PUTTING BRAINS TO WORK

WHEN THE SOVIETS launched the Sputnik satellite in the 1950s, they took a great American idea and beat us to the punch in translating U.S. research into product development. One positive result of Sputnik is that it served as a catalyst to get our own space program off the ground.

The same type of shock is needed today in U.S. manufacturing. While this country remains aleader in technological research, other nations are taking our ideas and applying them to product development and marketing. Americans are living under the misconception that in a post-industrial economy, manufacturing is no longer necessary. In reality, a nation's economic prosperity is derived not so much from research as from the application of research to manufacturing.Nowhere is this fact more evident than in California. Although the state has been a leader since World War II in technological research, with 22 percent of the nation's scientists and engineers, California's greatest growth came in the immediate post-war period when manufacturing grew along with the university system and national laboratories.

During and immediately after the war, industrial production increased by 50 percent, while personal income grew by 240 percent. New industries were developed in microelectronics, aerospace and biotechnology. California's population was growing by as much as 1,000 residents a day. More recently, however, the emphasis in California has been on basic research rather than

applied research and manufacturing. At the same time, California, and indeed the United States, have found themselves competing in a global economy. More than 70 percent of all U.S. products compete with merchandise from abroad.

California, the so-called Gateway to the Pacific, has a $17 billion deficit in its trade with nations of the Pacific Rim. The United States has a $50 billion trade deficit with Japan alone. This trade imbalance has not resulted because Americans lack basic research, but rather because of the failure to translate ideas into high-quality, cost-competitive products.

What has happened is that other nations are taking our ideas, applying them to product development, and then producing better quality merchandise at a cheaper price.

The United States has already experienced an erosion of its manufacturing base in products such as steel, shoes and textiles. High-technology manufacturing could be next. It is estimated that by 1988 Japan may become the leading producer of semiconductors. Already today, only 35 percent of the computer workers in the United States are involved in production.

Modern economies are driven not only by the development of technology but also by the application of research to value-added manufacturing and the sophisticated marketing of finished products in the international arena.

The United States still has all of the ingredients for success - well- endowed universities and national laboratories, sufficient venture capital, a large and skilled work force and sophisticated marketing skills.

Rather than cutting off the cycle of innovation after basic research, we must continue the cycle through applied research, product development, manufacturing and international marketing in order to enjoy the full rewards of our technology.

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