Midwest business chiefs say `fairness' essential for global trade
In the industrial heartland of the United States, business leaders see competitiveness and fairness as keys to international trade. ``The playing field is not level, and will never be,'' says Edson Spencer, chairman of Honeywell Inc., which is based in Minneapolis. ``It is full of ups and downs [to encourage] growth.''
Mr. Spencer says the rules of the trading game were defined after World War II, when Japan's industry was wiped out and had to be rebuilt to pay for imports. The Japanese protected their industries by ``highly regulated capital markets, tariffs, import licenses, research and development grants, effective cooperation between the minister of finance and the business establishment,'' says Spencer.
Speaking at a recent conference by the Chicago Council on Foreign Relations, Spencer said he believes the ``tightly disciplined nature of the Japanese society have made it difficult for non-Japanese to penetrate their markets.'' The Japanese ``usually open their doors,'' he adds, ``but too little too late.''
The US, on the other hand, according to Spencer, has had voluntary auto restraints, a 20 percent duty on light trucks, voluntary restraints on steel exports, finished-steel market limitations, duties on stainless steel, multifiber agreements on textiles and beef restrictions. There have been peanut, dairy product, cotton, and sugar restrictions. US airlines must be controlled by US citizens. Ownership of television and radio stations is restricted.
Honeywell has been successful in Japan, and Spencer believes ``they are as open as any other country in the world.'' The European Community, he says, is more difficult to export to than Japan.
In the future, Spencer sees Japan facing similar problems as other major socieites, such as Britain and the US with a rapidly aging population, escalating labor and elderly costs, a deteriorating educational system, and the need for investment of massive amounts of capital to their infrastructure.
``Their savings are dropping, and they are experiencing competition from other Asian countries, which will earn money from financial returns other than exports.''
Honeywell's chief believes in pushing aggressively to open foreign markets, ``but protecting those declining industries during this transition.''
Lee Morgan, who is on the board of directors of Caterpillar Tractor, based in Peoria, Ill., would like to ``take a Caterpillar tractor and level the field.'' Mr. Morgan's approach stems from the company's severe problems beginning in 1982-83 when a seven-month strike along with a strong dollar and a soft world economy caused ``Caterpillar's business to go flat.'' Morgan says the company spent a great deal of time on the national level educating workers about the dollar.
His view of the trading field over the next several years is that it is as level as it is going to get until ``we can become free traders.'' Morgan bases his conclusions on a recent General Accounting Office report on international trade. It concluded that the five causes for the US trade deficit were: the strong dollar, strength of the US economy relative to the world, the third-world debt, foreign trade barriers, and loss of trade competitiveness.
Surprisingly, foreign trade barriers and loss of trade competitiveness accounted for only 5 percent of the trade deficit. Fifty to 60 percent of the trade deficit was due to the dollar, the report concluded. Fifteen to 20 percent came from the US economy growing faster than other world economies.
Caterpillar lost 40 percent of its market in less developed countries during this time.
``I say let the governments hammer out their agreements,'' Morgan says. ``If ever there was a time for the US to export it is right now. Import quotas and protectionism won't solve our trade problems. Macro-economic policies created the mess and it is going to take them to clean it up.''
In the meantime, ``we have cut costs, improved products.'' Companies who have done likewise, he says, ``will emerge as a world class competitor.''
James Farley, president of SpeedFam Corporation of Chicago, says he made a decision in 1963 to ``go overseas'' or ``get killed.'' SpeedFam makes tools for machines ranging from semi-conductors to wristwatches.
Visiting Japan in the late '60s as part of a Department of Commerce trade show, Mr. Farley met a young Japanese and eventually hired him, but not without a few problems. ``I asked him how much money he wanted. He had no idea,'' Farley says. For the next eight weeks, at least twice a week, the young man called saying he was not going to join SpeedFam. His friends were telling him not to work for an American company, because the Americans would leave at the first sign of trouble.
Farley settled this snag with a letter of intent stating if SpeedFam closed its doors because of some factor not the fault of this Japanese manager, SpeedFam would find a job for him in another location.
Farley is now involved in helping other US companies break into the overseas markets. While Farley admits he can't help all the companies who want to do business in the Far East, he says, ``People who want to go can find ways to do it.''
Caterpillar's Morgan agrees. ``It is left up to business to fight for exports.'' Both Morgan and Honeywell's Spencer look to the General Agreement on Tariffs and Trade negotiations as a beginning.
``This has to be a major undertaking,'' says Spencer, ``but there is no better place to solve [these issues] than at GATT.''
All three business leaders say the US could expand exports by focusing on markets in the developing world.