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COMPUTER FIRM ON TOP OF THE WORLD : Chairman of Western Digital Believes Competition, Not Protectionism, Is Key to Healthy U.S. Business

December 21, 1987

Western Digital Chairman Roger W. Johnson doesn't have much sympathy for those who would argue that American business is fighting a losing battle with foreign competition.

And at a time when many American industries are calling on Congress to pass trade legislation to help protect them from overseas competitors, Johnson views such measures as counterproductive.

American companies, Johnson bluntly states, "should go out and compete and stop crying."

Western Digital, an Irvine-based computer products maker, has done well competing internationally.

The company's foreign sales grew by 80%, to $170 million, during the fiscal year ended June 30, and represented 37% of total company revenues. The company also recorded strong sales growth in tough-to-crack Asian markets, such as South Korea and Taiwan.

The firm has manufacturing plants in Ireland, Malaysia and Puerto Rico, as well as in Costa Mesa and Irvine.

Western Digital, which employs 3,400 people worldwide, has become one of the leading suppliers of personal computer parts, such as computer chips that control the data storage, graphics and communication functions of personal computers.

Recently, Western Digital has attracted attention in the industry by introducing a line of computer chips that duplicate certain functions of IBM's new personal computer line, a development expected to speed the arrival of clones of the IBM models.

A former Burroughs Corp. executive, Johnson, 53, joined Western Digital as president and chief operating officer in 1982. He was named chief executive officer in 1983 and chairman in 1984. A native of Hartford, Conn., Johnson serves on the board of directors of the Orange County Performing Arts Center, the American Business Conference, Quintec Industries and Triconex Corp. He also is a founding member of UC Irvine's Chief Executive Roundtable.

In a recent interview in his Irvine office overlooking the San Diego Freeway, Johnson talked with Times staff writer David Olmos about his views on international trade. Q: At your company's recent annual meeting, it was mentioned that Western Digital exports more products than it imports, giving you a favorable balance of trade. How have you been able to achieve that?

A: What we have done is fully recognize our business as a worldwide business. There's quite a difference, I think, between saying that you're a worldwide company and really acting that way. For example, we operate in seven different countries, with sales offices. Those companies are incorporated in those countries. They're run by foreign nationals. They don't have any Americans running the companies. Now, behind all of that, though, is a recognition that each market is different. And you really have to understand the markets. In many cases, the products that will sell in this country or in a European country, say France, will not sell in Germany. You must understand that, and you have to work at that.

Q: Specifically, what would you do differently in Germany, for example, than in Japan?

A: To start with, in Germany we hire Germans. We hire people who understand their markets. We teach them all our products. They then take our products and tell us if we have to modify them or which ones can be sold as is. They understand the different applications the product can be used for. So, we don't do anything different to them. We just hire people who know the marketplace that they're moving into.

Secondly, we recognize that it's very critical to support international customers with more than just selling operations. So we often locate technical support and engineering people in international markets. The foreign operations have the ability to literally redesign products and modify them. That gives them an opportunity to work with an international customer. And you have a much better relationship because you better understand what he (the customer) needs.

Thirdly, we manufacture offshore in a number of instances. We locate our plants offshore for market access, customer support, the cost of capital and taxes. We don't really go anywhere for labor costs. So even our manufacturing strategies are tied to supporting the worldwide markets. What you have is a company that really does operate as an international company. And when you do that, you have a lot better chance of beating your competition than if you merely operate as a U.S. company doing business offshore. It's very different.

Q: There are some people who might criticize American companies, such as Western Digital, which do offshore manufacturing, saying that you export jobs overseas.

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