Abstract
The Industrial Research Institute recently completed a high-priority project -- to define the planning environment for the 1990s as the basis for its own strategic plan. Ten key points were developed alter considerable dialogue and some debate. The presentation that follows is a discussion of these points in the context of the Japanese/American relationship from the viewpoint of a technology officer of an American firm. Point 1. Technology development will continue to occur more aggressively outside of the U.S. This situation is driven by significant differences between the U.S. and its major industrial competitors in areas such as the cost of capital equity market financing government support of R&D, and environmental laws and regulations. These differences result in reduced opportunities to pursue longer range goals to commit critical masses of technological resources to major projects and to establish effective national plans for exploitation of unique capabilities. Cooperative means to monitor develop, or acquire technology worldwide will become increasingly important for U.S. industry. It is apparent that the multi-national model of research with which we have all lived is growing obsolete in many fields. In this model, technologies developed in the U.S. are exported to Europe and the other OECD countries, and, ultimately, move into the less-developed countries. Today, it is increasingly necessary to have global product line management and to roll technology out nearly simultaneously, at least insofar as possible, to all parts of the world. W. R. Grace's R&D organizations, for example, are becoming increasingly global, with faster growth occurring outside the U.S. We recently opened a corporate research center in Japan to monitor technology and carry out both proprietary and cooperative research there. Free trade is becoming an increasingly powerful global movement. It appears that the less-developed countries will no longer be sheltered behind tariff walls, so the traditional strategy of building a plant with a well-established technology in those countries and then closing the border probably is not going to work. Free trade is already being expedited by the Europe 1992 movement. In fact, this movement is now beginning to spread to several countries of eastern Europe which is moving very rapidly toward a free trade philosophy. Latin America has also changed dramatically during the past year. Perhaps this occurred as a result of President Salinas' trip to Europe, where he discovered that the focus of European financiers had shifted from Latin America toward Central Europe, with the implication that Latin America was going to have to solve most of its own problems as less outside money became available. The drastic economic reforms going on today in Argentina, Mexico and Brazil are nothing short of astonishing, and represent further motion toward a free market. The one area that is still holding up the political trend toward free markets, of course, is the Japan/U.S. relationship, which is continuing to deteriorate. Our trade balance has not budged, and mutual patience on each side of the Pacific is eroding. Since the U.S. and Japan together produce almost two-thirds of the world's manufactured goods, a crisis on this frontier is no small matter. What we in the U.S. have perceived as de facto mercantilism is beginning to tempt our politicians to establish retaliatory policies. Many Americans, some of them knowledgeable, perceive the Japanese as insincere in their efforts to remedy the situation. On the other hand, many Japanese perceive Americans as bullies who use Japan as an excuse to cover our own inadequacies. Almost every American company with which I am familiar believes itself to have a lower market share and lower profitability in Japan than its core businesses have been able to earn in almost any other part of the world. That applies to my own firm. We've been in Japan for well over 20 years, with only mixed results. …
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