Japanese carmaker Subaru

On December 20, 1977, under the stress of constant police surveillance and investigation, Gacy confesses to over 30 murders and informs his lawyer and friend where the bodies were buried, both in the crawl space and the river. 26 victims were found in the crawl space and 4 in the river. Gacy is arrested, convicted of 33 murders, and sentenced to death by lethal injection. He attempted an insanity plea but was denied, and was executed on May 10, 1994.

There were several forensic indicators that investigators used to tie Gacy to the murders. Some of these involve fiber analysis, dental and radiology records, using the decomposition process of the human body, and facial reconstruction in identifying the victims. Investigators found fibers that resembled human hair in both Gacy’s car and near the crawl space where the bodies were buried. In addition to these hair samples, investigators also found fibers that contained traces of Gacy’s blood and semen in the same area. Blood belonging to the victims was found on some of the fibers, which would later directly tie Gacy to the crimes. The fibers in Gacy’s car were analyzed by forensic scientists and matched Piest’s hair samples. Furthermore, the search dogs that determined that Piest had been in Gacy’s car indicated this by a “death reaction”, which told investigators that Piest’s dead body had been inside of Gacy’s car.

Out of Gacy’s 33 known victims, only 25 were ever conclusively identified. Many of Gacy’s victims had similar physical descriptions and were therefore hard to identify by purely asking the public. To identify the victims, investigators turned to Betty Pat Gatliff, a pioneer in forensic science and facial reconstruction. Facial reconstruction is the process of recreating the facial features of an individual by using their remains. Certain facial features, such as jawlines, nasal structure, and overall face shape can be useful in identifying a victim even long after death. By using these features, and with the help of computer software, forensic investigators are able to create an image of a person’s face, which is instrumental in identifying victims after their bodies have decayed. Facial reconstruction can be done in two or three dimensions.

Two-dimensional facial reconstructions is used with skull radiographs and are based on pre-death photographs and information. However, this is not necessarily ideal because cranial features are not always visible or at the right scale (Downing). In order to get a realistic and more accurate depiction of the victim’s face, an artist and a forensic anthropologist are usually necessary (Downing).

Three-dimensional facial reconstruction is done by sculptures or high resolution, three-dimensional images. Computer programs are able to create facial reconstructions by manipulating scanned photographs of the remains and use approximations to recreate facial features. These tend to produce results that do not look artificial (Reichs and Craig 491).

Sometimes, investigators will use a method called superimposition as a technique for facial reconstruction. Unfortunately, it is not a commonly used method, as it requires investigators to have some knowledge about the identity of the remains they are dealing with. By superimposing a photograph of an individual over the skeletal remains, investigators are able to see if the facial features line up with the anatomical features, allowing them to identify a victim.

In the case of John Wayne Gacy’s victims, experts were able to use facial reconstruction to identify nine of the bodies found in the crawl space. The following graphic shows the facial reconstructions of these nine victims:

Since facial reconstruction was not enough to identify all of the victims, investigators obtained DNA profiles from each of the unidentified victims and actively sought out DNA samples from males across the United States who had been reported missing between 1970 and 1979 (Cook County Sheriff’s Office 3).

The remaining victims were identified using dental and radiology records.

Since dental enamel is harder than bone, teeth outlast tissue and sometimes bone when the body decomposes. Teeth are very reliable in identifying victims, as they tend to reveal habits about the individual, such as nail biting, grinding and pressure habits, lip biting, and clenching (Ryan 254). Furthermore, the roof of the mouth, which forms an arch, is unique to each individual in shape, size, and contour. Teeth also have individual characteristics that are unique to each person in that the relationship of teeth to one another varies, along with size and shape of the jaws and palate (Ryan 255). In order to identify an individual using dental records, forensic dentists must acquire the dental records of the victim or deceased. In cases involving multiple deaths, forensic dentists receive a list of possible individuals and then compare records to the teeth (Freeman par. 2). In many cases, X-rays are considered to be more reliable and provide the best comparisons, but these are not always available to forensic investigators. Once the dental records have been acquired, forensic investigators then look at the individual tooth size, color, and contour, arch sizes and types, and the relationship between the jaws, which is used to help classify facial types (Ryan 256).

Although John Wayne Gacy’s most recent victim was Robert Piest in 1978, investigators in Cook County are still searching for identification for the remaining bodies. The most recently identified victim, William Bundy, was conclusively identified in 2011. The Cook County Sheriff’s department announced the same year that they were renewing their efforts to identify the remaining seven of Gacy’s victims. However, no one has since come forward to conclusively identify them, and their names remain unknown.

Subaru’s Sales Boom Thanks to the Weaker Yen For the Japanese carmaker Subaru, a sharp fall in the value of yen against the U.S. dollar has turned a problem—the lack of U.S. production—into an unexpected sales boom. Subaru, which is a niche player in the global auto industry, has long bucked the trend among its Japanese rivals of establishing significant manufacturing facilities in the North American market. Instead, the company has chosen to concentrate most of its manufacturing in Japan in order to achieve economies of scale at its home plants, exporting its production to the United States. Subaru still makes 80 percent of its vehicles at home, compared with 21 percent for Honda. Back in 2012, this strategy was viewed as something of a liability. In those days, one U.S. dollar bought only 80 Japanese yen. The strong yen meant that Subaru cars were being priced out of the U.S. market. Japanese companies like Honda and Toyota, which had substantial production in the United States, gained business at Subaru’s expense. But from 2012 onward, with Japan mired in recession and consumer prices falling, the country’s central bank repeatedly cut interest rates in an attempt to stimulate the economy. As interest rates fell in Japan, investors moved money out of the country, selling yen and buying the U.S. dollar. They used those dollars to invest in U.S. stocks and bonds where they anticipated a greater return. As a consequence, the price of yen in terms of dollars fell. By December 2015, one dollar bought 120 yen, representing a 50 percent fall in the value of the yen against the U.S. dollar since 2012. For Subaru, the depreciation in the value of the yen has given it a pricing advantage and driven a sales boom. Demand for Subaru cars in the United States has been so strong that the automaker has been struggling to keep up. The profits of Subaru’s parent company, Fuji Heavy Industries, have surged. In February 2015, Fuji announced that it would earn record operating profits of around ¥410 billion ($3.5 billion) for the financial year ending March 2015. Subaru’s profit margin has increased to 14.4 percent, compared with 5.6 percent for Honda, a company that is heavily dependent on U.S. production. The good times continued in 2015, with Subaru posting record profits in the quarter ending December 31, 2015. Despite its current pricing advantage, Subaru is moving to increase its U.S. production. It plans to expand its sole plant in the United States, in Indiana, by March 2017, with a goal of making 310,000 a year, up from 200,000 currently. When asked why it is doing this, Subaru’s management notes that the yen will not stay weak against the dollar forever, and it is wise to expand local production as a hedge against future increases in the value of the yen. Indeed, when the Bank of Japan decided to set a key interest rate below zero in early February 2016, the yen started to appreciate against the U.S. dollar, presumably on expectations that negative interest rates would finally help stimulate Japan’s sluggish economy. By late March 2016, the yen had appreciated against the dollar and was trading at $1=112 yen. Sources: Chang-Ran Kim, “Subaru-Maker, Fuji Heavy Lifts Profit View on Rosy US Sales, Weak Yen,” Reuters, February 3, 2015; Yoko Kubota, “Why Subaru’s Profit Is Surging,” The Wall Street Journal, November 14, 2014; Doron Levin, “Subaru Profit Soaring on Weaker Yen,” Market Watch, November 15, 2014; Y. Kubato, “Weaker Yen Drives Subaru Maker’s Profit Higher,” The Wall Street Journal, February 4, 2016. Page 294 Case


Why do you think that historically, Subaru chose to export production from Japan, rather than set up manufacturing facilities in the United States like its Japanese rivals?

What are the currency risks associated with Subaru’s export strategy?

What are the potential benefits? Why did Subaru’s sales and profits surge in 2014 and 2015? Is Subaru wise to expand its U.S. production capacity?

What other strategies could the company use to hedge against adverse changes in exchange rates? What are the pros and cons of the different hedging strategies Subaru might adopt?

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