Japanese Automakers Work To Increase Influence in Washington

Nissan Motor Company, seeking to block a proposed American tax change this fall that would have forced the Japanese carmaker to pay more than its American rivals, found a ready champion in Senator Lott, a Republican of Mississippi.“I said that was totally outrageous and unfair and we’re not going to let that happen,” Mr. Lott, whose home state benefits from a Nissan plant employing 6,000 people, said in an interview. The offending language was dropped before the bill was passed last month; Mr. Lott, the former Senate majority leader who has never owned a foreign car, says his next one will be a Nissan.Japan’s carmakers, a quiet presence in Washington for years, are flexing their political muscle. Since 1999,Toyota Motor Corporation, Honda Motor Company, and Nissan have almost quadrupled the amount they spend on lobbying in America, and have also increased their political giving. Further adding to their clout, most of their 11 American assembly plants – which employ 55,000 workers – are in Southern states where Republicans, who control both houses of Congress, are politically ascendant.“In the past, the Japanese automakers would defer to Detroit on auto issues, even when it wasn’t in their best interest,” said Brian O’Neill, president of the Arlington, Va.-based Insurance Institute for Highway Safety, which works with automakers on legislative issues. “Now they’re being much more assertive, and their confidence is growing in line with their increase in U.S. plants.”Already this year, Toyota and Honda used their influence to obtain from Congress an extension of tax credits that favor their hybrid-electric autos over those produced by American companies. And Nissan earned a waiver from a rule relating to fuel-economy standards for its cars.Their Detroit-area rivals are taking notice. General Motors of Detroit; Ford Motor Company of Dearborn, Mich.; and Stuttgart, Germany-based DaimlerChrysler AG – which lays claim to American status because its Chrysler division headquarters is in Auburn Hills, Mich. – are preparing to mail a 19-page report to all 535 members of Congress. The companies want to remind lawmakers that they still employ 87% of all American autoworkers and build 75% of the cars and trucks. The report also emphasizes the American automakers’ 395,000-strong work force and the hundreds of thousands more who rely on their pensions.Japanese companies have long proven adept at winning tax and other economic concessions from local governments in America, eager to attract their factories and jobs. They have been less successful on the national level; in the 1980s, for example, they couldn’t forestall American pressure to agree to “voluntary” export restraints that limited their sales and boosted American-based automakers’ profits.These days, they are getting a much friendlier reception in Washington, said Senator Shelby, a Republican of Alabama. “It used to be all Detroit,” he said. “But we look everywhere now. The automobile business is like everything: It is a competitive global enterprise.”American companies still spend more on lobbying than the Japanese do, but they have been cutting back while the Japanese are increasing. Disclosure reports filed with the U.S. Senate show that Toyota of Toyota City, Tokyo-based Honda and Nissan, and the Association of International Automakers – the Arlington, Va., trade association that represents them – spent $7.2 million on lobbying in 2003, up from $1.9 million in 1999. During the same period, lobbying expenditures by General Motors, Ford, and Daimler-Chrysler declined to $17.1 million from $19.7 million.Toyota and Nissan also contributed $361,250 in 2003 and 2004 to independent political groups incorporated under Section 527 of the Internal Revenue Code, according to Political-MoneyLine, a Washington group that tracks campaign finance. That eclipsed the $334,915 that American automakers gave in that period. The 527 groups can accept unlimited donations from corporate treasuries.American and Japanese manufacturers still agree on many topics. When they don’t, the reasons often stem from the vast differences in scale and history between the American makers and the Japanese, who began opening plants in America in the 1980s.For example, American-based automakers have 800,000 employees, retirees, and dependents, adding $1,200 to the cost of each vehicle they produce. By comparison, pension and health care costs add $450 to the price of foreign makers’ models, American carmakers’ said in the report, because they have fewer plants and employees and haven’t been producing in America for as long.“On 95% of the issues, we’re all in lockstep on issues such as energy and safety,” said a General Motors spokesman for government affairs in Washington, Chris Preuss. “But on some issues such as pension costs, huge competitiveness issues, we have unique viewpoints.”The tax provision on which Mr. Lott intervened was part of a $76.5 billion tax cut designed to help American exporters. The reduction replaced a $50 billion tax break for exporters that the World Trade Organization said violated international trade rules.The language Mr. Lott persuaded fellow lawmakers to remove would have exempted the American operations of foreign automakers from the bill’s reduction of tax rates to 32% from 35%. Without that intervention, General Motors and Ford would have paid lower taxes on the same production.In another political victory this year, Nissan won a waiver from a American fuel-economy rule that allows it to continue counting Mexican-built Sentra sedans as imports, despite trade rules that would have reclassified them as domestically produced. The change came over the objections of Ford, General Motors, and Chrysler. Nissan threatened to move production of some car models from Tennessee and Mississippi to overseas factories if it didn’t get the waiver.American automakers, in their public-relations counteroffensive against the Japanese, want to remind lawmakers how important they remain to the economy, said Stephen Collins, president of the Automotive Trade Policy Council, which represents the American automakers on trade issues in Washington and produced their report to Congress. From 1980 to 2002, while foreign automakers invested $27 billion in new plants, American automakers invested $176 billion in improving existing plants and adding capacity, he said, quoting from the report.The new American automakers’ report revives 1990s-era calls for American government pressure for improved access to the Japanese and South Korean markets and criticizes Japan’s efforts to lower the value of the yen relative to the American dollar.American automakers’ “views haven’t really evolved over the years,” said the director of government affairs for the Association of International Automobile Manufacturers, Paul D. Ryan. “Our view is that a job is a job. A job in Alabama is just as important as a job in Michigan.”The American automakers’ public relations efforts extend beyond their report. General Motors has placed its own newspaper advertisements making similar points in Washington and in Texas, where Toyota will start building pickups in 2006.The ads portray General Motors’ 182 facilities in 33 states, 154,000 American employees, and 500,000 retirees as having an impact across the American economy.Even so, the Japanese makers’ political power is likely to increase. Nissan in 2003 opened its Mississippi plant to assemble Titan pickups, and Honda this year opened a second assembly line at its Alabama plant that makes Odyssey minivans and Pilot SUVs. South Korea’s Hyundai Motor Co. will make Sonata sedans and Santa Fe SUVs in Alabama next year.In addition, Toyota, Honda, and Nissan operate or are building another 12 parts, transmission, and engine factories in America, employing another 25,000, again mostly in the South.It’s getting tougher for General Motors, Ford, and Chrysler to have their way on trade issues now because Toyota has “a lot of employees here, and we’re a growing part of the economy,” said Toyota’s North American senior vice president, Dennis Cuneo.Even in Michigan, where American automakers built 2.7 million vehicles last year, the state legislature agreed in September to sell 690 acres of land to Toyota to expand a technical center after the automaker offered $9 million for the property, less than the $25.3 million bid from a residential development group.Democratic Governor Jennifer Granholm, who was elected with help from the United Auto Workers, backed non-union Toyota’s Michigan expansion to “cement Michigan as the global epicenter of the automobile industry.”Collectively, Asian brands boosted their share to a record 34.4% of the American market in the first 10 months of the year from 28.2% in 2000, according to Woodcliff Lake, N.J.-based Autodata Corp. In the same period, the market share for General Motors, Ford and Chrysler fell to 58.9% from 66%.Mr. Lott, for one, said American manufacturers shouldn’t expect much help from Washington.“They have created their own problems, kind of like a lot of the airlines,” Mr. Lott said. “Bad management decisions, caving in on labor-union demands, and in many cases not creating a good product. And they want us to bail them out? No.”

Japanese Automakers Work To Increase Influence in Washington

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