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Toyota & Government Policy
Term Paper ID:27213

Essay Subject:
Reviews the close support & assistance that Toyota has always received from the Japanese government & the resultant conflict that has created between the Japanese & US governments.... More...

4 Pages / 900 Words
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Paper Abstract:
Reviews the close support & assistance that Toyota has always received from the Japanese government & the resultant conflict that has created between the Japanese & US governments.

Paper Introduction:
Toyota and Government Policy Introduction From the beginning, Toyota has had the support and assistance of the Japanese government in its development. That assistance enabled it to become competitive enough to make major inroads on the automotive industry in the United States, which brought it into conflict with the U.S. government. The contemporary conflict between the two governments over the issue of protectionism and free trade is exemplified by this case. Protective Legislation The initial protective legislation was adopted in May of 1936. This was the automobile manufacturing business law which indicated that all business in the automotive industry required a government

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They no longercompared as well with American cars of the same type, and the government ofJapan was not immediately able to do anything about that situation. Itwas located on the eastern edges of Tokyo and was designed to showcase carsfor both the domestic and foreign market. Only those firms with more than 5 percent of shares andmore than 5 percent Japanese members of boards of directors could belicensed (Ohno, 1988). Reagan Democrats, who were a large group during the198 s, also came from the ranks of blue-collar workers who frequentlyfavored some level of protectionism in order to save their jobs and thewages they had gained through unionization. All was not completely satisfactory, however, since there stillremained quotas that capped shipments of Japanese-made cars to the UnitedStates. The combination of a recession in Japan with a strong yen madeJapanese cars less economical than they once had been. While Japanprovides some protection for the automotive industry currently, and otherkinds of benefits, much of what is being accomplished by Toyota today isthe result of its entrepreneurial capabilities and its flexibility indealing with the changing situation in the U.S. trade representatives had previously worked for Japanesecompanies or other foreign interests. The Japanese government supported both the domestic automotiveindustry and its expansion into foreign markets with a whole series ofactions. (1994). (199 ). And White, J.B. This led to skyrocketing expansion of Toyotasales in the United States, until it was eventually the top Japanesecompany. Ohno, T. (1988). Thelegislation was drafted by the military, which was in ascendance at thattime and needed good domestic products. Agents of influence. He supported free trade andsupported the kinds of actions that brought Toyota manufacturers to theUnited States itself, hiring young, non-union workers to make cheaper carsthan Detroit could build. NY: Simon andSchuster. Toyota executives were incensed and almost refused toagree to the quotas, stating that MITI had not been as supportive of theautomotive industry as other Japanese industries. Comeback. Toyota and Government PolicyIntroduction From the beginning, Toyota has had the support and assistance of theJapanese government in its development. Ingrassia, P. This increased the stock of Toyotacars available to the public. The quotas were actually negotiated by arepresentative of the Japanese government agency MITI in response to strongAmerican pressure and protectionist sentiment during the late Carteradministration. This began after the end of theCarter administration, at which time many of the Democrats who left officewent to work for Japanese companies or the Japanese government. Thiswas the automobile manufacturing business law which indicated that allbusiness in the automotive industry required a government permit. Halberstam, D. Pat Choate (199 ) made the important point that not only did Japanesetrade policy favor Japanese automotive companies, so did U.S. The law wasquite effective in achieving these ends, even considering the interveningwar which impacted the entire industry.Continued Support The government did not end with this piece of protective legislation,however. However, this expansion became problematic during the early199 s. This limited the market share that Toyota could accomplish, atleast using that method. In oneinstance, Julius Katz, one of two U.S. The legislation required that anycompany making over 3, vehicles per year had to obtain a license fromthe government. There hasbeen a strong connection between the two countries since the end of WorldWar II, but this intensified at the political level during the late 197 s.By the mid-198 s, many of those individuals had begun to come back fromwork with Japan to work in the United States government again. trade policyin many instances because of the people who were working within the system. Toyota production system. The strong ties between the two countries continue. At this point, the Japaneseautomotive industry was at the apex of its power and profit, with 25percent of all car sales going to Japanese manufacturers by 1988 (Ingrassiaand White, 1994). Companies like Toyota were supported with government funding, taxbreaks, favorable export legislation, and unfavorable import legislationimpacting foreign car makers, like car makers from the United States. The Reagan years were years of free trade philosophy, even thoughsome Republicans pushed Reagan to do something about the Japaneseadvantages in trade. Knopf. Senior deputy trade representativeshad previously headed the Government Research Corporation, as Washington-based public affairs firm which had both the Japanese government and Toyotaas major clients. NY: Alfred A. There were few problems with the United States government during theseyears. This seems likely to have produced an influence on hispolicy-making and advising. The reckoning. Cambridge, MA: TheProductivity Press. NY: William Morrow andCompany, Inc. That assistance enabled it tobecome competitive enough to make major inroads on the automotive industryin the United States, which brought it into conflict with the U.S.government. For example, during the 198 s the Japanese government actually built aworld-class exhibition center specifically for the automotive industry. The intent of this law was to protect the domestic automotiveindustry, while suppressing the foreign car assembly business. These quotas had been imposed in response to thedecline in the auto industry in the United States and the increase inunemployment in that country. References Choate, P. market. Reagan did not respond to this push. Bythe late 198 s, Toyota began to deal with that problem by increasingproduction in the United States itself. (1986). However, they eventuallycapitulated and agree to the voluntary restrictions (Halberstam, 1986). The contemporary conflict between the two governments over theissue of protectionism and free trade is exemplified by this case.Protective Legislation The initial protective legislation was adopted in May of 1936. For example, during the Bush administration, many of the people who wereinvolved as U.S.

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