Brussels — One recent morning Henri Smets, in a shiny new Japanese car, pulled up to work at a decaying steel mill in the industrial heartland of southeastern Belgium.
''It's simple,'' he explained. ''I drive a Japanese car because it's better.''
In a sentence Mr. Smets had pinpointed one cause among many for what has become the new industrial decline of Western Europe.
Caught in a complex mire of stiff competition from Japan, high interest rates , soaring costs, overstretched borrowing, and growing protectionism worldwide, industry in Western Europe has sunk to its lowest level since the depression period.
Europe's plight -- pointed up by the announcement earlier this week that the West German giant AEG-Telefunken, Western Europe's third largest manufacturer of electrical equipment, is unable to pay its bills -- has been gathering steam for years. And few analysts see much light ahead.
The number of corporate bankruptcies in the 10 countries of the European Community (EC) -- after holding steady in the 1970s -- has risen sharply in the past two years.
According to EC statistics, bankruptcies in Belgium increased last year to 4, 133 (up 16.8 percent from 1980); to 20,895 in France (up 20.3 percent); to a postwar record of 11,653 in West Germany (up 27.4 percent); to 7,268 in the Netherlands (up 42.1 percent), and to 14,210 in the United Kingdom (up 26.4 percent). The trend has continued this year.
Especially hard hit have been construction services and the manufacturing sector. The US government recently added insult to the European steel industry's injury by imposing duties on its exports to the lucrative US market.
''The situation is worse than anything we've seen in the postwar period,'' an aide to EC Industry Commissioner Etienne Davignon said.
An official of the Confederation of British Industry -- the country's employers' federation - echoed the EC aide's remark last week when he called the latest survey of confederation members ''as depressing as any we have produced.
''Industry has failed to get a foothold on the first rung of the ladder to recovery,'' said Sir James Clemison, adding that plans for new investments in Britain have been cut for the first time in nearly two years.
Similarly, the federal labor office in West Germany last month issued its bleakest forecast in 30 years, and the country's Economic Affairs Ministry reported that orders for industry this year have dropped below the levels of 1976.
The current situation, experts agree, has come about through a cumulative combination of events over the past several years. This includes rising wage and nonwage labor costs, which have outstripped the prices received by producers, leading to a sustained reduction in profits, and the quadrupling of oil prices in 1973-74, followed by a further tripling five years later.
But experts here have focused their concern recently on the persistently high interest rates in the US. This has kept rates in Western Europe lofty as well and has resulted in dampened investment opportunities on both sides of the Atlantic and a slowdown in trade.
''The present experience of high real interest rates persisting during a long period of low capacity utilization,'' the twice yearly Economic Outlook released last month by the Paris-based Organization for Economic Cooperation and Development said, ''is unprecedented since 1929-33.
''It is not clear what all the effects on the household and business sectors will be,'' the report said. But there is ''a significant risk'' of strained balance sheets, cyclically low profitability, and weak demand prospects ''leading to a significant weakening of business investment.'' With interest rates high, the report said, ''any recovery in business investment seems likely to be muted.''
Few experts will risk forecasting a turnaround in the near future, and workable solutions appear scarce. ''The Europeans,'' said one analyst, ''have become good at blaming the Americans and the Japanese for their ills but bad at doing anything themselves -- if they could.''
For his part, reflecting the view of the 10 million unemployed workers in Western Europe, Belgian steel worker Henri Smets said outside his employer's rundown mill, ''Experts may have their theories. We have reality. And it is not good.''