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State Has Key Role in Pacific Rim, Businessmen Told

November 09, 1986|BOB WEBSTER | United Press International

California has an opportunity to play a key role in the emerging economic power of the Pacific, but it is feared that complacency could jeopardize the state's chance to help sharpen America's competitive edge in the global market.

"There is very little awareness in California of the Pacific Basin or of the issue of competitiveness among the business community or our public leaders," said Robert Monagan, president of the California Economic Development Corp.

With a new global economy taking shape, led by Japan and other Pacific Rim nations, the United States is finding itself in a position once held by Great Britain--that of a great industrial power relegated to scrambling for an economic position.

'Dying of 1,000 Cuts'

"Our nation is declining in its ability to compete in the world market. There is no single thing to turn around. It's more like dying of 1,000 cuts," said John Young, president and chief executive officer of Hewlett-Packard Co. in Palo Alto, and chairman of the President's Commission on International Competitiveness.

"This is a relatively new occurrence for us Americans. We haven't been in a position where we've lost the world pennant," said Regis McKenna, chairman of Regis McKenna Inc., a public relations firm in Northern California's Silicon Valley.

McKenna recently chaired the Industrial Competitiveness Task Force for the California Senate's Joint Committee on Science and Technology.

The task force, made up of California business and government leaders, said the state can improve the nation's international economic position by strengthening its educational system and its export policies.

Battling Back

With the research assistance of SRI International, a Menlo Park, Calif. research center, the committee has released a study showing that California is having trouble battling back international competition.

"The numbers are pretty frightening," McKenna said. "We have seen industry after industry lose its position in American markets."

Between 1979 and 1982, for example, California lost more than 27,000 jobs in the automobile industry and more than 6,000 jobs in steel. Now, most of the major automobile and steel facilities in the state are operated under joint venture partnerships with Japanese and other foreign investors.

Last year, California lost 5,600 jobs in its high-technology industry where young entrepreneurs fueled an international business within the last 10 years.

Competition Fierce

Foreign competition has been fierce in the semiconductor field and Japanese firms now dominate the world markets for memory chips.

"Entrepreneurs alone will not solve our problems. We need sustainers," McKenna said.

Within two years, the SRI study predicts, Japan, with its lower capital and labor costs, could become the world's leading producer of semiconductors.

"Many think high technology is going to save the country, but it is clear that our electronic trade deficit with Japan far exceeds Detroit's," Hewlett-Packard's Young said.

"Technology is our strongest advantage," he said. "But our biggest weakness in technology is our failure to focus on manufacturing and mastering production."

'Long-Term Erosion'

Each of California's major export industries--high technology, agriculture, aerospace and financial services--have shown signs of a "long-term erosion" in the international market, according to the SRI study.

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