Focus on Economy, Not on Muckraking

JEFFREY MORGAN confesses he's "scared for the United States." The young president of RAD Technologies, a developer and distributor of desktop computer software, sees too many Americans more interested in doings at the Kennedy compound in Palm Beach or the muckraking book on Nancy Reagan than in the business future of the nation. That's one reason why he approached his father, James Morgan, about writing a book on how companies can compete and succeed in Japan. The younger Morgan learned something about this by working in Japan for Mitsui & Co., that nation's oldest trading conglomerate with worldwide revenues exceeding $100 billion. The senior Morgan is chairman of Applied Materials Inc., a leading supplier of processing equipment to the worldwide semiconductor industry. The company made about 40 percent of its $573 million in annual sales last year in Japan. That proportion is extraordinary by US corporate standards.

Indeed, only about 120 of Fortune magazine's list of the 500 largest US industrial companies have operations in Japan - the world's second-largest and fastest-growing industrial market. It is the second-largest export market for the US after Canada.

"It is critical to be successful in Japan to be successful in the new global marketplace," said James Morgan, starting a tour with his son this week to promote their book, "Cracking the Japanese Market: Strategies for Success in the new Global Economy" (Free Press).

He maintains that Japan is opening up to the rest of the world. "US and European pressure on Japan is starting to pay off," he and his son write. Japan is slowly realizing it also must take in its share of manufactured products. The tastes of Japanese consumers are becoming internationalized. So, the opportunities for American business to succeed in Japan have never been greater, they say.

James Morgan runs his own company with the modern management techniques that were dreamed up mostly by American academics and consultants in the 1960s. These ideas about quality, employee participation, less rigid corporate hierarchies, etc. were eagerly adopted and adapted by Japanese companies, helping them succeed in world markets. Challenged by Japanese imports, US companies have in recent years been picking up rapidly what are often regarded as Japanese management styles.

In an attempt to reduce the distance between himself and the employees on whom the success of Applied Materials depends, Morgan has no reserved parking place, a simply-furnished office - not even a fancy salary by the standards of executives of US companies. In a perfect world, he has said, he would act less like a chief executive officer and his employees more like one.

Much of the book deals with how US companies can do business in Japan. An "Afterword" makes suggestions about industrial policy. "America's unique sense of fairness is not shared by the rest of the world," the Morgans write. "An 'Americanocentric' view of right and wrong blinds us from dealing realistically with the challenges created by the new world economy." Because of Japan's success, many nations are now looking to Japan and Japanese corporations, not American ones, as models for corporate and econ omic development. That model involves organized economies with active government involvement in the machinations of the market.

So the Morgans advocate what has been anathema for the Reagan administration and, to a lesser degree, the Bush administration - a more active industrial policy. The federal government, they say, should establish a strong, cabinet-level department similar to Japan's famous Ministry of International Trade and Industry to look after US industry and trade interests on a global basis. A policy coordinating office, reporting directly to the president, should provide continuous coordination of national policy among the various departments and agencies in dealing with Japan and Germany. The US should require "reciprocity" from its trading partners in market access, and possibly even in terms of the value of annual trade.

That's all controversial. Another hot issue: the Morgans urge the US to develop a national educational curriculum in part designed to provide industry with an appropriate work force to meet the challenge of global competitiveness.

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