Fender cares about profits, not where the goods are produced, particularly. Given that the Yen is weak imported US goods are likely to be at a price premium compared to what Fender Japan was selling at, so I think it's unlikely that US-made Fenders would sell well as compared to the full breadth of Fender Japan production at all price points.
That's more likely, and more what I was alluding to, although my money would be on Mexican production given the experience with the Marcus Miller and Geddy Lee. The MIM line is a bit cheaper, so even with a weak Yen you might be talking about retail cost parity with Fender Japan in Japan itself. And then the presumption is that the profit margin on the Mexican production would be higher than that in Japan (no middleman). In this scenario it isn't making way for US-made goods.
Maybe the other possibility is that currently with Fender Japan the Japanese market is only for domestic production in Japan, but if that block was removed it would be possible to sell premium-level instruments (MIA) and then rebrand some of the Squier CV production in Indonesia as Fender and have that cover the lower price points within Japan? That would open Japan up to US production.
Or it might be a combination of MIM and MII?
I'm in another business, but the principal is the same. Here is how I understand it. Fender Japan is a distributor and a manufacturing source. You kind of have to separate the two for it to make sense.
So Fender currently has US, Mexican, Indonesian, and Chinese product in market in Japan, alongside the Fender Japan manufactured product. An American company has two choices when operating in a foreign country. One is to set up shop themselves, two is to use a distributor. It is very expensive and risky to set up shop yourself, especially in a market as peculiar as Japan can be. If you use a distributor, the distributor has the infrastructure in country, and the business/political relationships to sell your product. They buy it from you for what you'd sell it to an American retailer, then they mark it up, and sell it to the retailer in their country. This adds a layer of mark up compared to retail pricing in the company's home market, making the product meaningfully more expensive, and sometimes hurting the consumer value. Because of this, it's usually a situation that is kept in place as short a time is necessary to establish the brand and justify opening your own local office.
The maufacturing component of Fender Japan adds complexity to this business model. As I understand it, fender Japan was a joint venture between two Japanese guitar companies and Fender, with one eventually dropping out. This venture acted initially as a manufacturing source for inexpensive products for US, Europe and Japan. As the yen climbed in value from the 80's to the 90's, Japanese manufacturing of guitars made less sense for these other markets, and was replaced by Mexico, Korea, China, etc... Simultaneously it became possible to import some of these other sources' guitars into Japan cost effectively. The venture then began to act more like a traditional distributor, but with manufacturing rights.
Years pass, currencies shift, and guitar tastes evolve. Certain models that previously only thrived in Japan (Jags, Jazzmasters, and Mustangs...) start to come back in America, forcing Fender USA to create cost effectively sourced versions for their markets. These get imported into the Japan distributor model too. Currencies continue to shift.
I noticed in the last year that Mexican Fenders in Japan were right on top of similar Fender Japan models as they sat together in the store. These had very similar prices and specifications. Now if you remember what I said before, Fender Mexico stuff has a distributor margin built into its economics, meaning they should be cheaper, but Fender Japan added a layer of profit before they get to retail. This is confusing because Fender US might still own a piece of Fender Japan toward the end... I'm a little fuzzy here... So Fender US may have been collecting a piece of the profit that Fender Japan created by marking up product provided by Fender US in the first place. Also, Fender US is collecting royalties on Fender Japan product as a licensor, so it gets a bit murky... But...
The other factor is economies of scale. The cost of each unit goes down as production volumes go up. Fender US now has many product in production from sourcing it controls (Mexican Jaguars, and Jazzmasters for example) that would work well in Japan at the prices they would cost for Fender to get them there.
An accountant probably had to sort all of this out so it made sense, but I figure that eliminating the Fender Japan Venture allows Fender US to sell its product directly, taking some of the money that was going to distributor margins, and redistributing it to creating its own subsidiary in Japan, with the rest going to profits. This then creates the need for higher production from their own controlled factories, lowering per-unit costs, and raising profits for all markets.
Blah blah blah...
Anyway, the Japanese production volume needs are probably very significant. Japan is a huge economy with a very over-indexed guitar market. I would hazard to guess that it might be the 2nd biggest guitar market in the world. I bet it's bigger than Europe. I'm just guessing, but it plays out that way in some other industries (my own included), so it is not that far fetched.
Another thing... I would have thought that the people of Japan would have some preference for Japanese manufactured product. My first hand conversations with Japanese friends suggest otherwise in this instance. Of course US manufacturing on a US brand such as fender is rated the highest. Oddly it seems that amongst my Japanese friends, Mexico seems to rate as a bit more desirable than Japan for Fenders. I think the SoCal borderlands roots of Fender, and the number of Mexican names made famous as markings on the insides of vintage Fenders helps that sense of legitimacy. Also, I personally have negative impressions of Fender's Mexican output because the first guitars coming out of there were quite rough. By the time they start getting to Japan, they worked out the bugs, and were delivering a pretty consistent product...
That's all I have... See what a little jet-lag can get out of you?
