Goodbye Firestone. The Japanese tire giant, Bridgestone, has offered to buy the venerable U.S. company for $88 a share. This is considered a hefty price by John Nevin, Firestone Chairman, who supports the sale of his company and who, along with other large shareholders, will become much richer as a result.
But will America become richer? The Japanese are willing to pay $88 a share only because the dollar is so cheap. Compared to three years ago, it takes only half the number of Yen to buy a Dollar today. So the Japanese are picking up Firestone at, what is for them, a fire sale price.
The dollar is way down, compared to the Yen, because of Ronald Reagan’s triple deficits–the trade deficit, the budget deficit and the mushrooming national debt. Japan is buying U.S. government bonds and has become our largest foreign creditor for our deficits. The Reagan government is in hock to Japan. The U.S., in just two years, has gone from being a creditor nation overseas to the largest debtor nation overseas. Japan is the world’s largest creditor nation.
Having more and more American industry, banks, real estate and other sectors being bought up by the Japanese (and to a lesser extent the British), due only to the low value of the dollar, raises the question of absentee ownership of our economy.
For years I have observed and spoken out against the
adverse effects of U.S. corporate absentee ownership of companies in Canada, Australia and other nations. In Australia, GM ownership of the Holden company even prohibited kept that local manufacturer from pursuing export markets.
Now the tidal wave of absentee, foreign ownership is heading toward the United States. The Firestone sale is merely part of the beginning of the buyout binge.
What is wrong with foreign absentee ownership? Not much when it is a modest amount and when it will restore a higher quality of competition. But when it reduces competition–there will be one less tire company in a shrinking field of manufacturers–it concentrates more power in fewer corporate hands. The non-communist world is heading toward a four company-Michelin, Perelli, Goodyear and Bridgestone–domination of the tire industry.
Further, when a company takes over a competitor, there will be layoffs of workers and a consolidation of retail outlets. Should Bridgestone decide to layoff workers, close or move operations, Americans will have to appeal to Tokyo where their economic destiny is being decided.
The largest Japanese takeover of an American manufacturer opens up an entirely bigger stage of takeovers. The waters are being tested for public reaction. Perhaps the Japanese need to be reminded of their own history in this regard.
In the ruins of postwar Japan forty two years ago, there remained the steadfast Japanese determination to control and own their economy. The Japanese told the U.S. that they did not want Ford to take over Nissan or GM to take over Toyota or U.S. Steel to set up shop in Osaka.
The Japanese will not permit U.S. construction firms to bid on public works in Japan but the U.S. has been permitting Japanese construction firms to bid and win construction jobs in the U.S… And so it goes.
Japan is the second largest economy. in the world and with half the U.S. population on a few resource-poor islands the size of California. The Japanese have done a remarkable job; but the U.S. does not have to allow Japan Inc. to become a dominant economic and political power in the U.S. due to the weakened Reagan dollar.
All over the country, the Japan lobby, represented by former White House aides, major corporate law and public relations firms and a deepening dealer network, is looming larger and larger. Polite executives from Japanese companies in Tokyo visit state legislatures and imply that if the state’s tax formula on multinational companies is not changed their way, the state may not be considered for potential factory sites.
If U.S. companies could buy into Japan at bargain basement prices, they would. But they have not been allowed to do so for decades. Now, dollar-rich Japan should be understanding of the growing American resentment against its absentee owners.
Who would have expected the formidable, former arch-critic of Japanese trade policies, John Nevin, not to even show up at the press conference in Akron announcing his company’s sale. Only the Chairman, the Vice-chairman of Bridgestone and the president of Bridgestone, U.S.A. were there to answer questions.
Nevin’s absence may have reflected the last shred of shame he possesses. And Reagan’s refusal to enforce the anti-monopoly laws against the Bridgestone takeover is just another example of his making America weak in reality, in contrast to his hollow rhetoric.