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Seiko Defends Japan Trade Policies

November 22, 1985|NANCY YOSHIHARA | Times Staff Writer

Tired of what they describe as unfair U.S. press coverage of U.S.-Japan trade issues, a growing number of Japanese executives and government officials are crisscrossing the United States to defend their country and its policies.

One of these is Ichiro Hattori, president of Seiko Instruments & Electronics and Seiko Epson Corp. Hattori was in Los Angeles earlier this week, and, in a luncheon address at a business outlook conference sponsored by the Los Angeles Chamber of Commerce, he gave an unusually candid view of Japan's position.

The continuing rhetoric about the U.S.-Japan trade imbalance and the rising protectionist sentiment on Capitol Hill have obscured Japan's efforts to open its markets and caused some important facts to be overlooked, he complained.

Noting that the U.S. trade deficit with Japan, which is expected to hit $50 billion this year from $36.7 billion in 1984, has been a favorite target of U.S. trade critics, Hattori said that, "as long as the imbalance exist, the improvement scarely reaches the eyes and ears of Americans."

Hattori, whose Seiko Instruments & Electronics manufactures Seiko brand watches, explained that, proportionately, the Japanese share of the U.S. external trade deficit has, in fact, been declining. In 1982, it accounted for one-half of the U.S. trade deficit, in 1983 for one-third and still less in 1984.

Second-Largest Importer of U.S. Goods

In short, the U.S. trade deficit with the world as a whole is growing at a far faster rate than its deficit with Japan.

He also pointed out that Japan is the second-largest importer of U.S. goods after Canada and that, contrary to popular belief, about one-half of Japanese imports from the United States are manufactured goods. The value of such manufactured goods increased by nearly 8% in 1984 from the previous year.

Hattori, who speaks fluent English, also observed that critics who maintain that Japan's trade policies are unfair and blame them for the losses of U.S. manufacturing jobs are being short-sighted on some moves by U.S. firms.

For example, as Japanese color television makers set up U.S. production facilities, American TV manufacturers produce almost all their sets overseas, calling it "offshore production." U.S. auto makers are increasingly setting up shop overseas, while Japanese auto manufacturers move production into the United States. U.S. high-tech firms also are moving to Mexico and other offshore sites, Hattori said.

He said the shift overseas is mainly pursued by large multinational U.S. companies at the expense of small and medium-size firms.

"In my opinion, this discrepancy, if allowed to continue, will eventually weaken the strength of the American industry as a whole," he said.

Increasing Value of Yen

The recent move by Japan to increase the value of the yen has provided "at least temporary relief to the trade negotiators of both governments," Hattori said. "The new rate, however, has made a far greater impact on Japanese industry than just buying time. This is a transformation of management thinking--a renewed conviction that Japanese industry must become more international in its manufacturing as well as its financing facilities."

He said that persistent threats of protectionism and the continued strength of the yen will keep Japanese companies shifting production to United States at the expense of manufacturing jobs in Japan. In addition, short-term capital outflow from Japan will also be reduced because there will not be as much of a surplus to invest.

In an interview after his address, Hattori said Seiko's computer group will open a plant in Portland, Ore., next June that will employ 200. The company, which is facing a slowdown in the worldwide demand for watches, is diversifying into computer peripherals, electronic components and machine tools.

He said it is unlikely that Seiko will locate any watchmaking facilities in the United States because there is no support industry to provide the necessary components.

Instead of offshore production, Seiko is concentrating on automation to cut costs.

Seiko has total worldwide annual sales of $2.5 billion to $3 billion, "depending on what the exchange rate is," Hattori explained.

U.S. sales accounted for $900 million--$500 million for watch-related products and $400 million in computer and other electronic sales.

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