US losing the global high-tech agenda. Executives give election preview on need for industrial strategy
The best and the brightest of the United States electronics industry were on Capitol Hill this week to warn of a crisis in American technological supremacy. Sessions on making America competitive are commonplace in the US today. What was different this time were the broad hints that ``national industrial strategy'' will be a major presidential campaign issue - and the specific concerns of these high-tech luminaries. Consider these scenes:
John Roach, chairman of Tandy Corporation of Fort Worth, Texas, holds a silvery-green compact disc in his right hand.
``This is a recordable and erasable CD developed by Tandy,'' he says. ``But the successful marketing of it is a function of whether the power structure will permit it to be marketed.''
The power structure, he says, is no longer American. It is Japanese. ``Foreign ownership almost totally dominates the consumer electronics market. Foreigners often set the standards.''
Richard Elkus, chairman of Prometrix Corporation of Santa Clara, Calif., recalls how he helped develop the first videocassette recorder, known as Instavideo, for the Ampex Corporation in the late 1960s. But Japan's Sony Corporation exploited the VCR and now dominates the market.
Mr. Elkus warns darkly of how the next generation of consumer electronics - especially high-definition television - could be lost to Japan unless there is a concerted national effort.
``Today the game is different,'' he says. ``It is the United States versus Japan and Europe. We need a national industrial strategy.''
Jack Tramiel, founder of Atari Corporation of Sunnyvale, Calif., tells how in 1977 he introduced the first personal computer in the Japanese market and enjoyed big sales. A year later, he says, Nippon Electric Corporation announced it would be coming out with a personal computer. Almost immediately, Mr. Tramiel's sales fell 98 percent.
``These people,'' he says of the Japanese, ``work together. They work for a goal.''
If it sounds like Japan-bashing, it is - but only to make a point, the executives and their backers say.
``America is on the verge of losing its high-technology lead for the first time in the 20th century,'' says Rep. Mel Levine (D) of California's Silicon Valley region. ``But let's not attack foreigners. Most of our problems are home grown. It is time to rebuild America, not tear down other nations.''
That was a nice turn of phrase - one that congressmen specialize in. The group sponsoring the conference is called ``Rebuild America.'' It is backed by economists such as Lester Thurow and Robert Solow of the Massachusetts Institute of Technology, the American Electronics Association, and a host of high-tech executives.
Congressman Levine is the group's chairman. Republican Rep. John Miller of Washington is also on board, but the tone has a decidedly Dukakisian tilt. When Rebuild America director Fred Branfman, a former aide to Sen. Gary Hart (D) of Colorado, lists what needs to be done to make America competitive, he talks of the need for ``new political leadership,'' implying that a George Bush succession is not what he has in mind.
The message doesn't go beyond that kind of code right now, however. Making America competitive and protecting US high-tech are goals that cut across party lines.
Everyone generally agrees, for instance, that government-business cooperation in the rough and tumble of the global market is a good thing. But the specific way this is to be done diverges along party lines and even within the two political parties. Democrats generally favor an ``industrial strategy'' articulated by President Reagan, oiled by Congress, and led by industry and labor. Republicans remain more laissez faire.
Richard Iverson, president of the American Electronics Association, favors a transfer tax on stocks to slow the turnover of corporate equities by pension funds and thus decrease the short-term profit thinking of corporate chiefs. He wants a capital-gains tax break reinstituted and incentives for development of high-definition television.
Mr. Roach of Tandy wants a return of the investment tax credit and a break for capital gains, but he doesn't like the higher minimum wage. Elkus of Prometrix also wants tax breaks. He focuses on high-definition TV and fiber optics and wants the government to let contracts for these items to speed their development. Tramiel of Atari has the most exotic ideas. He wants a US Department of Exports, an Export Bank, and a ``Marshall Plan'' for the electronics industry.
The touchstones almost everybody likes are industrial consortiums such as Sematech for the semiconductor industry and MCC for the computer industry, tax laws that encourage more investment in research and development, a change in corporate short-term profit orientation, and trimming of the US budget deficit.
Overall, Americans should be keenly aware that, as high-tech consultant Regis McKenna says, ``the 21st century is not going to be one of physical confrontation but of technological confrontation.''