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Electronics Association Says U.S. Industry Must Produce in U.S.

December 19, 1985

TOKYO (AP) _ A top Japanese electronics executive said Thursday that U.S. electronics firms should stop shifting production to low-cost foreign countries, and instead develop new technologies and improve productivity at their plants in the United States.

If U.S. industries do not change their policies, they will face a ″potential decline″ that would hurt both the United States and Japan, said Akio Morita, chairman of Sony Corp. as well as chairman of the Electronic Industries Association of Japan.

Morita said problems in U.S. industry would increase the likelihood of increased trade friction and criticism of Japan, hurting Japanese electronics companies.

The United States ″cannot continue to compete by merely closing down domestic factories and moving production overseas,″ thereby exporting jobs to Japan and other Asian countries, he said.

″Unless U.S. management changes its attitude (and) ... takes back production to the United States, there is a danger to both Japan and to U.S. industry,″ he said.

Speaking at a news conference, Morita described 1985 as a ″year of protest against Japan″ in which the electronics industry was made to deal with strong demands from the United States and Europe that the country open its markets further to foreign electronic products.

He said the 600-member association supported the increase in the exchange rate of the Japanese yen, even though he said it would reduce exports of electronic goods next year by making them more expensive in the United States.

The yen’s appreciation - a rise of about 15 percent against the dollar since late September - is more important in reducing Japan’s trade surplus than government market-opening measures like last summer’s ″Action Program,″ he said.

″All Japanese export companies will face a very difficult year next year″ because of the higher value of the yen, Morita said. ″But even if we feel pain, we must make the yen strong.″

He said the reason for Japanese success in electronics was the attitude of companies toward new technology. U.S. and European companies won’t invest enough in new technologies to develop new products and lower production costs, he said.

In comparison, when Sony began working on compact disk players, ″we definitely believed that compact disks would take over from records,″ and therefore invested heavily in the development of the technology, the Sony chairman said.

Toshio Takai, president of the Electronic Industries Association of Japan, said the association regretted a decision by the U.S. Commerce Department to initiate an investigation into whether Japanese companies have sold 256- kilobit semiconductor memory chips on the U.S. market at unfairly low prices.

Takai said he was not optimistic about separate negotiations under way between the two governments on U.S. allegations of unfair Japanese trade practices in electronics.

″The U.S. government’s desire is to expand sales of U.S.-made ICs (integrated circuits) in Japan. But because of the lowness of the price of ICs in the Japanese market, I believe it is very difficult to increase sales of U.S. ICs here,″ he said.

But an incremental improvement in sales of U.S. ICs is likely, which would allow the two sides to reach an agreement in the negotiations, he said.

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