LOSING THE EDGE : U.S. Is Still the Front-Runner, but Its Lead Is Slipping

Despite competitive setbacks in recent years, the United States continues to hold a commanding lead in key modern technologies but may be losing its edge in certain areas that will become critical to success in the future, according to a survey of U.S. and Asian executives conducted by The Times and the Booz-Allen & Hamilton management consulting firm.

“Right now we’re in good shape,” said Jack M. Nilles, a research scientist at USC and former aerospace engineer. “But five years from now, 10 years from now--given the way things are going--we’re not going to be in good shape relative to the rest of the world.”

The survey reinforced the view that America still enjoys the world’s most fertile climate for scientific and technological breakthroughs. For example, big majorities of those responding rated the United States far ahead in developing the most sophisticated computers and software, the instructions that tell computers what to do. They also described this country as the world’s front-runner in using computers to design products, an approach that will become increasingly critical in industry.

“We have tremendous advantages over everybody else in the world, if we just get our act together,” maintained D. Bruce Merrifield, assistant secretary of commerce for productivity, technology and innovation. He warned, however, that many U.S. companies trail in emerging technologies “and are now terribly vulnerable to the innovations that are coming on line everywhere in the world.”

Already, Japan leads the world in the development of industrial robots, according to survey respondents, a technology not expected to yield its biggest benefits until years in the future. Japan also is seen as having surpassed the United States in much of the huge market of semiconductors, or “chips”--miniature building blocks for modern electronics, used in computers and other products.

“The Japanese have already shown their ability to take advantage of our industrial and strategic mistakes and catch up with us,” Nilles declared.

The U.S. technological edge is eroding for several reasons, according to experts who did not take part in the poll. They said, among other things, that America’s schools do an inadequate job of teaching science, and its corporations shy away from products that promise no quick payoff.

For now, however, the United States still holds the high ground in much of modern technology, at least in areas that have great commercial significance, according to most of the business executives queried.

Asked which country leads in software engineering, for example, 98% of Japanese firms said the United States was ahead. The United States also was ranked in first place by 91% of the non-Japanese Asian firms. Of the U.S. firms polled, 97% agreed that their own country was in first place.

The lead is an important one: Software is increasingly key to companies’ competitiveness as it becomes more sophisticated and its uses grow. Various industrial advances--for instance, in running factories and inventory systems--will rely more and more on computerized instructions as a way to maximize efficiency.

“The United States, with literally thousands of companies in this area, turns out things (in software) that no one else touches,” said Arthur J. Alexander, an economist at the RAND Corp., a think tank in Santa Monica.

Alexander credited U.S. software innovations in large part to “a generation of kids who are equivalent to the kids that built the cars and jalopies and Model Ts 50 years ago.” He added: “The generation of hackers are now entrepreneurs.”

Yet the survey suggested that small, entrepreneurial U.S. firms are not the only source of high-tech breakthroughs. IBM--hardly a mom-and-pop company--was cited most often as the world leader in software development, for example. Other responses, however, backed up the notion that big innovations can emerge from smaller companies. Cray Research, dwarfed in size by IBM, was named the leader in the advanced computers known as supercomputers, which are used to tackle incredibly complex puzzles, such as the outcome of a nuclear explosion.

The United States also was viewed as at the technological frontier in what may be the most challenging area of computer science: artificial intelligence. This is the development of computers with human traits, such as the ability to “learn” from experience. Although progress in artificial intelligence has been limited, America was rated the world leader by 92% of Japanese respondents, 85% of non-Japanese Asians and 94% of Americans surveyed.

The United States also was seen in the forefront in high-performance materials--the sorts of metal alloys, plastics, fibers and other new substances needed for breakthroughs in product design and performance. The Japanese rated the United States in first place by 77%, with non-Japanese Asian firms and U.S. firms also ranking America No. 1 by majorities of 63% and 64%.

Tricky Business

The importance of new materials in today’s economic battle is strikingly clear. In the modern world of automated factories, where more machines and fewer people are used to put things together, “materials have replaced labor as a key cost,” said Jagdish N. Sheth, a marketing professor at USC.

Much of the interest in new, “miracle” materials focuses on superconductors. These much-ballyhooed substances conduct electricity without resistance--thus retaining energy--and create the potential for inventions that seem out of a science fiction novel, such as passenger trains that speed over magnetic fields.

While scientists long have experimented with superconductors at extremely low temperatures, the current competition is enlivened by discoveries of materials that work at higher temperatures. Among the American survey respondents, a large majority--87%--perceived the United States as ahead in the emerging field. Non-Japanese Asians agreed by the slightly smaller figure of 74%. America’s main competition, the Japanese, also rated the United States on top--but by a more modest majority of 60%.

In any case, predicting what will happen in a fledgling technology is a tricky business. Alexander said the unknowns about superconductors reminded him of lasers back in the days when specialists touted the concentrated light beams almost exclusively as military weapons. “Who would have thought 25 years ago that lasers would have these applications with cash registers and compact disc players?” the RAND economist asked.

Similar riddles surround the emerging field of biotechnology, the science of reproducing and manipulating large quantities of cells in the laboratory. It is a technology with mind-boggling possibilities in medicine and agriculture, ranging from new heart drugs to frost-fighting bacteria. For now, America appears to be securely ahead: This was the view of 95% of the Americans queried, 85% of the Japanese and 87% of the non-Japanese Asians.

“Bioengineering may be the field for small manufacturers to get into,” observed Nilles, noting the millions of dollars it typically takes these days to launch a state-of-the-art electronics factory.

Yet the survey showed that U.S. leadership is seen as shaky--or worse--in some areas expected to have their biggest payoff in the future.

The Japanese, for example, are widely credited with pioneering the use of industrial robots. Executives from the different countries shared this view by majorities that ranged from 86% to 90%.

In other fields, it appeared that world leadership was up for grabs, with evidence of strength in both the United States and Japan. Despite the U.S. edge in computers, many of those surveyed said the Japanese were leading the way in “computer-integrated manufacturing,” the technology in which software programs help arrange for highly efficient coordination of a factory.

Slim majorities of Americans and non-Japanese Asians rated Japan ahead in this area. Executives from different countries saw each other with very different eyes, however. Among Japanese surveyed, 72% believed that the United States continued to pioneer this emerging use for computers.

Perceptions also clashed in the important area of microelectronics--chips and related technology used in computers and other high-tech electronics. American respondents gave the United States a 50% to 48% edge over Japan. By contrast, Japanese respondents--mindful perhaps of their country’s success in winning business at the lower and middle ends of the industry--said Japan was ahead of the United States--by a resounding 78% to 22%.

Despite the Japanese view, specialists interviewed said the United States still led in some of the most sophisticated areas of microelectronics. But they pointed out that the leadership pays limited dividends given Japan’s dominance in lucrative commercial markets. “We maintain our high-tech advantage, but meanwhile all the money is being made by the Japanese,” Nilles said.

“Gap Getting Narrower”

Japanese pressures are also evident in telecommunications, the booming field of worldwide telephone and other communications networks. In fiber optics, for example, a technology that allows for high-quality, long-distance voice communication, 64% of Japanese respondents saw their country as ahead. The American respondents disagreed, however, with 84% claiming that their own country was at the forefront.

Siding with the Americans, USC’s Sheth said the United States is hanging onto a lead in such areas of communication as fiber optics, cellular mobile telephones and satellite technology. But he cautioned that U.S. government policies, which are fragmented among different agencies, were making it hard for industry to plan innovations.

Sheth’s warning, while aimed at telecommunications, seems an apt description for U.S. technological leadership in a whole range of fields: “We are significantly ahead,” he said. “But the gap is getting narrower and narrower.”

ABOUT THE SURVEY

How is the technology development race shaping up among the United States and the other major economic powers along the Pacific?

To get some answers, The Times and Booz-Allen & Hamilton, a leading management consulting firm, polled the top executives at major companies in seven nations: the United States, Japan, South Korea, Singapore, Taiwan, Australia and New Zealand, along with Hong Kong.

Twelve-page questionnaires were sent to executives at 1,280 companies, a group consisting mostly of the largest concerns in each of the nations and Hong Kong that make or use sophisticated technology. In all, 282 replies were received, including 118 from the United States and 79 from Japan. From those replies, The Times and Booz-Allen drew conclusions on such matters as how the United States fares versus Japan in various technologies, how the various nations differ in their approaches to gaining new technology and what handicaps the United States may face in trying to recapture its leadership in fields where it has lagged.

Also assisting in the survey was the Japanese business newspaper, the Nihon Keizai Shimbun, which submitted The Times/Booz-Allen survey to its advisory panel of 119 leading Japanese executives.

WHO’S ON TOP IN TECHNOLOGY?

Table shows how executives responded to questions about which country--primarily the U.S. or Japan--leads in various fields of technology. For example, when asked which country leads in supercomputers, 90% of the U.S. executives surveyed answered “the United States” while 10% answered “Japan.” In some cases the percentages do not add up to 100%; in almost all those instances the respondents named European nations. IN SUPERCOMPUTERS?

Percentage Percentage Survey respondents answering “Japan” answering “U.S.” U.S. executives: 10% 90% Japanese executives: 8% 92% Other Asian executives: 7% 93% IN SOFTWARE ENGINEERING? Percentage Percentage Survey respondents answering “Japan” answering “U.S.” U.S. executives: 1.5% 97% Japanese executives: 2% 98% Other Asian executives: 6% 91% IN ARTIFICIAL INTELLIGENCE AND EXPERT SYSTEMS? Percentage Percentage Survey respondents answering “Japan” answering “U.S.” U.S. executives: 6% 94% Japanese executives: 8% 92% Other Asian executives: 15% 85% IN COMPUTER-AIDED DESIGN AND ENGINEERING? Percentage Percentage Survey respondents answering “Japan” answering “U.S.” U.S. executives: 21% 79% Japanese executives: 24% 76% Other Asian executives: 17% 83% IN COMPUTER-INTEGRATED MANUFACTURING? Percentage Percentage Survey respondents answering “Japan” answering “U.S.” U.S. executives: 55% 45% Japanese executives: 28% 72% Other Asian executives: 56% 44% IN ROBOTICS? Percentage Percentage Survey respondents answering “Japan” answering “U.S.” U.S. executives: 86% 12% Japanese executives: 90% 10% Other Asian executives: 88% 9% IN MICROELECTRONICS? Percentage Percentage Survey respondents answering “Japan” answering “U.S.” U.S. executives: 48% 50% Japanese executives: 78% 22% Other Asian executives: 52% 48% IN HIGH-PERFORMANCE MATERIALS? Percentage Percentage Survey respondents answering “Japan” answering “U.S.” U.S. executives: 29% 64% Japanese executives: 23% 77% Other Asian executives: 37% 63% IN SUPERCONDUCTIVITY? Percentage Percentage Survey respondents answering “Japan” answering “U.S.” U.S. executives: 10% 87% Japanese executives: 38% 60% Other Asian executives: 22% 74% IN TELECOMUNICATIONS (VOICE & DATA)? Percentage Percentage Survey respondents answering “Japan” answering “U.S.” U.S. executives: 11% 84% Japanese executives: 33% 67% Other Asian executives: 17% 76% IN LASER/FIBER OPTICS? Percentage Percentage Survey respondents answering “Japan” answering “U.S.” U.S. executives: 12% 84% Japanese executives: 64% 36% Other Asian executives: 15% 78%

Note: The percentages are based on the replies of 118 U.S. executives, 79 Japanese executives and 66 executives from other Pacific economies.

Source: The Times / Booz-Allen & Hamilton survey