Still a Chance to Regain Lost Export Markets
The news is good on trade. U.S. industry is exporting to the world, and the trade deficit took a big drop to $9.75 billion in the government figures reported Tuesday--the lowest level in three years for the gap between imports and exports.
Clearly, the fallen dollar is doing its work. Three years ago, the U.S. currency began to decline against European currencies and the Japanese yen, making U.S. goods a bargain. And at long last, the trade deficit--which reached a peak of $171 billion last year--is showing signs of turning around.
But now for the hard part, because currencies alone don’t make industries or nations competitive. In the years ahead, the United States faces a challenge new in its history: It must become a trading nation to pay the foreign debt incurred in a decade of trade deficits and government borrowing--and it must do that while its own industries fight even to hold onto their U.S. markets.
The U.S. foreign debt stands now at $540 billion, says Richard Drobnick, head of the International Business Education and Research Program at the University of Southern California. It will be $1 trillion by 1992, when Drobnick projects exports and imports coming into balance. So we have much to do.
Helped Bring Revival
First, “we should stop kidding ourselves with the lower dollar,” says Edward Finein, vice president and chief engineer of Xerox Corp. “The dollar is not a competitive advantage, it’s only a window to get competitive,” says Finein, who sees international competitors coming to this country and finds U.S. industry not very well prepared.
Suppliers to Xerox of such basic items as plastic casings for office copiers haven’t made the investment in new equipment or the effort to grasp the new disciplines of manufacturing, says Finein. “U.S. suppliers’ lead times are too long; the Japanese change tools in five minutes, the Americans take half a day,” he says.
Finein is not a crepe hanger. He has been with Xerox 36 years and helped lead its competitive recovery in the early 1980s, when the company woke up and recaptured business it had lost in the 1970s to Ricoh, Canon and Minolta of Japan. “We changed,” he explains. “We used to charge higher prices for new products--you know, added features, higher price. Now we charge less for new products in order to gain market share.”
Currently he’s helping Xerox suppliers around Rochester, N.Y., become more productive and efficient. He figures he has three years to do the job because Canon of Japan is setting up in Virginia and either training suppliers there or bringing its own from Japan. Within three years, that is, the battle will be in this country--with no edge for currency.
Which makes it all the more imperative that U.S. companies get more aggressive about invading foreign markets. So far, though, it’s often a case of comfortable at home, reluctant abroad.
Never Went Back
For example, the lower dollar has made U.S. paper companies the lowest-cost producers in the world. Yet they haven’t gone after markets that were taken away from them in the early 1980s when the dollar was so high.
“A lot of us were driven out of northern Europe by the Scandinavian paper suppliers. They said, ‘This is our market and you fellows can’t compete in it anymore,’ ” recalls William Laidig, chairman of Stamford, Conn.’s Great Northern Nekoosa Corp., a major paper company. “But I don’t see us going back to reclaim those markets now, even though the opportunity is there.”
Why not? Because we’re selling all we can in the U.S. market, says Laidig. To increase exports, he explains, “We would have to have excess production over and above what our domestic distributors require of us.”
But that’s the point. Exporting when there’s excess production is not the attitude of a trading nation, but of one whose companies come home when the going gets rough. Countries that need to trade think of serving foreign markets first--an attitude that more U.S. companies will have to get used to.
History is partly to blame. Historically, the United States has relied on foreign trade for only 5% to 6% of its gross national product. The figure has risen now to 17%, but that is still a long way from such trading nations as Sweden or Finland or West Germany, where trade accounts for more than 50% of GNP. In Japan, seven of every 10 jobs is dependent, directly or indirectly, on exports.
To change that history, U.S. companies will have to recall an earlier tradition. They will have to emulate the Yankee traders of the 1830s and ‘40s who developed ways to cut the ice of Walden Pond, store it for months in the holds of sailing ships and transport it half way around the world to sell in India and China.
Note: They weren’t content to sell it in the sultry Carolinas or Virginia; they pushed on and introduced ice to distant Asia.
It took more than currency differences to do that.
