Dutch Not Fazed by Japanese Rivals

TOKYO — “A bottom-line philosophy and short-term goals have triggered a disastrous movement in the American electronics industry” in which U.S. firms could be digging their own graves, Wisse Dekker, president of the giant Dutch Philips Corp., said here this week.

Calling his firm “the only international company holding its ground--and more--against Japan in the field of consumer electronics,” Decker bemoaned American firms’ abdication from the field.

“There is hardly anything left” in consumer electronics manufacturing in the United States, he said. He forecast that this situation will make it clear to American electronics firms that “eventually it will be impossible for a diversified electronics industry to survive if the industry is not actively involved in consumer electronics.” He scored American electronics firms for failing to respond to Japan’s challenge.

“Many years ago,” he said, “when Japan started to produce more attractive and better-priced products, most of the American companies engaged in consumer electronics did not worry about how to respond but rather started buying products from Japanese sources, marketing them under their own label. Thus they paved the way for their most formidable competitor: Japan.

“Today, none of the more advanced consumer electronics products is produced in the United States. Not one of the 12 million VCRs sold in the United States is manufactured there. The same is true for compact disk equipment. There are other examples and, most certainly, more to follow in the future.”

He said U.S. industry has suffered many setbacks because it has dropped out of manufacturing consumer products. Not only is the consumer electronics field growing by 25% a year, but miniaturization, digitalization and integration in consumer electronics are linked with professional systems that integrate computers and telecommunications, he said.

“If you drop out of the learning curve, you will never be able to get back in,” he warned. Dekker said America’s failing had taught his firm “a very important lesson.”

“We must guarantee a place for our electronic industry in the information and communications technology-driven economies of the future,” he said.

“To do that, we must maintain our capabilities to develop integrated circuits, components, laser and other kinds of technology expertise associated with the consumer electronics sector of today to stay in the learning curve.” Production of the videocassette recorder itself, Dekker said, is not so important for its own sake “but rather for the technology that goes with the VCR--lasers, ceramics, heads, magnetics and a thousand other things.”

Dekker said the vulnerability of the American electronics industry, because of its concentration in computers and digital devices, already has been demonstrated by the boom and bust in sales of personal computers in 1984 and 1985.

Philips, too, lost almost as much in 1985 “as we gained in 1984,” he said. But, unlike American firms, he said, “we could make it up in other fields in other countries.” Philips, with $24 billion in sales in 1985, maintains operations in 60 countries and employs a total of 340,000 workers in 420 factories.

Electronics firms, he said, must pay attention to Japanese developments in “production sophistication, where tomorrow’s competitive contest will be waged.”

“Factory automation, with computer-controlled activities related to flexible production, will change everything from marketing strategies to geographic locations for production centers,” he predicted.

Dekker admonished the Japanese to stop what he called “target-oriented cooperation between the Japanese government, banks and industry” as a means of achieving a “goal of worldwide domination in a long list of industries.”

“Targeting is a Japanese strategy that must become obsolete” and be replaced by multinationalism, with Japanese investment in overseas research and development, production, sales and service, he said.

Ultimate Japanese domination of the entire global electronics industry, even if possible, would not benefit Japan, he said, adding:

“As resourceful and successful as the Japanese are, I do not believe that they alone can carry the high-technology industries. If the sources of talent from Europe and the United States dry up because they have no industry to feed them, Japan alone will not be able to sustain the entire infrastructure of education, research and industry to bring to the world the full benefits and promises of the information society. And is that what the Japanese really want? I think not.”