Why US isn't 'buying American' -- and the cost in jobs, industries
Washington — US officials, economists, and labor leaders face a problem of critical importance: Can the drain of American jobs to other nations be stopped? The United States -- once the overwhelming economic giant of the world -- has been losing jobs -- and even entire industries -- to other lands. The toll of manufacturing plants lost to overseas competition is mounting:
* The domestic black-and-white TV industry . . . virtually gone.
* The US color TV industry . . . seriously threatened by Asian imports.
* The US steel industry . . . in deep trouble, with the world's largest steel firm now believed to be in Japan.
* The auto industry . . . facing job layoffs.
* The pharmaceutical industry . . . moving more jobs abroad.
* The chemical industry . . . a potential "problem child" in the 1980s.
There are no easy answers. Political and business leaders, economists and union chieftains are troubled by the erosion of US competitive strength.
But what is certain is that the scramble by Congress late last year to provide up to $1.5 billion in federal loan backing for the troubled Chrysler corporation -- the nation's 10th largest firm -- underscores a growing feeling that the United States has become too complacent in recent years about its once-dominant industrial position.
Under this perception, now widely shared here, the view is that the Us government has stood aside as industry after industry has seen its preeminence either overtaken or seriously threatened by overseas competitors, many of them receiving special trade preferences from their host governments and official protection through restrictive trade barriers.
The issue of the slippage of US productivity and loss of manufacturing jobs abroad must be squarely faced by the American people, argues Albert Sommers, chief economist of the Conference Board, a leading US industrial group representing major businesses.
"The US," Mr. Sommers says, is "relinquishing its technological superiority in enough areas to be a matter of general concern."
"The numbers are stark," argues Dr. Richard L. Lesher, president of the Chamber of Commerce of the US.
What Dr. Lesher and other economists mean by "the numbers" can be looked at this way:
-- Recently US Steel Corporation actually invited Japanese business leaders to come to the US to consult about production techniques.
The steel industry in the US is threatened by a tide of imports, which reached 18 percent of the domestic market in 1978, up from an average of roughly 14 percent for the preceeding 10-year period. Some industry analysts are concerned that imports could hit between 40 and 50 percent of the market in the next 10 years.
The steel industry is at a crossroads, argues Robert B. Peabody, president of the American Iron and Steel Institute, main trade group for the industry. "We're at a point where if government policies [regarding trade, capital expenditures, taxes, and environmental regulations] do not meaningfully change, the steel industry in this nation years hence" will be a "radically different kind of industry from what historically this country has had," he says.
It will be a smaller industry, he argues, requiring heavy government funding.
Jobs within the steel industry alone have plummeted from roughly 544,000 in 1969 to 433,000 now.
Perhaps the one bright spot for the industry is speciality steel, which is boasting stepped up production and sales. But specially steel represents only around 1 percent of overall production.
Steel imports reached 18 percent of the domestic market in 1978, up from 14 percent 10 years ago, and could hit 50 percent during the next decade.
-- The increasingly regulated US auto industry is also facing a tide of imports, now accounting for roughly one-fourth of the entire domestic market. That is up from roughly 15 percent just a few years ago in 1976.
Yet, while imports continue to flood the market, one firm of the once mighty US triumverate of General Motors, Ford, and Chrysler -- Chrysler -- is now asserting that its very survival is independent on federal assistance from Uncle Sam.
Moreover, the overall production of the largest Japanese producer --Toyota -- is inching closer and closer to the overall production of the second largest US producer, Ford. In fact, some analysts say that the world's best selling car is now a Toyota.
-- The US black-and-white TV industry virtually disappeared in the 1970s. Now, industry officials argue that the domestic color TV industry will bite the bullet in the 1980s unless tougher import restraints are imposed on overseas producers -- especially Japan, Korea and Taiwan.
-- Beyond television sets, entire groupings of consumer related electronic products, from hair dryers to washers to toasters to vaccuum cleaners, are now being built abroad for US producers. But in each case that has meant a loss of US factory jobs.
-- The once virtually dominant US fastener-parts industry -- firms that make nuts and bolts and other "fasteners" that are used to rivet together almost every product made in the US -- is now seriously threatened by overseas, particularly Japanese, producers.
Exactly what has happened to cause the shift from US industrial dominance in the 1940s and '50s to mere equality -- or in some cases, a secondary status -- remains in dispute.
The trend, however, seems clear.
"The industrial base of the US," argues Dr. Murray Weidenbaum, director of the Center for the Study of American Business, at Washington University in St. Louis, "is expanding more slowly than that of Japan and most overseas industrial nations."
The industrial bases in Japan and much of Western Europe, particularly Germany, were destroyed during world War II.
That has meant that plants there tend to be newer, more advanced technologically.
More alarming to US economists, however, is the slippage of productivity in the US, plus the low rate of savings and investment compared with other nations.
At the same time, US firms are increasingly regulated and require large capital expenditures for government mandated environmental safety and health measures.
According to Dr. Weidenbaum, somewhat over 10 percent of most firm's research and development budgets are now spent on "defensive research."
This is research designed to protect a firm against government regulation. Yet, in each case, it is money that would otherwise have been spent on new plants or equipment.
Dr. Lesher, of the US Chamber, argues that environmentalists have been successful in painting the picture of the US as the world's "worst polluter."
In fact, he argues, that is open to question.
Japan, for example, he notes, has serious air and water pollution problems. Yet the government, which works closely with industry to promote exports, has been very cautious in requiring large-scale investment of precious capital expenditures on pollution measures.
Ironically, while the Carter administration is boasting of "cutting back" on the size of government, many of the most stringent and costly pollution and safety measures for firms will be going into effect in the 1980s.
In the case of the auto industry, for example, tough safety (restraint systems) and emission standards will take effect in 1984 and 1985.
Tough and expensive new measures for the chemical industry also go into effect in the mid-1980s.
Does that mean the industrial picture is totally gloomy?
Not so, argues Dr. Weidenbaum.
Japanese firms, however, are known to have already targeted the US computer industry. They are seeking to bypass the Americans during the next decade with third-generation computers.