Strong Yen Helps to Fuel Germany’s Export Boom

There was a touch of gloating in the most recent earnings report issued by Kuka, a company based in the Bavarian city of Augsburg whose orange industrial robots are a common site on auto assembly lines around the world.

Kuka said last month that its sales had more than bounced back to levels predating the financial crisis.

By contrast, sales at its Japanese rivals were still a third below where they had stood in early 2008, before the global downturn slammed the machinery industry.

A surge in orders from European carmakers has helped Kuka’s rebound.

But it also does not hurt that the euro has plunged compared with the yen, which has given Kuka a price advantage against Japanese competitors that it did not have a year ago.

“Price is not the sole criteria, but it’s an important criteria,” Kuka’s chief executive, Till Reuter, said in an interview. “The weaker euro is to our advantage.”

European companies tend to focus on the dollar exchange rate

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[DXC1  Loading...      ()   ], because the United States currency is the most important for world trade.

But the yen’s recent strengthening is playing a role in Germany’s export boom as well. The euro has fallen 19 percent against the yen in the last year, nearly double the decline against the dollar.

Over all, the euro

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[EURJPY=X  Loading...      ()   ] is down more than 36 percent against the yen since August 2008.

A stronger yen is good news for German machinery and auto companies whose main competitors often are based in Japan. And it is, of course, bad news in Japan, where the strong currency has become a political issue.

The rivalry between the two countries is particularly intense in China. It is the fastest-growing market for many German companies, but proximity gives Japanese exporters an edge.

China was the destination for 5 percent of German auto exports last year, up from 0.6 percent in 2000. And 9.1 percent of German machinery exports went to China, up from 2.7 percent a decade ago, according to the Ifo Institute, a research organization in Munich.

“Japanese manufacturers are all over the place, and they are usually the toughest competitors,” said Oliver Wack, a China specialist at the German Engineering Federation, an industry group.

In fact, German companies gained ground in China last year, increasing their share of imports to 22.9 percent from 20.6 percent, while Japan’s share of Chinese imports slipped to 24.1 percent from 27 percent, according to the engineering federation.