EDITOR'S NOTE - The dollar has lost half of its value against some currencies, making American goods more competitive internationally. But the U.S. trade deficit persists. The following report, first of a three-part series, looks at the economic forces at work.

Undated (AP) _ By PETER COY AP Business Writer

Joy Jones is working overtime these days, and she couldn't be happier about it.

The 34-year-old machine operator makes refrigeration valves at a factory in Mauston, Wis. Business is booming because a cheaper dollar has helped Parker Hannifin Corp. compete with its archrival, Danfoss of Denmark.

''We have a lot of orders and we're very busy,'' Mrs. Jones said. ''I have a job and I'm not worried about losing it.''

There is a frantic new bustle in smokestack America. A decline in the dollar, though not as dramatic as often thought, is stimulating sales of American-made products by making them cheaper in comparison to foreign goods.

The faster action on the factory floor is good news for corporate shareholders and people like Mrs. Jones. Ironically, though, it may be bad news for the nation as a whole.

Why bad news? Because overtime and order lags are evidence of a strain on production capacity. They indicate that the United States has partly ''de- industrialized'' - that is, lost its ability to make what it needs.

''Corporate anorexia'' is the term David Hale, chief economist of Kemper Financial Services Inc. in Chicago, uses to describe the state of the economy.

Troublesome shortages of material and labor are popping up across the country, in industries ranging from chemicals to paper to personal computers.

With the dollar down, factories have to work harder to keep up with demand from foreigners, as well as from consumers at home who are buying American products rather than imports.

Shortages mean the economy could be on the verge of overheating, causing a sharp rise in prices that would stifle growth and lead to a recession.

Most worrisome, this strain on American industry comes at a time when the United States continues to satisfy much of its consumer demand with a steady diet of imports. The merchandise trade deficit, the shortfall of what the United States sells to the world compared with what it buys, hit a record $17.6 billion in October.

Right now, American factories are incapable of both increasing exports and replacing imported goods with ones made at home, in order to erase that deficit. They cannot produce enough steel, cars, semiconductors, textiles and televisions to meet the demand. Some products, such as videocassette recorders, are not made in the United States at all.

Government figures show American factories overall are running at about 82 percent of capacity as of November, apparently leaving some slack. But in paper and textiles, for example, utilization rates are at feverish 20-year highs, and they are close to their highs in aluminum and chemicals.

If the economy falls into a recession in 1988, the shortages, price rises and delivery lags would ease because of a decline in demand. But that would only postpone the inevitable squeeze on capacity.

Building the needed production capacity will require vast expenditures on new plants and equipment. But it is uncertain where the money will come from, given Americans' puny savings rate - 3.5 percent of personal income, compared with 17 percent in Japan - and the amount of capital tied up in financing the federal budget deficit.

It is also unclear where the workers to run the new factories would come from. The ''baby bust'' generation is entering the labor force and there may not be enough workers to go around.

Many of the unemployed or under-employed available for production jobs lack the basic skills to work in a world-class factory, as Japanese automakers have been finding in interviews for jobs in their U.S. plants.

In short, the U.S. economy is structured to be a giant vacuum cleaner for imported products, and a simple decline in the value of the dollar will not change that overnight.

''You're not going to go into the international marketplace and suddenly have windfalls simply because of a falling dollar,'' said Robert Simko, executive director of International Technology Group of Los Altos, Calif.

The optimistic viewpoint is that American companies became ''lean and mean'' by closing plants and laying off workers in the early and mid-1980s, when the dollar was overvalued.

But ''lean and scared'' might be a better description in some cases. Cutting capacity was easy, because it usually helped profits, once the pain of write-offs and dismissals was forgotten. The braver thing would be to take a chance on the future by investing huge sums in untested technologies and undeveloped markets. That is Japan's strongpoint, and some critics say it is the biggest U.S. failing.

Some corporate executives make a case for caution, saying they will not risk their shareholders' money with expansion programs just because business has improved recently.

But critics say a conservative attitude ultimately can be lethal. They note, for example, that for the first time last year, Japan's enterprising Hitachi Ltd. won more U.S. patents than any American company.

''Most companies in America have sort of lost their guts. They look over their shoulders at what the Japanese are doing,'' complained Alan Huang, a researcher at AT&T Bell Laboratories.

''What we have is a decaying idea of entrepreneurship. You can drop the dollar as low as you want and it won't help all that much,'' said Ronald Wakeford, executive director of the Council for Export Trading Companies.

In truth, the dollar has not fallen much from its recent peak in spite of its well-publicized 50 percent drop against the Japanese yen and West German mark - and a 44 percent drop against the Danish krone, the dip that makes Parker Hannifin's valves so attractive.

Overall, the dollar has fallen only about 6.5 percent since early 1985, according to a Manufacturers Hanover Trust Co. trade-weighted index of the currencies of 18 nations, including U.S. trading partners with weak currencies, such as Mexico, Brazil, Venezuela and China.

Because the dollar is still so strong, ''it is misleading to expect we should see a major turnaround in our trade deficit'' from its decline, said Irwin Kellner, Manufacturers Hanover's chief economist.

The dollar may yet descend more. American officials are pressuring such nations as Taiwan, South Korea and Singapore to let their currencies rise against the U.S. currency.

A steep dollar drop could sharply boost import prices and inflation, and put an even greater squeeze on the nation's limited production capacity.

NEXT: Part II - Down at the Docks

End Adv Monday PMs Dec 21