In the Glare of the Rising Sun

By George Russell

Is American industry, faced with relentless pressure from Japan and other Asian industrial countries, inevitably washed up? Can the U.S. slash its record trade deficit without further depreciating its currency and building higher barriers to imports? New books by two veteran American journalists contain widely differing reflections on these pressing economic issues of the '80s. According to David Halberstam's The Reckoning (Morrow; $19.95), the U.S. has every reason for pessimism about its industrial future. But Robert Christopher's Second to None: American Companies in Japan (Crown; $16.95) presents an argument for pragmatic optimism: many U.S. companies are competing on their opponents' home ground more effectively than most Americans realize.

U.S. industrial failure is the theme of Halberstam, Pulitzer prizewinner and author of The Best and the Brightest and The Powers That Be. The product of five years of research, his latest book attempts to dissect the double whammy suffered by the U.S. auto industry at the hands of OPEC and Japanese automakers. Much of Halberstam's rambling 752-page work is devoted to a dramatic recapitulation of the dynastic and bureaucratic maneuvering at two firms, Ford of Detroit and Nissan of Tokyo, before and during the great U.S. auto crisis of the late '70s. But the moral that Halberstam, 52, draws from his story is intended to have wider significance. As a result of the failings of U.S. industry, he says, "life for most Americans (is) bound to become leaner. But in the middle of 1986 there seemed to be little awareness of this, let alone concern about it."

Halberstam traces responsibility for the plight of the U.S. auto industry largely to cupidity and arrogance in Detroit. Sheltered by cheap oil and the absence of foreign rivals, the auto magnates typified by the Ford family flourished in an environment that amounted to a "parody of competition" after World War II. Until the '70s, Halberstam says, the cir- cumstances of automaking's Big Three amounted to a state of "shared monopoly" in which innovation was smothered, and warnings of dire change on the economic horizon were ignored.

Halberstam is clearly in search of villains. His populistic assessment / becomes particularly scathing when it concerns the rise of the accounting prodigies who took over in Detroit during the '50s. He argues that a closed world of numbers and cost accounting pioneered by men like onetime Ford President Robert McNamara (previously flayed by Halberstam for his role as Defense Secretary during the Viet Nam War) overrode the hands-on thinking that had propelled the automakers to greatness. Partly as a result, obliviousness to the implications of the oil crisis reigned, and even minimal maintenance of Detroit's sometimes ramshackle assembly lines was squeezed. Meanwhile, Nissan, with its original ungainly Datsun, and other Japanese companies won over American customers by tinkering constantly to produce better cars, backed by better service, at lower prices.

Christopher, 62, a former TIME and Newsweek editor and current administrator of the Pulitzer Prizes at Columbia University, focuses instead on the often overlooked fact that many U.S. companies have achieved "remarkable successes" in Japan. Based on four decades of Japan watching, his trenchant, readable book goes against the arguments of many businessmen to suggest that the U.S. would have less to bewail in its trade deficit if more American firms took the time and trouble -- at times very considerable -- required to crack the Japanese market.

Christopher punctures a sizable number of business myths about Japan. Despite its protectionist reputation, he says, the country buys more manufactured goods from the U.S. than West Germany does, and American companies loom large in a number of significant domestic sectors. Coca-Cola Japan, for example, produces 60% of all Japanese carbonated beverages. IBM Japan has $2 billion in annual domestic sales and exports totaling $1 billion. Xerox's Japanese affiliate has sales of $1 billion. Such well-known U.S. brand names as Johnson & Johnson, Nabisco, Walt Disney and Tupperware add hundreds of millions of dollars more. In short, says Christopher, the perception in the U.S. of the impenetrable Japanese economic monolith "has not caught up with changing realities." One reason for this: U.S. firms that succeed in Japan keep quiet to avoid attracting their American rivals.

Still, entry to Japanese markets is difficult, and many U.S. businessmen are unwilling to make the effort to succeed. To cross the Japanese threshold, Christopher says, U.S. firms need to abandon "quarteritis," the push for ever increasing quarterly earnings. Instead, they should accept the possibility of considerable short-term losses as they compete long term for market share. Would-be entrants must "Japanize" their staffs, procedures and even corporate structures to bring themselves into line with the country's subtle network of individual and group loyalties. U.S. firms should be prepared to modify their goods and sales pitches where necessary to give the Japanese what they need and want. For example, because many Japanese dislike the taste of lime in soft drinks, Coca-Cola has removed much of that flavor from the Sprite it sells in Japan. Kodak alters the color balance of its film in Japan so that Japanese skin tones will reproduce in preferred pinkish shades rather than in yellow.

Christopher and Halberstam agree that Japanese excellence begins on the factory floor. One of the country's great tools is that workers are encouraged to devise improvements in goods as they are produced, resulting in enormous advances over a short time. Can U.S. firms show similar dedication? Christopher, at least, believes that many companies already have.