Share this story
Close X
Switch to Desktop Site

Is America keeping up with the competition? How US industry could do more to build on its present strengths

American business is not competitive internationally. That's what some analysts say. But two prominent foreign businessmen, one West German and the other Japanese, see a mixed situation.

Dieter Spethmann, chairman of the board of managing directors of Thyssen AG, D"usseldorf, finds that the United States' ``strengths outweigh weaknesses.''

About these ads

The decisive positive factor, he says, is the entrepreneurial spirit still governing the US.

Yotaro Kobayashi, president of Fuji Xerox Company, Tokyo, describes the US as ``a very dynamic, attractive market.'' But he does offer some advice for remedying its business weaknesses.

Both men were part of a panel on American competitiveness, speaking to the world's top 100 or so commercial bankers at their annual International Monetary Conference here.

Dr. Spethmann listed these strengths of American industry:

1.The mobility of its labor force.

In general even home ownership does not deter Americans from moving to a better job elsewhere in the country. In Europe, house ownership and similar factors constitute ``nearly insurmountable obstacles'' to mobility.

Nor do American workers expect lifetime employment in the profession for which they once were qualified, Spethmann says. University professors in the US are apt to shift into industry and then return to the academic world. That seldom takes place in Europe.

About these ads

2.Flexible labor costs.

American employees and their unions are prepared, in special cases, to forgo wage increases or accept wage cuts or other changes that reduce personnel costs. This can safeguard jobs.

In 1987, US industry paid on average $14 an hour to its workers. That ranked ninth on the world list of total labor costs. West German industrial firms paid $18 an hour, just behind Switzerland. American labor costs rose 4.4 percent between 1985 and 1987, as against about 10 percent in Germany.

Labor productivity rose 24.5 percent in US industry between 1983 and '86. That's nearly as much as the 25.6 percent in Japan, and well above the 16.3 percent in Germany in the same period.

3.Favorable corporate income taxes.

The US rate is 34 percent of profits, compared with 35 percent in Britain, 41 percent in the Netherlands, 42 percent in France, and 56 percent in West Germany.

Spethmann admitted these figures are not fully comparable. Nonetheless, he says the US rate is low.

4.Favorable energy costs.

The US has plentiful domestic low-cost energy sources.

5.The largest market in the world.

6.Greater scope for entrepreneurial action.

``The discussion on economic policies in this country is less determined by ideology than in Europe, where thinking in terms of social classes has left its mark,'' says Spethmann.

The German industrialist then cited some American industrial problems. One is that most US producers are predominantly oriented to the domestic market because of its immense size.

``Countries like Japan and Germany were forced much earlier to compete internationally,'' Spethmann says.

Another weakness is vocational training. Industry needs a wide selection of skilled workers to operate industry's expensive machines reliably.

Spethmann also holds that, as a general rule, US products are behind in quality and that management is too oriented toward the short term. ``International competitiveness is the result of strategic decisions,'' he says.

Fuji Xerox's Mr. Kobayashi contended that the US must develop an effective industrial policy. By this he meant that management, the government, and if possible, labor should cooperate to run industrial America.

This might run against the traditional American thought process that values competition to such an extent that it takes for granted counterproductive adversarial relationships among the partners of industry, he adds.

US multinational corporations, he says, have improved their competitiveness through moving jobs around the world to the geographic area that provides them with the greatest efficiency and profitability. But the US as a nation has suffered from a loss of jobs which was not in the best interests of the people of the US.

``What is good for the survival of corporations is not necessarily good for the nation,'' he says.

Echoing the term ``Japan Inc.,'' Kobayashi spoke of a ``New America Inc.,'' a pulling together of its strengths and resources, characterized by a clear statement of direction and objectives, an effective allocation of resources according to agreed-upon priorities, cooperation among the key members of society, and an organization-wide commitment to the fulfillment of customer needs.

Then nothing can prevent the US from developing great capabilities to serve the needs of the world better, he concluded.

Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.