U.S. Too Short Term, Minebea Says
American business executives and economists, in a burst of soul-searching brought on by U.S. industry’s declining international competitiveness, have concluded that American business performance has been hurt by an obsession with short-term profits over long-range planning and investment.
Reginald Jones, the former chairman of General Electric, often used to gripe that he couldn’t get his managers to plan beyond the next quarterly profits statement. And Irwin Kellner, chief economist at Manufacturers Hanover, said recently: “Corporate America increasingly is looking only to the next reporting period. The future is being shortchanged. The Japanese have the ability to look to the longer term.”
It’s one thing to recognize one’s flaws and vow to correct them. But it’s a different matter when one’s chief competitor--in this case Japan--charges American business with shortsightedness and uses it as an argument against Japanese-American business combinations.
Takami Takahashi, chairman of Tokyo-based Minebea Co., took that tack this week in a long statement blasting a hostile takeover attempt by an Anglo-American investment group.
The statement reinforces Takahashi’s reputation as an outspoken maverick among the customarily reserved ranks of Japanese executives. Ironically, Takahashi has come under considerable fire in Japan for adopting what are seen as American-style hardball business management tactics.
Takahashi opposes a bid by Trafalgar Holdings and Glen International Financial Service Co. to take over Minebea, a fast-growing Japanese industrial conglomerate put together by the kind of aggressive acquisition strategy that it now is fighting. Trafalgar is the investment vehicle of Charles W. Knapp, the colorful and controversial former savings and loan executive who was forced out of the chairmanship of Financial Corp. of America in 1984 during a run on the thrift’s deposits.
Glen is a London-based investment firm chaired by financier Terrence Ramsden.
Knapp has said his group does not “intend to be involved in operations after acquiring ownership of the company.” The comment leaves open the question of whether he intends to break up Minebea and sell the parts or plans to find Japanese executives to run the firm.
Takahashi’s fear is that Knapp and Ramsden will ruin Minebea in a grab for short-term gain by “cannibalizing” the company’s profitable divisions to pay for the acquisition. He appears to believe that American executives are congenitally incapable of looking beyond the next quarter’s profits.
“Minebea’s business philosophy focuses on the importance of medium- and long-term investments. U.S. industries, while strong in research and development, have been losing ground in manufacturing capabilities, allowing Japanese industries to catch up. This is in large part because a number of U.S. industries, in pursuit of short-term profits, have failed to develop and implement longer-term investment strategies. This has contributed to the trade friction between the U.S. and Japan.”
Takahashi said Minebea’s shareholders “will not countenance any buy-out attempt which misguidedly aims at short-term profits through a bust-up liquidation sale of all of Minebea’s assets to pay off Trafalgar-Glen investors.”
In an answering press release, Knapp said: “Our interest in Minebea is based on the belief that we are capable of selecting Japanese management more attuned to the financial success of each operation and that we have, through this means, the ability to increase significantly the company’s profits.”
