Japan's Economic Red Tide Rises

NEWS OF AN AUTOMOBILE ASSEMBLY PLANT'S CLOSing is supposed to come from Detroit, not Japan. But there was the No. 2 Japanese carmaker, Nissan, announcing that it was shutting down its plant in Zama, outside Tokyo, and reassigning 4,000 workers. In expectation of a $246 million loss for the fiscal year, Nissan plans to reduce its 53,000-member work force by 5,000. The car company's troubling news is only the latest downtick in Japan's deepening recession. The country's aggregate corporate earnings are down for an unprecedented third year, promising plenty of blue-chip company for Nissan. In other bad news, telecommunications giant NTT announced that it would cut 30,000 employees over three years. And Matsushita president Akio Tanii resigned, accepting responsibility for a sharp drop in profits, owing in part to costs associated with 700,000 defective refrigerators. Making matters worse is the sudden rise of the yen to a record high against the dollar. Monetary appreciation will hurt Japan's big exporters first, bringing in fewer yen for their sales in dollars abroad. Toyota, for example, calculates that for every yen in appreciation against the dollar, it loses $51 million in revenue from exports.

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