From: jcliu@euler.Berkeley.EDU (James C. Liu - Nucl. Engin. UC Berkeley)
Subject: Re: DOES AMERICA SAY YES TO JAPAN? - Off track!!
Organization: University of California at Berkeley
Date: Thu, 17 Dec 1992 22:11:25 GMT

In article <BzExLy.7IH@news.cso.uiuc.edu> irvine@uxh.cso.uiuc.edu 
(Brent Irvine) writes:

  >BZZT! WRONG! Take the cigar away!!  The low prices HELPS drive [or
  >for a lot of manufacturers HELPED drive :( ] American manufacturers
  >out of buisiness because those low prices are designed with a razor
  >margin or at a loss specifically to DRIVE AMERICANS OUT OF BUISINESS.
  >The consequence is that there are less jobs, and less $$ in the
  >economy - so i seriously doubt that as a whole we are a richer people
  >for it.

Some of us are richer for it.  Japan is still a big market for US 
technology.  For example, General Electric sold $6.3 Billion in
Advance Boiling Water Reactors plus fuel, design and managment services
to Japan in 1991.  Of course, many jobs will be subcontracted out to
Japanese manufacturers, but this is an example of the dual benefits in
trade.

To put most of the blame on Japan is overboard.  Much of the loss in jobs
has been in the assembly line jobs.  It is inevitable with technology, 
many of the unskilled or marginally skilled labour jobs will go overseas
where costs are lower.  The biggest problem is that in most sectors of
the economy, there is an unwillingness to pursue profit through innovation.
Ford sits on its Taurus for 7 years then changes it a little bit and
re-markets it.  Toyota goes through a new Camry every 3 years.  Companies
would rather handover dividends to stockholders than re-invest in new
capital equipment which would make the manufacturing companies more
competitive.  America (the people together with government) need to
learn a lesson from Japan and target certain industries that it wishes
to dominate then gear the combined gov't, industrial, and educational
complex to produce that goal.  Already, there's been mention by netters
about the aerospace, telecommunications, information, agriculture, and
entertainment industries that the US still holds leads in or dominates.
Protectionism is one option, but one that should only be a last resort.

Rather, we can learn from some successful companies that have strong foot
holds in Japan. If we turn to the workstation market, the Americans clearly
dominate the market and are poised to do so.  We can examine the number
one workstation company, Sun Microsystems, whose quarterly report just
happens to be handy. Sun pays no dividends.  They roughly put 2/3rds of
their profits back in marketing and R&D, and put 1/3rd in the bank for
later capital improvements or acquistions.  Sun currently has $1.3 Billion
in cash in the bank.  This provides intimidation value against takeovers,
as well as available cash to buy key small technologies which will improve
Sun's competitiveness.  
     Sun uses mostly Japanese manufactured components in its workstations, 
from Sony monitors, to Fujitsu Sparc cpus and other 3rd party simms.  
However, with a little technology and assembly, Sun sells workstations 
back to Japan at perhaps a 300% profit over the cost of parts and labour.  
Sun enjoys a high 30's to 40% market share in Japan and the rest of Asia, 
which is up from 30% two years ago.  Much of this increase in market
comes from knowing and satisfying market demand for low cost, client/
server networed computing.  All those profits come back to Sun Micro, 
and get re-invested.  Sun is now the biggest employer in Silicon
Valley and continues to expand its market.  The Japanese have unsuccessfully 
tried to enter the UNIX client/server workstation market but are unable to 
match America's pace in workstation improvement.  NEC, Hitachi and Toshiba 
have basically resigned for now to license the SPARC technology and the 
Solaris OS.  In fact, large corporations like IBM, are finding the pace a 
bit hard to swallow because their own RISC workstations are cutting major 
chunks into their mainframe business. But, the fast paced improvement is 
beneficial to some American companies as Sun has now turned to Cypress and
TI for the new generation of SuperSparc (Viking) and MicroSparc (Tsunami)
cpu's as well as Weitek for its GX graphics accelerators. (who now are more
competitive against the Japanese giants like NEC and Fujitsu).
    Unlike IBM which lost in the PC market because it in arrogance charged
too much for its PC's, Sun offers superior support at prices which are only
marginally higher than its closest domestic or foreign clone competitors.
Also, because the Solaris OS is controlled by Sun, the situation of IBM
going down the tubes while MicroSoft became a giant will not be repeated
as more clone manufacturers bring hardware prices down to that of just a
commodity.
    In just 10 years, Sun Micro has climbed from 4 Stanford/Berkeley geeks
to the Fortune 143rd largest company in America.  The lessons that both
Japanese and American companies should learn from this success story are
very basic:
    1.  Cover the company's financial rear end first before satisfying
        stockholders' desires for dividends.
    2.  Put effort into both marketing AND research, because you may have
        a competitive product on the market today, but not tomorrow.
    3.  Know what products your market wants.  Localize your product to
        meet the demand of customers in you area (something American
        car, refrigerator, home appliance manufacturers haven't figured
        out.  You can't sell 'em a frige that doesn't fit through their
        door! or a car they can't find parking for!)
    4.  Balance your debt with cash in the bank.  You never know when you
        you can pick up cheap capital equipment or technology.
    5.  Know your competition.
    6.  Control as many key technologies in your product as possible
        (i.e. don't be like IBM with its PC's running MS-DOS)
    7.  Hire good people, provide them with decent pay, good benefits,
        interesting jobs, then work the hell out of them. (I talked to
        some HP guys..they put in standard 45-50 hour weeks..but my
        friends at Sun are doing easily 60+ hours a week)

Obviously, this points to the need to focus on innovation and constant
improvement.  America has lost jobs not because it got dumped on by
foreign countries, but because many companies especially the auto
manufacturers, allowed themselves to get dumped on due to their lack of
constant improvement.  Japan has continued to improve, even though the
improvement has been in small increments and not big jumps as we've come
to expect in America.  For all those unlucky Americans that once had very
plush and comfortable manufacturing jobs, but are now out of work, I can
only see in hindsight that they should adopted a more Confuciam paradigm
and studied hard in a science or technology major.  For all those American
companies going down the tubes like IBM, their combination of greed and
impatience led them to their downfall.  Take a lesson from Nobunaga, 
Hideyoshi and Tokugawa.  All three thirsted for power.  Nobunaga was
stubborn in his ways, Hideyoshi was impatient, and the patient Tokugawa 
began a reign which lasted for many generations.  

Jaa, James
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