(2 of 5)
The Japanese are not content, however, merely to buy foreign bonds and make loans. They are also constantly searching the world for opportunities to buy companies, form partnerships and build businesses from scratch. Such direct foreign investments by Japan have doubled since 1979, to $28 billion. Many Japanese companies have spread as far and wide as IBM or Exxon. YKK, the Japanese zipper manufacturer, has plants from The Netherlands to New Zealand and from Honduras to Egypt. Toshiba makes advanced computer chips in the U.S., West Germany, Malaysia and Mexico.
The U.S., in particular, has become a mecca for Japanese manufacturers. Matsushita turns out Panasonic electronic products near Chicago. Toyota is building cars in Fremont, Calif., in partnership with General Motors. Nippon Kokan last year paid almost $300 million to buy half of National Steel. According to the latest count by the Japan Economic Institute in Washington, 309 Japanese companies are operating 479 plants in the U.S.
All this activity may be only the beginning. Within the past two months, several major new Japanese investments in the U.S. have been announced. Mazda Motor said in late November that it would build a $450 million auto-assembly plant in Flat Rock, Mich. In December, Toshiba and Westinghouse Electric revealed plans for a joint venture in which they will put up a $100 million factory in Horseheads, N.Y., to produce tubes for computer monitors and color television sets.
Japanese companies have compelling reasons for building plants on American soil. The U.S. is the biggest foreign market for Japan's products, absorbing about one-third of its exports. But those shipments are threatened by American protectionism. Already the U.S. Government has forced Japan to limit exports of autos and steel. In addition, American politicians are demanding that Japan build factories in the U.S. to restore jobs that its exports have destroyed. Executives of Japanese firms, including Honda and Nippon Kokan, have admitted that fears of trade friction helped persuade them to invest in the U.S.
Japan's new ventures will provide paychecks for thousands of Americans. The proposed Mazda plant, for example, is expected to employ 3,500 people and support 3,500 additional jobs in auto-supply industries. Michigan Governor James Blanchard calls the Mazda deal "a milestone in U.S.-Japanese relations."
Most areas of the U.S. are eager to have Japanese factories. In fact, 17 states, including Alabama, Ohio and Alaska, have opened offices in Tokyo to recruit investments. Cities and towns offer the Japanese tax breaks and choice industrial sites. One of the most ardent suitors is Battle Creek, Mich. The city already has factories set up by three Japanese companies: Hi-Lex, which makes cable systems for cars, snowmobiles and motorcycles; Lotte, a chewing gum manufacturer; and Musashi Seimitsu, a producer of auto- motive equipment. In addition, Nippon Denso announced in August that it would build a $100 million plant in Battle Creek to make parts for auto air conditioners.