – Canon Inc and other Japanese electronics companies want to bring production of some goods back home, reversing a years-old trend of overseas manufacturing as a rapid decline in the value of the yen makes local goods more competitive.
The yen has tumbled some 8 percent since the Bank of Japan last eased monetary policy in October and is now trading near seven-year lows. Since late 2012, it has lost a third of its value due to Prime Minister Shinzo Abe’s reflationary economic policies.
The steep slide has raised costs for firms highly dependent on raw material imports as well as those that manufacture abroad.
Now, Canon says it wants domestic production to return to 60 percent of overall output in three years, up from around 40 percent. “From now on, new copier, camera and printer products will be built at domestic factories and as they replace older products, the volume of goods made overseas will fall,” said company spokesman Hirotomo Fujimori.
Sharp Corp is also looking at lifting the ratio of LCD televisions and refrigerators made in Japan to counter the yen’s weakness, a spokesman said.
Panasonic Corp has been considering whether to lift domestic production levels for some time. Its white goods division sees a 1.8 billion yen drop in operating income every time the dollar strengthens by one yen, because this division largely produces its goods overseas and sells them in Japan.
No companies, however, have yet to go so far as saying that yen weakness is a big enough factor to justify the large investment needed for new domestic plants or assembly lines.
“Most white goods sold in Japan are imported from China so it’s natural we could see more goods manufactured in Japan on the back of a weaker yen,” Panasonic CEO Kazuhiro Tsuga said at the Consumer Electronics Show in Las Vegas this week.