Computer Pioneer Hopes to Blaze Trail to Soviets

By MICHAEL PARKS

June 16, 1988 12 AM PT

Times Staff Writer

MOSCOW —

The transfer of technology between the Soviet Union and the West has been largely a one-way street, with Moscow buying, licensing, copying and sometimes just stealing the technology it needs to modernize its industry.

But William C. Norris, who built Control Data Corp. into one of the world’s leading computer companies, has an idea that could make the traffic two-way, with small American companies developing and marketing the largely unused discoveries of Soviet research institutes.

“The U.S. competitive position in high technology is eroding, and what we need are new competitive products to get us back into the leadership position,” Norris said in an interview after meeting with Soviet officials here this week. “I believe that we can find many of those products in Soviet laboratories where a great deal of research is not really utilized.”

What Norris, who is chairman emeritus of Control Data, has proposed to the Soviet government is a network of joint ventures between Soviet laboratories and small American firms that would take scientific research from institutes here, develop it into marketable products manufactured in both countries and market them internationally.

“I am talking about a very large program based on Soviet technology and American entrepreneurship,” he said. “There are opportunities--I can see them already--in virtually every field of high technology, from computers to communications to medical instruments. Ten years from now, we should be forming 200 of these joint high-tech companies a year.”

The new joint ventures would also facilitate increased American exports to the Soviet Union, Norris said, by providing contacts with Soviet partners and potential customers to smaller U.S. companies, which now have difficulty in breaking into the large market here.

Soviet-American trade last year totaled less than $2 billion, according to U.S. figures. American sales were $1.5 billion, two-thirds of that being grain, and American purchases came to $470 million, largely raw materials.

For the United States, trade with the Soviet Union constitutes less than 1% of its total foreign trade, and for the Soviet Union trade with the United States is about 2% of its exports and imports.

But Norris is confident that as American companies receive more Soviet technology, political confidence will grow between the two countries and that many of the export controls that now severely restrict East-West trade in strategic high-technology products will be eased.

“Much of the research is already there, waiting to be applied, and American entrepreneurs have the experience to do it,” he said.

Norris has also proposed the establishment of an institute to teach Soviet students American entrepreneurial skills, with the expectation that its graduates would help to staff the joint ventures.

“Some of the instruction will be classroom work, some will be computer-based education, but most will come from working in the new joint ventures,” he said. “The only way really to learn entrepreneurial management is to learn in a hands-on operation.”

Soviet Skills Called Lacking

Norris, 76, has long been a maverick advocate of the social responsibilities of business. He retired from Control Data in 1986, but this year the company established the William C. Norris Institute in Minneapolis and gave it nearly $9 million to allow him to pursue such projects as this.

“Basic to the success of the planned Soviet economic reforms is the development of products able to compete economically in global markets, and competition is fierce there today,” Norris said.

“For that, they need skills--identifying market needs and almost simultaneously developing products of the highest quality at lower costs, and then getting them into the market fastest--and the Soviet Union does not have those skills today.”

Norris’ proposals, which he sees as aimed at fostering long-term economic cooperation between the Soviet Union and the United States, are now before Soviet authorities, and decisions are expected in a few months.

“There is a warmer feeling between the two countries now following President Reagan’s visit here,” he said, “and I think this sort of project, which I know is economically sound, now has a proper political environment to make it work.”

And to skeptics, Norris insists that “it will work!”

The plan hinges in part on Control Data’s successful development of a Soviet process that treats machine tools, helicopter parts, drill bits and other metal implements with titanium nitride in order to increase their durability, stepping up their speed and extending their lives by as much as thirtyfold.

Strategic Goods

Control Data bought the rights to the process 10 years ago for $400,000 and later sold its 20% share in Multi-Arc Scientific Coatings, the St. Paul, Minn., firm that did further research and development on the process, for $8 million.

“The Soviets turned down our proposal for a joint venture 10 years ago, because they did not want that sort of relationship,” Norris said. “Well, they do now.”

Ironically, when Soviet customers wanted to buy some of the resulting products, Control Data and Multi-Arc could not get export licenses from the U.S. Commerce Department to sell what were regarded as strategic goods.

There are other examples of Soviet discoveries and designs exported successfully to the West.

Ocean Spray, the Plymouth, Mass., food company, is experimenting with a Soviet technique for extracting more juice and color from cranberries by briefly electrifying the berries and rupturing cell membranes.

A Soviet-designed “radio-frequency quadropole” is being used in research at the Los Alamos National Laboratory as part of the U.S. Strategic Defense Initiative program. Used to focus and accelerate atomic particles, the device would be a crucial element in a neutral-particle-beam weapon.

Control Data has had a successful conventional joint venture with Romania to manufacture computer peripherals, including disc drives, tape drives and printers, that goes back more than a decade.

“I know that other American businessmen are uncertain and even nervous about joint ventures in the Soviet Union, largely because the present laws are new and very vague,” Norris said. “I, on the contrary, am very confident about being able to manage joint ventures. With good faith, you can clear up the vagueness and in the process build a stronger relationship.”

Invasion Ruined Deal

Norris said that American venture capital companies, which have substantial funds to invest, are already interested in the proposal, but he plans to search for U.S. partners primarily through the economic development programs that most states now have.

Control Data sold the first large scientific computers to the Soviet Union in the mid-1960s and, after more than a decade developing the market here, was close to an agreement on large-scale cooperation including the sale and manufacture of computers, peripheral equipment and software when Soviet troops intervened in Afghanistan in December, 1979.

“We were ready to sign when they went into Afghanistan, and that blew up the whole thing,” Norris recalled. “We had no choice. Public opinion was strongly against such dealings with the Soviet Union, and we could not get export licenses from our government. We lost about $1 billion in computer sales as a result.”

TOP U.S. EXPORTS TO SOVIET UNION

In 1986; in millions of dollars

1. Soybeans $313

2. Corn 281

3. Fertilizers 261

4. Pressure-sensitive tape 54

5. Track-laying tractors 38

6. Almonds 38

7. Insulating/Transformer oils 18

8. Tallow 15

9. Auto, diesel oil 15

10. Petroleum coke 14