Dire warnings were issued here Wednesday about potential losses of American jobs, technological competitiveness and economic clout if the United States fails to develop a strong domestic high-definition television industry.
The warnings came as the Pentagon announced that 87 high-technology companies--including two foreign-owned electronics giants--had submitted proposals for $30 million in Defense Department seed money for research and development on high-definition television, commonly known as HDTV.
HDTV offers the promise of brighter, sharper, clearer television images for applications ranging from computer-enhanced medical imaging to home television and computer screens. It is seen in some circles as the next major advance in electronics and a multibillion-dollar boon to the nations and the companies that dominate the field.
Loss of 2 Million Jobs
Military planners fear the U.S. will fall behind in the new technology, leaving it dependent on Japanese, Korean or European suppliers for the latest electronic gadgetry planned for new-generation weapons systems. But the Pentagon--which expects to install high-resolution monitors in new helicopters, planes, ships and tanks, as well as in training simulators and command centers--has contracting rules requiring that domestic subsidiaries of foreign-owned firms be allowed to bid on most Defense Department contracts.
A private study released Wednesday said that unless the U.S. moves aggressively into the new technology, it stands to lose more than 2 million jobs annually and suffer a $225-billion trade deficit in electronics by the year 2010.
But the report from the labor-funded Economic Policy Institute said that if the United States gains a strong foothold in the nascent industry, it could enjoy a $10-billion annual trade surplus in electronics 20 years from now. If the U.S. fails, the annual trade deficits in personal computers and semiconductors alone could soar to $114 billion and $76 billion, respectively.
“Our nation stands at a critical juncture,” said Robert B. Cohen, the report’s author. “If we do not create a strong industrial base centered on development of HDTV and flat-display screen technology, it will not only weaken our industrial base but also reduce the numbers of skilled jobs that are needed to make us more competitive.”
Commerce Secretary Robert Mosbacher, approaching the same concern from a slightly different tack, told Congress Wednesday that the private sector should remain “pre-eminent” in the HDTV effort. He urged that all government start-up money be strictly limited to domestic firms and that it not be given to foreign competitors.
“In my view, the private sector must take the lead,” he said, adding that his agency would do what it could to “get the hindrances out of the way” by supporting legislation to provide tax incentives and possible antitrust exemptions for U.S. firms working on HDTV projects.
He said that government aid for technology development has the “highest priority” at Commerce and that he expects to be able to forward recommendations on the subject to Congress in the next two months.
Japan’s electronics industry is guided and funded to some degree by the government Ministry of International Trade and Industry (MITI). The Japanese government announced in December that it was investing $700 million in work on HDTV screens alone, Cohen said.
Japan expects to have an HDTV system in full operation by the mid-1990s, whereas the U.S. telecommunications industry has barely begun testing HDTV technology. European governments are spending $100 million to $200 million a year on HDTV initiatives, he said, adding, “Our government is hardly playing a role, even with the (Pentagon) funds.”
The Defense Department said Wednesday that the first HDTV research grants could be awarded as early as April.
The program is sponsored by the Defense Advanced Research Projects Agency (DARPA), the Pentagon’s high-tech research and development think tank. It also helped establish Sematech, the government-industry consortium that is spending $200 million to support improvements in U.S. semiconductor manufacturing.
Despite scattered congressional and industry opposition, the Pentagon said in January that it would not bar foreign-owned firms from submitting requests for HDTV research money. The department cited federal procurement rules demanding open competition and pointedly noted that U.S. firms may not possess needed research and production capabilities for new television technology.
Because of that decision, at least two foreign electronics giants submitted their own requests--Sony Corp. of America, a subsidiary of the Japanese conglomerate, and North American Philips Corp., a subsidiary of Philips Industries N.V. of the Netherlands. Also, Hycom Inc. of Irvine, which is owned by the U.S. arm of Japan’s Sharp Corp., joined with Spire Corp. of Bedford, Mass., in a grant application.
Among other large companies requesting federal research grants were: AT&T; Technologies Inc.; General Electric Co.; Harris Corp.; Honeywell Inc.; Hughes Aircraft Co.; International Business Machines; ITT Semiconductors; the Norden Systems subsidiary of the United Technologies Corp.; Tandy Corp.; Texas Instruments Inc.; Westinghouse, and Zenith Electronics Corp. Also submitting requests were the Massachusetts Institute of Technology and the New York Institute of Technology.
Strong, Weak Scenarios
“We are gratified by the extremely strong response from industry,” said Craig I. Fields, DARPA’s deputy director for research. “Many of the proposals are of impressive quality and they demand a careful evaluation.”
HDTV technology will improve the entire “food chain” in the electronics industry, Cohen said, adding: “HDTVs will be used in the home, as display screens for personal computers and by the nation’s businesses to improve controls over automated production in auto, steel and manufacturing plants, to integrate video and print media in newspapers and for the collection and transmission of important medical results such as X-rays and computer tomographs.”
He said he based his study on findings recently released by the American Electronics Assn. According to its study, a “strong” scenario would be for 50% of the U.S. HDTV market to be controlled by U.S. companies; in a “weak” scenario, only 10% of the U.S. market would be controlled by U.S. concerns.
With a strong HDTV base, he said, the U.S. personal computer industry would attain an estimated $176 billion in sales by 2010, in contrast to an expected $44 billion in sales with a weak HDTV sector. In the semiconductor industry, sales would be $99 billion in a strong U.S. HDTV industry, compared to $25 billion in a weak industry.