The Japan External Trade Organization (JETRO) today released the results of its latest annual survey of Japanese-affiliated manufacturers operating in the US.
The survey revealed strong business performance for a majority of firms, with a record 75.7% of respondents expecting to post an operating profit in 2005; only 9.6% of firms (a record low), on the other hand, expect to post an operating loss.
Respondent firms did not appear to be greatly affected by the prolonged hike in oil prices. However, among firms expecting smaller profits or greater losses (compared to last year), rising utility and procurement costs were frequently cited as a negative pressure. (The survey was conducted before Hurricanes Katrina and Rita devastated sections of the US Gulf Coast, an important oil producing area. Thus, the impact of further oil price hikes—as a result of the storms—are not reflected in the survey results.)
Japanese firms in the US boosted procurement from China, while also citing increased competition from Chinese-made goods in the US market. Specifically, more than half of firms in the electric/electronic parts, metal product and apparel/textile sectors linked downward pressure on prices for their products (and thus expected lower profits) with the steady influx of (cheaper) Chinese products in the US market.
Responding to questions about free trade agreements (FTAs) the US has in place with other countries, the majority of firms cited the North American Free Trade Agreement (NAFTA) as bringing the most benefits. The welcoming attitude towards NAFTA underscores how the agreement has better enabled Japanese manufacturers operating in the US to include Mexico and Canada in their business structure. Further, more than half of respondents would welcome an FTA between the US and Japan.
A total of 586 companies (or 33.9 % of firms sent questionnaires) replied to the survey, which JETRO's six US offices (in Atlanta, Chicago, Houston, Los Angeles, New York and San Francisco) conducted in July and August 2005. JETRO began this annual survey in 1981.
Japan External Trade Organization
News 
marketing@alchempro.com
