Toyota projects first operating loss

December 22, 2008 6:24:26 PM PST
Even one of the largest and most successful car makers in the world is in trouble. Toyota said on Monday that for the first time in its history of more than six decades, it will lose money this year -- $1.6 billion, and Bay Area ports are paying the price.

California has always been an important import car market. But unsold cars, fresh off the boat, are stacking up in Benicia, as well as in Southern California.

Toyota and Mercedes alone have leased an additional 46 acres to store cars in California that have no buyers and nowhere to go.

Japanese automakers now find themselves in the same predicament as Detroit.

Consumers are staying away from showrooms, either unable to get loans or unwilling to make a big purchase right now.

And that's causing new Toyota shipments to stack up at its facility at the port of Benicia.

The president of Toyota told reporters in Japan: "It's a kind of emergency that we've never experienced before."

"Places where we thought there was going to be great strength -- better than here, it looks like we're all in the same boat right now," said Sean Randolph Ph.D.

Randolph is an economist and president of the Bay Area Economic Institute. A global economic flu has spread from the U.S. to Europe and now to Asia. Japanese exports to the U.S. are down 33 percent.

Sebastian Teunissen is Executive Director of U.C's Clausen Center for International Business. He says this is a tough time for Americans to buy Japanese imports.

"Because of the strength of the yen relative to the dollar, anything that we're going to buy from Japan is going to cost more. A year ago, a dollar was buying about 114 yen. Today it's buying about 89 or 90 yen. So if you're buying something from Japan paying the same number of yen, you're paying more dollars for it," said Teunissen, Ph.D.

The Port of Oakland's ship container facilities provide a way to gauge imports. For the first 11 months of this year, import volume is down 7.8 percent.

Last month, imports dropped 21.5 percent compared to a year ago November.

While the picture looks gloomy, economists point out that china is still on a growth curve. Its economy is expected to grow by eight percent next year, down from 11 or 12 percent.

But that's an exception.

"Everybody's caught up in it. Whether we call it a spiral, it's kind of hard to say. But it's a global slowdown. I don't think there's any place -- any significant economy -- that isn't going to be slowing down seriously," said Randolph.

A slowdown in imports also has an impact on income at the Port of Oakland.

When import and export volume rises above a pre-set figure, the port gets additional revenue from its cargo facility tenants. With this slowdown, it could lose $1 million in revenue that it was counting on.


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