The Commerce Department yesterday ruled that Japanese companies are illegally dumping roller bearings in this country by failing to increase prices to cover the sharp rise in the value of the yen over the past two years.
The ruling is likely to be used as a precedent by other American industries that have not regained domestic sales from their Japanese competitors even though the yen has increased in value by more than 60 percent since September 1985. Auto, steel and computer manufacturers have been following this case closely.
"It certainly is a very important precedent with regards to all Japanese products landed in this country," said Robert A. Perkins, vice president of the Washington office of Chrysler Corp.
He emphasized that Chrysler is not planning to file an unfair-trade complaint against Japanese auto makers, which also have not increased the prices of their cars in this country to match the big jump in the value of the yen. But he added, "We certainly are watching the whole matter of Japanese vehicle prices."
The Commerce Department ruling came in a complaint brought by Timken Co. of Canton, Ohio, one of the world's largest makers of roller bearings. Makers of such bearings, critical for most manufacturing and especially for defense production, have been badly hurt by imports.
Commerce investigators found that one major Japanese manufacturer, Koyo Seiko Co. Ltd., is dumping its products at discounts of 70.44 percent of their fair market value. Another maker, NTN Toyo Bearing Co. Ltd., was found to be dumping at 47.05 percent of fair value, while all other companies were dumping at 47.57 percent of fair value.
Under U.S. law, the Commerce Department will order the U.S. Customs Service to collect duties equal to the dumping margins on roller bearings from Japan. These tariffs will be held until the International Trade Commission issues its final decision within 45 days on whether Timken has been injured by the Japanese dumping. The ITC, an independent, quasijudicial body, has already issued a preliminary finding of "a reasonable indication" of injury.
The dumping tariffs, if applied, will increase the prices of Japanese roller bearings in this country to effectively match the decline in the value of the dollar.
"They weren't making that much money before the devaluation and there is no way they could sell above their costs" at their current prices, said Thomas Cline, public affairs manager for Timken.
"The basis of the case is that they are selling the product unfairly. What concerns us is the combination of the fluctuation of the currency with no change in the cost of their products here," Cline continued.
In the trade complaint, Timken said the yen increased by 64 percent between February 1985 and July 1986, the period covered by the petition, but Japanese roller bearing prices in this country failed to match that rise. Because of the higher value of the yen, Japanese products should cost more in this country while American goods would cost less in Japan.
For instance, Timken cited the case of a bearing sold by NTN Bearing Co. that cost $28.40 before the yen started to appreciate in value. Despite the yen's rise, Timken said the price was the same the next year.
Many Japanese manufacturers say they have managed to keep the prices of their product stable in the face of the sharply rising yen by cutting manufacturing costs and taking smaller profit margins. But Timken charged that the Japanese bearing makers had profit margins so small that they couldn't absorb the added costs of the higher yen. For example, Koyo Seiko Co. had profit margins of 4.3 percent in 1985.
The decision was hailed on Capitol Hill, where lawmakers from states with bearing manufacturers have formed the Congressional Bearing Caucus to press for import relief for that industry.
"We caught them," exclaimed Rep. Nancy L. Johnson (R-Conn.). "At long last, U.S. trade officials have proven ... that the Japanese are dumping their products unfairly and ripping off thousands of important U.S. jobs."
Earlier this year, Rep. John Dingell (D-Mich.) had pressed the Commerce Department to look into the pricing practices of Japanese auto makers, which he said had increased their prices by less than 15 percent even though the yen had increased in value by more than 60 percent.