Box 5, Folder 3A – General speeches
February 7, 1984, Productivity, Fairmont Hotel, San Francisco, CA – an HP sponsored Executive Luncheon with an emphasis on top management of HP customers.
2/7/84, Copy of speech handwritten by Packard on yellow, notebook paper
Packard looks at the decline in growth of productivity in the U.S. since World War II. He says the U.S. gained 3% per year from 1948 – 1965; 2% from 1965 – 1972; 1% per year from 1972 – 1979. Saying other countries have done much better he cites some examples:
France, West Germany, Italy: Late 1960-mid 1970s – 5-6%/year
Japan: 1967-1973 –10%/yr, fell to 4% 1973-1979, well ahead of U.S.
He points out that the U.S. came out of WW II with a high level of productivity while Europe and Japan had to rebuild economies that were destroyed in the war. The U.S. also had the highest standard of living and a large share of the export market. He says things began to change from the 1960s to the 1980s.
“I can not propose to explain what caused this change. In part it was simply these other countries catching up. And we helped them with massive aid and __?___ open markets for their products. There was a significant change in our educational system in the 1960s and early 1970s to try and provide more opportunities for minority groups and those thought to be disadvantaged. The emphasis changed from education for excellence to education for everybody, excellent or not. This was not all bad, but it was also not all good for our nation.
“Research and development – the generation of new knowledge and applying it to make better products and better services is without any doubt the most important source of productivity improvement – which, after all, is best defined as making a better world for more people.
“Before WW II the center of R&D for the world was Europe. The U.S. was not far behind and Japan was known best for its ability to copy from abroad and had a poor reputation for the quality of its products. WW II made the United States the undisputed leader of the world in research and development. By winning the war the U.S. position as the world leader in R&D was determined for the next two decades that followed.
“Thus, by the end of the 1960s a new world equilibrium in R&D was being established. There is no reason to assume that the U.S. could have maintained its position of leadership forever.
“On the otherhand, the position of leadership in world wide R&D gave the U.S. an advantage that it should take advantage of for the future welfare of the country. Hewlett-Packard has been in the center of this drama of R&D for the last 45 years. And I can assure you that we did not see these trends in this great drama with any great clarity. I think we have learned some lessons that have helped with our success. And I think we are in a unique position to help improve the productivity of our economy in the years ahead.
Bill Hewlett and I are engineers by profession and we devoted the first 25 years of our work in our company to designing and manufacturing electronic instruments to improve the productivity of electronic engineers. One of our early mottos was “Inexpensive quality,” and we did design and manufacture electronic instruments that enabled electronic engineers all over the world to do their work more efficiently.
“We are here today to talk about productivity, not just for electronic engineers, which has been our business for 45 years, but to talk about productivity for our entire economy – administration, marketing, manufacturing, distribution and, of course, engineering.
“I do not suggest by any means that we have all of the answers. In fact one of the messages that this program is intended to convey is that to improve productivity with computers is a cooperative endeavor. It involves hardware suppliers, software suppliers and the user, all working together to analyze the problem and to select the best solution.
“The reason I have asked you to join me here for lunch today is that to achieve real productivity improvements from the application of computer technology requires a better understanding by top management of what it is all about.
“Now I am not smart enough to give you the exact answer to this question. I would like to note some of the things that the Hewlett-Packard Productivity Program will suggest that your people consider.
- “A large centralized computer system is not likely to be the right way to go in applying computers to your management problems. There are several reasons for this recommendation.
- Your computers should be adapted to improve the efficiency of your people. A study on engineering use of computers showed that if the routine non-productive work of engineers could be eliminated by computers, an order of magnitude of improvement of engineering productivity could be achieved. Your engineeres know what will improve their productivity and if each engineer is given a work station that has network capability with other engineers, and not just across to a big central computer, a very large improvement in productivity can be achieved. In one recent survey engineers responded that they were spending as much as 80% of their time doing non-engineering tasks. This is the kind of work computers should eliminate for them. So they will have more than just 20% of their time doing creative work.”
2/7/84, Copy of printed program for the “Executive Luncheon”
11/8/83, Internal HP memo from Dave Lyon to Packard inviting him to speak at the Productivity ’84 Executive Luncheon
1/26/84, Memo to Packard from Dave Lyon thanking him for meeting with him to discuss plans for the luncheon
2/1/84, Copy of a memo from Packard to Dave Lyon asking for some specific examples of productivity improvement.e.g. inventory control
6/23/80, Copy of a page from the U.S. News and World Report containing a Q and A with Packard discussing the subject of productivity
Box 5, Folder 4 – General Speeches
March 13, 1984, Japan and U.S. Cooperating in High Tech
3/13/84, Typewritten text of Packard’s talk
Packard says this is an important subject because “advanced technology is moving forward very rapidly in every aspect of our society today and promises great things for all of us and our children and our grandchildren.”
Packard sees Japan and the U.S. at the forefront of this high technology revolution and he says “…the question we are here to discuss at this conference is how can we cooperate to improve the contributions of technology to our respective societies and to the rest of the world as well.”
Since the production of new products and services is a competitive process, Packard asks “…why should we cooperate in high technology, why shouldn’t we just compete and let the cards fall where they will.”
Before discussing the question of “cooperation or competition,” Packard relates a story which took place in Palo Alto when HP had about ten employees. He and Bill Hewlett had decided to develop and manufacture general purpose electronic instruments. The leading company in that field was General Radio, founded by Melville Eastham. Mr. Eastham called on Dave and Bill in 1939 and they expected him to be critical because they had decided to go into competition with him.
“Mr. Eastham, much to our amazement, relates Packard, “said he thought competition would be good for both of us. Not for the obvious reason that it would encourage both of our companies to work harder but for a much more important and much less obvious reason.
“He said that given the rapidly advancing electronic technology both of our companies were bound to develop new instruments utilizing new principles and new concepts in measurement. He said these new ideas would catch on much faster if two or three firms proposed them than if they were the exclusive product of only one firm.
“We have had many areas of friendly cooperation and this friendly cooperation has helped us both succeed in our business enterprises. We used to meet at least once a year – visited each others labs.”
“Thus,” Packard says, “I became convinced early in my professional career that cooperation and competition are not mutually exclusive but indeed can and should be beneficial to both parties. We had a firm policy not to copy a competitors product but to do better. And we had an open door policy at our laboratories.”
“I believe that all of our firms which are engaged in new technology products will benefit from a relatively free flow of new knowledge. In fact, in the field of electronics there has been a great deal of cooperation in the exchange of new technology both here in the United States and between the U.S. and Japan.”
Packard agrees “There are occasional areas where a technological break through can be made by an individual company and can be exploited by exclusive protection. In most cases, additional participants will accelerate the product’s development and the public acceptance of a uniquely new product. In today’s maze of new technology, cooperation, even among competitors, will advance the cause of all.”
“Actually, this is a very complicated problem that is being discussed at this conference because, while it is possible to make a good cause for cooperation in general, when one looks at specific situations one can find areas where broad cooperation is important, also areas where new technology must be tightly controlled, for example in areas of national security and also where a private firm has an unique position in some new technology.
“Cooperation between our two countries is very important in basic research. In searching for new ideas it is often the collaboration of several people that results in a major contribution. A few new basic scientific concepts are the result of an individual’s contribution. More often it is a team effort or the synergism of several different approaches to a study of the problem. This, in my view, argues for the most extensive cooperation among laboratories doing basic research work. Anyone who has been working in the field of high technology, electronics, genetic engineering, aeronautics – whatever – knows about a great many things to be done if only the technology were available.
“I think there is no doubt that the advance of high technology will be accelerated by extensive cooperation, not only between the United States and Japan but among all nations in basic research.”
“This recommendation for more cooperation in basic research may not have much meaning for those of you in small, high technology companies when you are working day and night to get out that new product. In the long run you will succeed or fail by the market acceptance of your new product. Your chance of success will be much greater if you can develop a new product, clearly ahead of the field. To do this the technology must be available and you must know about it. In the final analysis all of us in the high technology industry live on the output of basic research activity.
Packard says he would now like to discuss “some of the specific ways high technology companies can cooperate in their work.
“One important approach is licensing of patents or know how. Over the years our company has received a great deal of technological assistance through cross licensing In the field of electronics most patents are generally available through reasonable license terms.
“The strategy most firms follow is to have an aggressive patent policy to obtain as many patents as possible and then to use patents to negotiate license agreements for other technology to support their work.
“We prefer to do this through broad, royalty free cross licenses with a lump sum prepayment negotiated to balance the respective contributions of the two parties.”
“We have enjoyed excellent cooperation with Japanese firms in negotiating cross license agreements and both parties have benefited from this cooperation.
“We have also undertaken a number of joint ventures in R&D with Japanese firms. We have preferred not to have highly structured agreements and this seems to match the Japanese approach.
“The agreement will be generally about two pages long. Instead of trying to anticipate all the problems and cover them in the agreement in detail, we simply include a statement to the effect that if difficulties are encountered, we will endeavor to sit down with them and negotiate a solution.
“It is my impression that the most effective benefits our company has received from R&D agreements come about when a good personal relationship develops between the people who are actually doing the research work. That approach has worked for us for many years here in the United States and during the last few years it seems to be working for us the same way in Japan.
“There are some problems in getting a good working relationship started with Japanese partners. One our people have noted was that you have to make at least two trips to Japan just to get acquainted with your prospective partner, to develop some understanding and confidence. After both parties are satisfied there will be some mutual benefit in the relationship, good working relations between the people doing the research work seem to become established and not much top level attention is needed to keep the program moving ahead.”
Packard describes some new approaches to cooperation in the field of biotechnology. “These are in effect research partnerships with large front end payments to help carry the relatively high cost of new product development in this field. …This approach provides an important means of access to this new technology but it is much too early to know how well this approach will pay off for the participants.”
“Military weaponry,” he says, “is one other area of cooperation that is beginning to open up to industry in U.S. and Japan.
“As you know,” Packard says, “a large part of the total R&D expenditure in the United States is for military work. Total R&D spending in U.S. is in excess of $90 billion and federal spending is about 47% of the total. It is interesting to note in passing that private R&D funding reached that of the U.S. government in 1978 and is increasing faster than federal funding.
“Private funding for R&D in the United States exceeds that of Japan and West Germany combined.
“But defense spending on R&D is substantial and there is an opportunity for Japanese industry to receive some benefit from this work.
“The basic Japanese policy for the development and production of defense equipment which was announced in 1970 stated Japanese government preference for acquiring military equipment from Japanese domestic R&D and production efforts. Japan has been developing and manufacturing military equipment for its self defense forces. This equipment includes armored personnel carriers, tanks, telecommunication and electronic equipment.
“Also, Japan has licensed production of the F15 fighter, the P3C anti submarine aircraft, the Hawk surface to air missile, as well as other items. Most of this equipment is licensed from U.S. firms but also some licenses from European firms are involved.
“Recently there has been some discussion of joint U.S.-Japanese development of military equipment in Japan. I believe this would provide an excellent opportunity for cooperation between our countries. Japanese know how in high tech electronics and in high quality production could make a very useful contribution to our joint military capability. Such joint R&D would also provide useful fall out for civilian products. In addition, many such products could be dual purpose, useful that is for both military and civilian applications. Japan could consider the export of dual purpose equipment although probably not the export of strictly military products.
“Let me conclude by saying that I believe this is a very important subject on the agenda of this conference. Japan and the United States have an increasingly important role of sharing world leadership in the future.
“The question is not which country will develop a dominant position for there will no longer be an overall dominant position in high tech industry in the future. One country may excel in certain areas while the other country will excel in others. With the rapid progress in the generations of new knowledge through basic research the situation will be continually changing. The years ahead will provide unlimited opportunities for both of our countries. The opportunities will be better for both of us if we can maintain an atmosphere of cooperative competition in high technology.”
3/13-14/84, Copy of the printed program for the conference
3/13/84, Copy of a printed pamphlet containing a brief biography of the speakers
3/14/84, Copy of a printed invitation from the officers of The Japan Society of Northern California to a reception the evening of 3/14/84
9/7/83, Letter to Packard from Maria Simpson, Project Director for The Conference Board inviting him to be one of the speakers at their conference on Japanese-American cooperation.
9/27/83, Letter to Packard from Maria Simpson saying she is delighted that he has agreed to speak at their conference, and giving information on conference arrangements.
11/30/83, Letter to Packard from Phyllis R. Herbert conference manager for The Conference Board, discussing arrangements for the conference.
1/19/84, Letter to Packard from Joseph L. Near, Director Public Relations for The Conference Board, asking for a copy of the text for this speech to be furnished to the press.
2/6/84, Letter to Packard from Phyllis Herbert discussing conference arrangements
2/27/84, Letter to Packard from Phyllis R. Herbert, conference manager for The Conference Board, discussing arrangements for the conference.
3/13/84, Copy of a typewritten sheet entitled, ‘Notes of Session Procedures for Speakers’
3/13/84, Copies of two charts showing ratio of research spending to GNP for several countries
Box 5, Folder 5 – General Speeches
May 13-14, 1984, 100 Years from the Carbon Arc to the Silicon Chip, IEEE Centennial, Boston MA
5/14/84, Copy of typewritten text of Packard’s speech
Packard says he was recently sitting on the deck of his house in Los Altos Hills at dusk, watching the thousands of lights coming on below – all over Silicon Valley. There were the bright sodium vapor lights along the highways, incandescent lights, traffic lights, many colored signs, airplane lights, diesel electric trains, satellites in the sky. There were power lines, telephone lines – over a thousand laboratories and factories making silicon chips and computers.
And he thought how much the world had changed since 1884 when AIEE was founded. What would he have seen from this spot a hundred years ago, in 1884, he wondered.
“There might have been a few bright carbon arc lights here and there across the valley. There would have been a telegraph line along the railroad where the trains were drawn by steam locomotives. There would be no power lines, no telephone lines. A few kerosene lamps might be seen moving along the road on wagons or buggies drawn by horses. There were probably a few DC motors here and there but they would not have been visible. The valley would have been covered with apricot orchards and vineyards and farms, but there were no factories of any consequence. It was not yet the age of electricity in the Santa Clara Valley, nor anywhere else, but that age was about to dawn.
“By 1884”, Packard says, ”electrical theory had been fairly well understood although the existence of the electron had not yet been demonstrated. During the previous century the relationship between voltage, current, magnetic field and even the theory of electromagnetic radiation had been worked out. There had been Gilbert and Ohm of Germany, Gersted of Denmark, Ampere of France, Volta of Italy, Benjamin Franklin and Henry of the U.S., Faraday of England and many others….It was in 1864 that James Clerk Maxwell expressed the basic laws of electromagnetic radiation by his famous equations.”
“By 1884,” Packard says, “there was not only considerable theory established about electrical phenomena but there also had been some practical use of electricity. The electrical telegraph on land had been in use for forty years, the trans-Atlantic cable for eighteen years. The direct current generator had been in use for twelve years, there was extensive use of the carbon arc for outdoor lighting.”
Packard says the American Institute of Electrical Engineers (AIEE) was founded in 1884 – “for the dissemination of information about electric power, illumination and telegraphy through publications and meetings. The time was right, for in the two decades that followed, the development and application of electrical equipment expanded at an explosive rate.”
Packard tells how Nicolas Tesla announced the development of the AC motor in a paper read before a IEEE meeting in May, 1888. “George Westinghouse recognized the importance of Tesla’s work. He acquired the rights to Tesla’s patents and engaged his services, and in October of 1880, only two years later, the Westinghouse Company was awarded a contract for three, 5000 horsepower, three phase, 25 cycle, 2000 volt generators for Niagara Falls. Power was transmitted from Niagara Falls to Buffalo, a distance of 22 miles, using three phase current at 11,000 volts, a short time later.
“From then on the generation and distribution of electric power and the conversion of electrical power to mechanical by AC motors proceeded to expand rapidly…,” Packard adds. “It is interesting to note that electrical machinery and transmission were the subjects of nearly half of all the papers in the AIEE transactions during the first twenty years of the Institute.
“Illumination was the second subject included in the purpose of the AIEE, but only 10% of the papers published before 1905 were on this subject. Carbon arc lighting was in widespread use in 1884. Incandescent lamps had been built and had just become practical a year or two before. It was the development of the carbon filament for incandescent lamps by Edison in the U.S. and Swan in England at about the same time that made incandescent lamps practical.”
Packard says “One can see this situation of simultaneous invention repeated over and over again during the past century. This is the result of the fact that when basic technical knowledge is widely disseminated throughout the world, a way to use that knowledge to solve a common problem often occurs to several people at about the same time.”
As a sidelight, Packard says he can not resist the temptation to comment on the “grossly misguided current proposal by our Defense Department to censor the publication of the results of basic research funded by the Department at U.S. universities. I am quite certain that this proposal, if carried out, will do considerable damage to the advancement of all technology in the United States including technology useful for military purposes. It will not seriously hamper the Soviets’ progress in technology for military equipment unless an impregnable barrier to the transfer of technical knowledge can be place around the Soviet Union and this, of course, is impossible.
“Telegraphy was another area to be addressed by the newly formed Institute. There was not much more to be done in telegraphy over wires, but the telephone became a practical device available for the public shortly after 1884. Telephone service was offered to the public in Cambridge, Massachusetts in May of 1877, after Alexander Graham Bell had been given priority in his invention by the Patent Office in 1876.”
Packard makes a point of saying that he thinks the forced breakup of the American Telephone and Telegraph Company was a great mistake. “The assured result that I see already developing is that our country will most likely have much worse telephone service in the future and it will cost all of the users more.”
:”It was wireless transmission that provided the greatest attraction for scientists and engineers as the 19th century came to an end. Marconi is widely recognized as the father of radio. In 1901 he sent a wireless signal across the Atlantic. He deserves much of the credit for the development of wireless telegraphy and the radio that followed.”
“It has been a mystery to me,” Packard says, “that some important work done in Palo Alto, California has seldom been recognized as an important contribution to the beginnings of radio. I read about Marconi, Fessenden, Alexanderson’s high frequency alternator but not much about the Poulsen arc. Thus, I am going to take this opportunity to tell you about an important contribution to radio that took place in Palo Alto, I might say Silicon Valley, just after the turn of the century. In keeping with the title of my talk tonight I want to make the point that the carbon arc was important, not only in the beginning of electrical illumination, but the carbon arc was also important in the beginnings of wireless telephony which became radio.
“Young Cy Elwell made a deal to acquire the American rights to the Poulsen arc, ordered a set of equipment to be delivered, and returned to San Francisco to raise the money to pay for the deal he had made. He set up the equipment in Sacramento and San Francisco and invited potential investors to talk over the system. The demonstration was a great success, the money was raised, including an investment by David Starr Jordan, then President of Stanford University. This resulted in the establishment of the Federal Telegraph Company in Palo Alto about 1906.
“The Poulsen arc became the most important source of radio frequency energy for the U.S. Navy through World War I, and large Poulsen arc transmitters were still being produced in Palo Alto in the 1920s, after the vacuum tube had taken over for both the transmission and reception of radio waves.”
“It may be interesting to you to note that a very large electromagnet was manufactured by the Federal Telegraph company in the 1920s, after the vacuum tube had taken over, for one of the last Poulsen arc systems. This magnet was later used by Professor Lawrence at Berkeley to make the first cyclotron which opened the door to high energy physics.
“The AIEE did not become extensively involved in radio, and so in 1912 a new organization was established, the Institute of Radio Engineers [IRE]. The AIEE continued a minor interest in radio and through the 1930s and 1940s, when I became actively involved in the profession, an occasional paper of importance to the field, that by then had become known as electronics, was published by the AIEE.”
Packard tells how, around 1924, he hooked up his first vacuum tube radio in Pueblo, Colorado, and was able to hear WHO from Des Moines Iowa.
“Through the 1920s radio broadcasting continued to develop, and there were more electronic phonographs, talking pictures, and some industrial applications of electronics in the early 1930s.
“But even in 1935 the electrical engineering profession was not quite sure about the importance or the future of radio. I studied radio engineering under Professor Fred Terman at Stanford in 1934 and the field had not yet become known as electronics at that time.,
“I was fortunate to get a job with General Electric when I graduated from Stanford in 1934. When I arrived in Schenectady, I expressed by interest in radio or electronics. My advisors from the company were convinced there was no future in electronics at the General Electric Company and recommended that I become involved in the more important areas of electrical engineering, such as power generation or transmission, or electric motors or other areas of electrical engineering that held great promise for the future – but electronics –no!
Packard says he hopes the audience will forgive him for expressing a bit of personal pride in this matter, “for next year it will be fifty years from the time I received that advice about my future career in electronics from my General Electric advisors. Today the Hewlett-Packard Company is larger than General Electric was at that time, and my Company has as much capability in electronics as the General Electric Company has today.
Packard tells of the transistor being invented in 1947, and integrated circuits being developed in the 1960s. In each case it took about ten years for this new technology to come into its own.
“The relative importance of electrical and electronic engineering was recognized by merging the AIEE and the IRE into the IEEE in 1963.
“Most, if not all of you, here tonight have been involved in the exciting things that have happened since that time. But the silicon chip has replaced the carbon arc and offers a very exciting future.
“I think it bodes well for the future of our profession and our industry that these 100 years have ended in a decade of excitement and challenge even greater than the decade of challenge at the beginning, 100 years ago.
Packard talks a bit about the past contributions of the IEEE before giving his thoughts about the future.
“Our institute has performed well its original objective of disseminating information about electrical and electronics engineering work.
“It has provided a strong incentive for scientists and engineers by providing a platform where they can present their work to their peers and receive accolades if the work is deserving. The IEEE has helped with standards and measures without which progress would have been difficult.
“Our institute has helped with the education of young men and young women –many more women today – as scientists and engineers. And the IEEE has been involved in governmental affairs from its early days.
“It is especially important to note that the IEEE began to develop a strong interest and involvement in the social responsibility of engineering in its early years. This subject has become of great importance during the last two decades since the work of electrical and electronics engineering has become more pervasive throughout the affairs of the world.
“I hope very much that the IEEE will play an even stronger and more effective role in the social aspects of our professional work during the next 100 years.
“During the past 100 years our profession has devoted its attention to producing electrical energy and electrical products to make the necessities of life: food, shelter, transportation, more readily available. In the next 100 years our profession will be much more involved in improving the quality of life.
“As the preservation of the environment and the conservation of our available energy have become high priority objectives during the past few years, all too many policies have been established and regulations adopted without adequate consideration of the basic engineering principles involved.
“I believe one of the most important challenges for the IEEE as it enters its second century is to make a more effective contribution to these important concerns of the society.
“Our work will of course involve technical innovation and development, but our profession must become more effective in dealing with the social aspects of our work.
“The generation and distribution of electrical energy will continue to be an important job during the next 100 years. We must find ways to use electrical energy more effectively and to generate it with less dependence on fossil fuels.
“One very important challenge will be to make nuclear energy safer, more reliable and more acceptable to the public. Nuclear energy has fallen into disfavor in recent years but I am sure it will come back to its rightful place sometime in the future.
“Our profession will do exciting things in space. There will be both manned and unmanned work stations in space and perhaps a manned station on the moon by the turn of the century.
“I doubt that we will see a large solar energy space station beaming large amounts of electrical energy to the earth with microwaves, but I could be wrong.
“I am sure the electric automobile will be in widespread use long before the end of the next 100 years. There will be a permanent shortage of fossil fuels and we will not be able to afford to squander the diminishing supplies on personal automobile transportation. I am quite sure the electrical engineering profession will come to the rescue on this problem long before 2084.
Packard believes the silicon chip “will continue as a star performer throughout the next 100 years. The capability of these remarkable devices will increase by several orders of magnitude and their effective cost will continue to come down.
“We are clearly becoming a society of information and communication rather than a society of industry. Nevertheless, industry will continue to expand the production of goods and services and energy. Industry will simply become much more efficient in using materials, energy and manpower, and the silicon ship is already becoming involved in improving the performance of the smoke stack industries.
“As we become a society of information and communication, I suggest to you that the IEEE could make an immense contribution by helping the world to become not only a society of information and communication, but a society of wisdom and communication. Information and communication are essential elements in achieving wisdom and I believe this is a real challenge to think about.
“One of the exciting new fields of technology is genetic engineering. This work will certainly expand our ability to control disease and extend the span of human life.
“In 1900 life expectancy was a little over 40 years in the industrialized countries. A child born this year will have a life expectancy of 80 years. Some people believe that life expectancy could again double in the next 100 years, in good part as the result of genetic engineering.
“I find this an awesome prospect and I raise it partly to indicate the excitement about the future in other fields. But also genetic engineering may have some impact on our profession in addition to offering the participants a longer and more productive life.
“There is an electrical aspect to most biological phenomenon. The human brain is an electronic computer with infinitely more capability than anything we can now design and build. Genetic engineering just might make biological material available to replace the silicon chip. This could bring many orders of magnitude of improvement in computers, electrical sensors, and perhaps other devices. Work is already being done in this field.
“I would like to conclude with a general observation about the opportunities of the next 100 years. It is a well known and widely applicable principle that the rate of change is proportional to the level of activity. This assumes that the process is not resource limited – or artificially limited in some way.
“Some aspects of electrical and electronic engineering will be resource limited in the next century and the rate of progress will be slow. Many opportunities, on the other hand, will be dependent only on human imagination and human ingenuity which are, of course, unlimited. And there will be areas of exponential growth for us in the future.
“We can take much pride in the accomplishments of the IEEE over the past 100 years. We can look forward to the next 100 years not only with hope, but I believe confidence that the second 100 years of the IEEE will be even more challenging, and more productive than the first.
“I only wish I were young enough to start all over again.”
5/13/84, Copy of printed Schedule of the IEEE Centennial Celebration
5/13/84, Copy of pamphlet with brief schedule of events
5/13/84, Copy of typewritten sheet summarizing a history of IEEE
5/26/82, Letter to Packard from Dr. Robert E. Larson, Institute President, inviting his participation in the 1984 Centennial Day celebration.
6/14/82, Copy of a letter from Packard to Dr. Robert E. :Larson saying, “While I am reluctant to give a commitment this far in advance, I would be pleased to take this assignment subject to the ‘fortunes of nature’ between now and then.”
4/2/84, Letter to Packard from Richard J. Gowen, 1984 IEEE President, thanking him for agreeing to be ‘their speaker.’
5/3/84, Letter to Packard from D. S, Brereton, of IEEE, giving details of the Celebration
5/3/84, Letter to Packard from Thomas C, White, IEEE, discussing press arrangements
5/9/84, Copy of a letter to Thomas White from Margaret Paull, [Packard’s secretary], enclosing a copy of Packard’s speech
5/14/84, Copy of room bill for Packard from The Westin Hotel in Boston
5/29/84, Copy of a telegram to Packard from Walker Cisler, Chairman Overseas Advisory Associates, Inc., asking for a copy of his speech
5/30/84, Letter to Packard from Joe Millington, HP Personnel Representative, saying he has been an employee for 10 months. He asks for a copy of Packard’s speech, and says ‘it is such a joy to work for our company.’
Newspaper clippings covering speech:
5/20/84, Boston Globe
5/20/84, Photocopy of article from Boston Sunday Globe
5/27/84, Mass High Tech, photograph only
5/28/84, Computerworld Weekly
5/28/84, Photocopy of clipping from Mass High Tech
Box 5, Folder 6 – General Speeches
May 27, 1984, Report On Federal Laboratory Review Panel
5/27/84, Typewritten text of Packard’s remarks
Packard had chaired the Federal Laboratory Review Panel in 1982, and he was asked by the American Association for the Advancement of Science to comment, at a symposium they were holding, on their findings and what progress had been made by the laboratories since then.
In his remarks Packard says the Review Panel was appointed in March, 1982, and asked to “look at the laboratory missions, identify impediments to performance and determine whether the nation is getting the optimum return on its substantial investment at the Federal Laboratories.
Packard explains that with some 700 Federal laboratories it was not possible to physically visit each one. As an alternate the Panel decided to visit laboratories supported by The Department of Defense, Agriculture, Commerce, Energy, Health and Human Services and National Aeronautics and Space Administration. The Panel members met with top agency representatives responsible for laboratory management, reviewed past studies, invited comments from industry and university people. Most of the Panel members had worked with Federal laboratories and brought their own experiences as well.
Packard says the Panel “identified many highly competent scientists and engineers, important research programs and unique large research facilities at the Federal laboratories. The magnitude of many of the programs and facilities were beyond the means of universities and industry and thus had a unique role in the advancement of science and technology.
“The Panel also noted,” he says, “a number of serious deficiencies at the Federal laboratories that limit both the quality and cost effectiveness of the work being done there. These deficiencies are not entirely new but have become more serious in recent years and the Panel decided it was time for these deficiencies to be corrected.
Packard presents the recommendations of the Panel:
Recommendations on the subject of missions:
1.1 “As a top management priority, Federal agencies should re-examine the missions of their laboratories.
1.2 The size of each Federal laboratory should be determined by its mission and the quality of its work.
“We noted that the preservation of the laboratory is not a mission, but we did not recommend that any specific laboratory should be terminated.”
“The second finding of the Panel related to personnel at the Federal laboratories. Many of the laboratories are having difficulty in attracting, motivating and retaining qualified scientists and engineers. The most serious problems were at laboratories under Civil Service regulations. Even at some of the laboratories which were contractor operated there were less than optimal personnel policies.
“The Panel made several recommendations in the personnel area:
2.1 “Administrative and legislative actions should be undertaken to create personnel systems for scientific and technical people independent of current Civil Service procedures.
2.2 Contracts governing government owned, contractor operated laboratories should be administered so as to permit the contractor to carry out an independent salary administration.
2.3 Personnel ceilings should not be used in addition to budgetary control of Federal laboratories.
Re resource funding:
3.1 “The Congress and Office of Management and Budget should authorize funding for the Federal laboratories on a predictable multiyear basis so research activities can be properly planned.
3.2 At least 5% and preferably up to 10% of the annual funds should be devoted to independent research and development at the laboratory director’s discretion.
3.3 Federal laboratories should be allowed to carry remaining funds into the next fiscal year.”
Fourth finding, management:
“There was far too much detailed direction of laboratory activities from agency headquarters and lack of accountability for the quality and relevance of the work being done. Far too many reports were being required.”
1.1 “Each Federal laboratory should have a more effective oversight function, generally a committee responsible for assuming the continuing excellence of the laboratory.
1.2 Federal agencies should rely to a greater extent on a peer review process for funding basic research.
1.3 The laboratory director should be appointed for a finite term and be held accountable for the quality, relevance and productivity of the laboratory.
1.4 The administration and the Congress should work together to strengthen the DOE laboratories. In particular, the Congress should make a substantial reduction in the oversight of DOE research and development.”
The fifth finding – “laboratories too isolated from universities, industry, and other users of their research.”
5.1 “Federal laboratories should encourage more access to their facilities by universities and industry.
5.2 Laboratories should have more flexibility in contracting to be able to contract with universities and industry for research.
5.3 DOD laboratories should have a larger role in working with military operating forces.
“The report of the Panel was reviewed by the full White House Science Council and submitted to Dr. Keyworth in May of 1983.
“I had the opportunity to brief the President and the Cabinet on the report in July of 1983 and in August the President directed the Office of Science and Technology Policy and the Office of Management and Budget to respond to the central thrust of the report.
“I also briefed the Secretary of Defense, the Secretary of the Department of Energy, the director of NASA and was assured of their support in implementing the recommendations.
“In response to the President’s memorandum, the Federal Coordinating Council for Science, Engineering (FCCSET), and Technology established a Committee on Federal Laboratories to monitor implementation of the Panel’s recommendations. The FCCSET was asked to report on July 1, 1984 the progress of implementation of the recommendations.”
“In general, the direct agency response to our recommendations has been good but it is too early to determine how much real improvement will come from this response.
“Packard says, “Some reductions have been made in the size of the laboratories and at least the panel’s recommendations in respect to laboratory size have been recognized.
“In the personnel issue there has been a good deal of work done in:
The Development of model legislation –
Assessment of actions that can be taken without legislation –
An examination of the operation of government owned, contractor operated laboratory operating policies – and
The collection of proper statistical information.
“While good progress has been made in developing the necessary model legislation to get laboratory personnel administration out from under Civil Service procedures, it is not yet clear whether the appropriate legislation can be enacted.
“Some of the bureaucracy that will be affected is having second thoughts and it will probably take a good deal of work with the Congress to get legislation passed. We may need the support of organizations like the AAAs to get this job done.
“The model legislation included these key features:
- Permits agencies to establish alternative personnel systems
- Applies to scientific and technical personnel in Federal laboratories and throughout agencies if broader coverage is deemed essential
- Bases pay on performance rather than longevity
- Creates broad pay bands
- Simplifies job classifications
- Allows pay cap to be waived for up to five percent for specifically qualified scientific and technical people
- Permits agency head to classify positions and fix compensation to be competitive with comparable positions outside government
- Allows inclusion of positions now in the Senior Executive Service
- Permits Naval Weapons center and Naval Ocean Systems Center personnel systems to become permanent.
“There are some personnel actions that do not require legislation that are recommended by the interagency working group.
- “Exclude Federal laboratories from current proposal to reduce the number of employees in Civil Service grades 11 through 15.
- Allocate to the laboratories more positions for specially qualified scientific and technical personnel under provisions of 5 USC 3104.
- Provide government operated laboratories with blanket permanent direct hire authority for all professional, scientific and technical positions in the laboratories.
- Provide government operated laboratories with blanket, direct hire excepted service appointment authority for research associates.
- Include special rate schedules for engineers and other manpower shortage occupations in annual cost of living adjustments.
“There are considerations underway about what can be done to eliminate personnel ceilings and allow the laboratories to be under budget control only.
“The interagency group is working on multiyear funding for R & D. This will have to be considered by OMB and requires agreement of the administration and the Congress.
“It will take further work to get multiyear funding approved for the Federal laboratories but I believe it can be done.
“Considerable progress has been made to increase discretionary funds for the Federal laboratories.
“Carryover funding situation is quite variable. DOE and DOT and DOC have no time limit on R & D appropriations. The DOD has two year obligation authority but DOD…[end of text].”
A sheet handwritten by Packard contains some additional notes – but difficult to decipher:
“Missions should be set by Administration
“Might require [ ? ] reports on what missions should be.
“Put some DOD [ ? ] in other than DOD laboratories.”
10/7/83, Letter to Packard from Albert H. Teich, Manager, Science Policy Studies of the American Association for the Advancement of Science inviting Packard to speak at a symposium entitled ‘The Role of Federal Laboratories: Toward a New National Policy?’
10/19/83, Copy of a letter from Packard to Albert H. Teich saying he would be pleased to speak at their symposium
10/25/83, Letter to Packard from Albert H. Teich saying he is pleased Packard will be able to participate and discussing possible dates.
11/8/84, Copy of a letter from Packard to Albert H. Teich discussing dates
1/18/84, Letter to Packard from Albert Teich discussing possible topics for Packard to cover
1/27/84, Copy of a letter from Packard to Albert Teich with further discussion of topics.
3/5/84, Copy of a flyer from AAAS to symposium speakers discussing copies of speech text
5/30/84, Copy of status report on a ‘Utilization Study – Pilot Stage, which involved visits to five companies, including HP, preceded by questionnaires to be completed by company lab personnel
June 1984, Note to Packard from John Adam, Associate Editor of the ‘Spectrum’ attaching an article they with to publish covering Packard’s speech at the symposium. A pencilled notation thereon says “Called OK 6/19/84.
Box 5, Folder 7 – General Speeches
June 13-15, 1984, New Products From Advanced Technology, German/American Seminar, Bonn, Germany
The seminar was entitled “Venture Financing and Foundation of Technology-Oriented Companies
Typewritten text of Packard’s speech
Packard says that he is pleased to participate in this conference “on how to contribute to economic growth and create new jobs by developing new products based on advanced technology.”
Rather than simply telling of his experiences at the Hewlett-Packard Company, he says he would like to first look at the subject from an “historical view,” – describing some general principles “that encourage success in new product development, and these same principles have resulted in successful new product development in many places and over a very long rime in the past.”
“The first principle,” Packard says, “is that the driving force for the development of new products is not technology, not money, but the imagination of people. Basic technical knowledge often makes it possible to do things that could not be done otherwise.” He adds that a complete understanding of the basic scientific principles involved isn’t always necessary – and he gives Edison’s development of the electric light bulb, and deForest’s invention of the vacuum tube as examples.
He also gives a corollary of the first principle “…there are many examples where new scientific principles have been discovered and it took time, and often someone other than the scientist who discovered the principles, for a useful new product based on those findings to be developed. A good example of this situation is in the early development of wireless, or radio.
“James Clerk Maxwell developed the scientific theory of electromagnetic radiation in 1865. Over twenty years later Hertz devised a rather simple experiment to demonstrate that electromagnetic waves actually existed. Ten years later Marconi in England and Professor Popov in Russia achieved wireless transmission of signals over distances measured in miles.
“There is often a delay between the scientific discovery and the successful product even in recent years. The transistor was demonstrated first in 1947, but it was nearly ten years before it came into widespread use.”
Packard gives two reasons why a new discovery may not be converted quickly into widespread use. “The scientist working at the forefront of new knowledge is often not interested in new products. More important, particularly in today’s world, a new product requires a large combination of scientific knowledge, not just one new idea. Often an innovative development requires a team of people working together and bringing a wide range of knowledge to the development.”
Packard says he raises this point because it is often thought that if a country would only increase its support of basic research, the development of new high technology products would be increased. “Most new basic science,” he says, “is available to anyone in the world (with a few exceptions that are classified for national security reasons), and so the differences among countries in their development of new products can not be explained on the basis of the scientific knowledge available to people working on new products.”
Packard emphasizes the point with the example of Japan and the
U.S.S.R. “Japan does very little basic research, yet has perhaps the most impressive new product program in the world today. Japan simply depends on basic research done in other countries.
“The U.S.S.R. has one of the best programs of basic research of any country today, yet has the least impressive new product development program. The U.S.S.R. is at least a decade behind the United States and Japan in electronic products. The Soviets try very hard to catch up by buying or stealing new product ideas from the United States, but for that matter, so does Japan.”
Packard says the Hewlett-Packard Company “does little basic research. All of our company’s new products are based on scientific knowledge that is available to virtually everyone else in the world. We do some very important research that has helped us achieve a lead in many new products over the years, and I would like to tell you what we do.
“To be useful for new product work, research has to be focused. Our company decided to concentrate on general purpose electronic measuring instruments from the beginning in 1939. Our first few products were based on the ‘feedback principle’ that was developed at the Bell Telephone Laboratories a few years earlier. We also realized that if, instead of using the knowledge available to everyone else, we could get ahead of the game by research, it would give us an important advantage. Accordingly, we have done a great deal of research in fields that would be directly applicable to our products and we have often been able to gain a lead on our competitors.
“Industrial research of the kind we have done at Hewlett-Packard is very important to the development of new high technology products, but to be effective it must be highly focused.”
“Highly focused industrial research can make an important contribution to new product development but at the same time, many companies have successful new product programs without much industrial research of any kind.
“Money can be an important factor in encouraging new product development. Money is important as an incentive to motivate innovative people and it is often a necessity to support experimental work and development work. The need for money varies greatly in different situations. Bill Hewlett and I started the Hewlett-Packard Company in 1939 with an investment of only $500. The dollars were larger in those days, but it did not require a great deal of equipment either to experiment or to build a product in electronics in 1939. The situation is different today. Work in large scale integrated circuits requires millions of dollars worth of facilities and equipment. The development of a new product in the field of genetic engineering is costing in the range of $50 million before the product can be marketed. The development of a new commercial jet aircraft may require the investment of $2 billion before the first aircraft can be delivered to a customer.”
“In the case of Hewlett-Packard Company, we spend about 10% of our sales dollar on new product development and with these funds, we finance hundreds of new product projects in some fifty of our divisions all over the world.
“The $500 million dollars we spent last year in new product development will add billions of dollars to our sales over the next few years. In 1983 over two thirds of our orders were for products introduced during the past four years.”
“I know there has been a great deal of talk about commercial fall out from government funded research and development, including that done for military purposes. There has been some important fall out such as the development of commercial jet aircraft from military jet aircraft. I would not consider this to be an area where a major contribution to the development of new commercial products can be made. There is, however, a great deal of research and development being supported by governments all over the world. The extent to which this work might make a more effective contribution of new commercial products should receive continuing attention.
“Last year I chaired a panel to study the U.S. Federal Laboratories. There are some 700 of them and they are supported at a level of nearly $20 billion. The panel recommended that a closer relation between the Federal Laboratories be established and that the laboratories should not undertake the development of commercial products without industry participation.
“Thus far,” Packard says, “I have talked about research and money, and I have intended to convey the idea both are important to better new product development. I hope you may have concluded that I do not believe these are the most important factors.
“It is said that necessity is the mother of invention, and any successful new product is the result of a person or a group of people deciding there is a need for a new product or service and having the imagination and the motivation to develop the product or service.
“I do not know whether a person’s imagination and therefore his innovative ability can be developed, but certainly it can be identified and encouraged. It seems to me then, that identifying and encouraging innovative people may be the most important thing that can be done to improve the effectiveness of new product development, whether it be in a company or in a country.
“We have given this matter a great deal of consideration in the Hewlett-Packard Company from the very beginning. In the first few years, Bill Hewlett and I participated actively in the development of our first products. Our first product came from a very innovative idea that Bill Hewlett had on the negative feed back principle. He did this work while he was still in the laboratory at Stanford.
“As the company grew, we realized our future would be determined by our ability to attract and motivate engineers to develop successful new products. With help and encouragement from Professor Frederick Terman
we undertook to identify as many bright young graduates as we could afford to hire each year from the leading technical universities across the United States.
“In hiring young people from U.S. universities, we learned that some universities like Stanford had given their students a good deal of encouragement in becoming involved in innovative new product work, sometimes to the point of encouraging them to go out after graduation and start new companies. This is clearly the reason why over a thousand new electronics companies have been established around Stanford University in Silicon Valley over the last two decades.”
“While I do not believe that the way we have approached the problem of new product development at the Hewlett-Packard Company is the only way to do the job, it has at least been moderately successful.
“In the first place, it became clear that it was essential to know what a potential customer might need and might want before a new product project went too far. Often the need was known before the project was started, but the customer’s ideas were always helpful as the development progressed. Thus we tried to establish and maintain a close relationship between our development engineers, our customers, and we also kept our marketing people closely involved. Often it was the marketing people who came up with an idea for a new product.
“We also realized that the cost and quality of a new product was highly dependent on our manufacturing capability. We decided it was essential to bring manufacturing people into every new product development program at an early stage, and as a corollary, keep development people involved
until the production of a new product was going smoothly.
“Thus we came to understand that an effective new product program was a team effort involving development people, manufacturing people and marketing people.”
“These ideas encouraged us to structure the Hewlett-Packard Company into a relatively large number of small divisions, each with an area of product responsibility, and each with the responsibility to develop, manufacture and sell products to provide leadership, if possible, in its product area. The company has over fifty such divisions world wide.
“Each division has a great deal of autonomy, is measured by its performance and requires a minimum of overall guidance from top management. Top management does have the responsibility to see that performance standards are set and performance is evaluated. There are also a number of policies, financial and personnel for example, that are kept as uniform as possible on a company wide basis.
“It is interesting, and I believe important, to point out that the country where these divisions have been located has not made much difference in their performance We have several divisions located in the Federal Republic of Germany, and they have been just as effective in developing successful new products as those in the United States, Japan, or elsewhere.
“In conclusion, I believe the actions which can be taken at the government level to improve new product development are very limited. I do not believe Japanese industrial policy has been anywhere as important as the highly competitive and highly energetic work of Japanese people in the Japanese success story.
“The Government can be helpful in some areas of tax policy to encourage venture and reward success. Perhaps the most important thing any government can do is to help establish an environment in industry and education that encourages entrepreneurship and rewards successful innovation.
“Before concluding I would like to say a word about what I think are the fields of opportunity today. Predictions about the future of science are always risky, but there are at least several good areas of opportunity for the next decades.
“Electronics will continue to be an area of opportunity for innovative new products. The field of general purpose computers is becoming very competitive and the chance for success for a new firm or a new venture in this field is not very high. Many small firms that entered this field during the last few years are going to fail, a number have already gone bankrupt.
“There is talk about the opportunity to develop a super computer. This is a limited field and it would be very difficult for a new firm to compete with those already working in this area.
“On the other hand, microprocessors and electronic sensors are invading every facet of the world’s economy. It would seem to me that this field is still one of great opportunity.
“Genetic engineering is a new area of great promise in high technology and appears to have almost an unlimited future. There are still some hurdles to overcome – the regulatory process has not yet been stabilized. Manufacturing costs and quality control have not been demonstrated. There are some real challenges in this field, but challenges make an opportunity for innovation.
“The development of better products in old established fields is often limited by the materials available and this innovative work on new materials will certainly result in the improvement of older products and also exciting new ones.
“In conclusion, I am quite sure the opportunities to develop successful new high technology products will be just as great in the years ahead as they have been at any time in the past.
“I wish I were young enough to start all over again.”
Undated, Two pages of notes, handwritten by Packard. It is not clear whether he used these with the above talk or not.
The outline starts with –
“Small business not viewed with great favor
Government procurement policy changed
Major corporations should be encouraged
Government should make reports on progress
Tax concessions should be given to small companies
Red tape on auditing books could be cut
Help should be given to prospective people
Government help should be given
Publish magazine for tech firms”
“Positive relationship between entrepreneurs and venture capital people
Venture capital – risk involvement
Active note – partnership relationship”
6/11/84, Travel and meeting schedule for Mr. and Mrs. Packard
6/13/84, Typewritten seminar schedule for Mr. and Mrs. Packard
6/13/84, Printed copy of the seminar program – written in English on one side, German on the other
6/13/84, Typewritten list of seminar participants from the United States
6/13/84, Typewritten list of seminar participants from Germany
6/13/84, Typewritten program for a banquet to be held and June 13. Dr. Risenhuber, Federal Minister of Research and Technology will preside and speak.
6/13/84, Typewritten list of seminar speakers giving a short biography of each – in German
6/13/84, Copy of typewritten list of what appears to be the names and addresses of seminar attendees
6/13/84, Copies of what appear to be worksheets for three work groups – typewritten and written in German
6/14/84, Typewritten seating arrangement for luncheon and English translation of remarks to be given by Chancellor Kohl
6/14/84, Typewritten copy of speech at the seminar by Peter L. Wolken, entitled ‘Experience Gained with Venture Capital in the United States of America’
6/15/84, Copy of typewritten speech given at the seminar by Dr. Otto Graf Lambsdorff
6/5/84, San Francisco Chronicle discussing Chancellor Kohl’s relations with the press
3/29/84, Copy of a telex from Arthur Burns, Ambassador to Germany to Packard asking if he will participate in a seminar on technological innovation being organized by Chancellor kohl in Germany
4/13/84, Copy of a letter from Packard to Eberhard Knoblauch General Manager of HP in Germany, telling him of the seminar and asking that he give Packard any thoughts he may have on why Germany “is not keeping up with the U.S. and Japan in technology
5/9/84, Copy of a letter to Packard from Dr. Heinz Riesenhuber inviting him to participate in the seminar
5/23/84, Copy of a letter to Packard from Dr. Peter R. Weilemann, discussing arrangements for the seminar.
6/13/84, Copy of an invitation from Dr. Heinz Riesenhuber to Mr. and Mrs. Packard for dinner on the evening of 6/13
6/14/84, Copy of an invitation to Packard inviting him to lunch on June 13
6/14/84, Copy of an invitation from Ambassador Burns inviting Mr. and Mrs. Packard to a reception 6/14
6/14/84, Hand printed letter to Mr. and Mrs. Packard from George and Walburga Kieferle, who says he designed several HP buildings in Germany, and wants to send some flowers
Box 5, Folder 8 – General Speeches
November 27, 1984, U.S. Japan Relations, New York, NY
11/27/84, Copy of typewritten text of Packard’s speech
Packard says he is glad to be here to discuss the report of the United States-Japan Advisory Commission. “The Commission began its work in May of 1983 and submitted its final report to President Reagan and Prime Minister Nakasone on September 17, 1984.
“The Commission was asked,” he says, “to consider all aspects of the U.S.-Japan relationship, not just trade and economic affairs. The full commission held four meetings with both U.S. and Japanese members present and both sides met a number of times and in addition, there were a number of informal meetings among the various members.”
Packard says he was pleased they were able to have “very frank as well as friendly discussions.”
When they started, Packard says he “had serious doubts that we could contribute much that world be useful since the subject of U.S.-Japan relations had already been studied in every aspect by literally hundreds of knowledgeable people. If nothing else, I hope our report will at least help to underscore the great importance of the U.S.-Japan relationship to both countries, and particularly to the future of peace and prosperity in the entire Western Pacific region.”
Packard says the most important message of the report of the commission is contained in the introduction which he proceeds to read [and which is quoted herewith].
‘The Japan-United States relationship over the past four decades has developed into one of the most unusual relationships between two major nations. Beginning with almost complete dependence on understanding and assistance from the United States, Japan has risen from the ashes of World War II to become one of the world’s powerful nations. As recently as 1960, Japan’s economy was only one-twelfth the size of the American economy. Today it is almost half, and its per capita income is nearly equivalent to the U. S. level. Our two countries together account for one-third of the world’s annual production of goods and services and three-fourths that of the Pacific basin nations.
‘The Japan-United States bond has become strong because of a wide range of common interests and attitudes, and because there have been few, if any, areas of basic conflict. It is fair to say that no two countries in the world share the essential ingredients of a vital bilateral relationship – economic, political and security ties – in greater degree than the United States and Japan.
‘The future success of this relationship is of great significance to world peace and prosperity, especially to that of the Pacific basin region. We believe that if Japan and the United States can manage their relations well and build even stronger bonds of cooperation, they have the capability to lead the Pacific region into a new era of progress and lasting peace. Our cooperation can be a powerful force propelling the developing countries of East Asia and the Pacific toward living standards comparable to those of the advanced, industrial democracies. It will also be of tremendous importance to our own prosperity and that of other advanced countries.
‘The U.S.-Japan Advisory Commission has studied nearly every aspect of our relationship: economic, including industrial, agricultural, and financial relations; security affairs; political and diplomatic relationships; and scientific and technological relations. We have noted particularly that as economic interdependence has increased, points of friction and conflict have increased. We do not believe these problems have arisen because of any divergence of basic national interests. We believe, however, that a more effective management arrangement is required to deal properly with the many complex problems that occur between the two countries.
‘Improving the management of the relationship, in our judgment, is the key challenge to the leaders of the two countries. The section that follows, which highlights this crucial issue, proposes solutions intended to break out of the pattern of recurrent cycles with peaks of friction and frenetic negotiation. In view of differences on our governments and administrative structures, each government will have to work out the details of improved management arrangements. The essential ingredients, however, call for the President and Prime Minister to set overall U.S.-Japan policy; establish and periodically review both short-term and long-term agendas; and assure that internal mechanisms for implementing decisions and monitoring performance are well in place, with provision for coordinated input by appropriate government agencies as well as representatives of the private sector.’
Returning to his own text, Packard says “There are going to be continuing problems of trade, of financial relations, of security affairs, political and diplomatic relationships, scientific and technological relationships.
“There is no way these problems can be solved once and for all. They are not being managed very well and they could get out of hand. They simply must be managed better. Better management requires the attention and leadership of the President and the Prime Minister. We believe President Reagan and Prime Minister Nakasome know and understand this. They have an historic opportunity to establish a pattern of leadership in managing the U.S.-Japan relationship that can result in a long era of peace and prosperity in the Pacific Basin.”
Saying that he is sure his audience is aware that this relationship has not been handled well, Packard proposes taking a look at some of the issues.
“Trade attracts most attention. Japanese exports to the United States have been going up at the rate of 19% per year while U.S. exports to Japan have been going up at only 12%.
“Last year the U.S. trade deficit with Japan was about 20 billion. This year it will be over 30 billion and it will increase again in 1985. This balance is between a very large export of manufactured goods by Japan over a smaller but still important export of agricultural and forest products and some raw materials by the United States.
“We are Japan’s largest market for manufactured goods and they are our largest market for agricultural products.
“From a macro-economic standpoint there is no need for the bilateral trade between the U.S. and Japan to be balanced. The dollars we give Japan for manufactured goods eventually get back to us one way or another. For example, they go to the Mid-East to buy oil for Japan and come back to the U.S. to finance our federal deficit.
“The problem is that the Japanese exports to the U.S. cost jobs in the U.S. and even threatens entire industries. The problem is exacerbated by the fact that the Japanese market is by no means completely open to goods manufactured in the United States. Also the market for agricultural goods in Japan is not completely open to U.S. agricultural products even though Japan is the largest U.S. market for agricultural products.”
Looking at the reasons why Japanese markets are not completely open, Packard says “Japan has very small resources of energy and raw materials and a shortage of food and must sell its manufactured products abroad to pay for energy, raw materials and food. This fact is thoroughly understood by the Japanese bureaucracy and the Japanese people as well. They have, really, no economic incentive to import manufactured products.
“This is reflected in bureaucratic action and is the cause of many of the non-tariff barriers to the import of manufactured goods.”
As an example, Packard tells of reports of small merchants in Japan putting American products on the back shelf while featuring local Japanese products. He contrasts this with the U.S. where department stores will feature Japanese imports in special sales.
Packard says their study showed up a very interesting thing concerning how Japanese and Americans perceive each other. “About 70% of the Japanese” he says, “feel friendly toward the United States. Of those who feel friendly, 38% said it was because of strong economic and trade ties, 23% because of close security relationships and 20% because we are both a democracy; but only 5% because we are friendly and likable.
“I suspect the fact that Americans are not really very well liked in Japan has something to do with the difficulty we have in selling our products there.
“There is another serious problem we have in penetrating the Japanese market with U.S. products. Very few American business people, or for that matter other Americans, can speak Japanese. Thus there is very poor communications with people in Japan at the working level. On the other hand, nearly all Japanese business people who have anything to do with U.S. markets can speak English.
Packard concludes from this that there are several things that can be done to increase the penetration of U.S. manufactured products into the Japanese market:
“One is to have a bureaucracy in Japan more interested in U.S. imports. Here the leadership of the Prime Minister is the key. (The bureaucracy was very critical of our report. Prime Minister Nakasone told them all to read it and do something about it.)
“Second, there should be increased private sector discussions of the problem. Most of the business leaders in Japan realize that the trade deficit has become a major problem. Discussions industry by industry will be productive and should be encouraged.
“Third, U.S. business should learn more about the Japanese market, the tastes and desires of the Japanese consumer. This will take time for more business people will have to learn Japanese, which is no easy matter.
“I might comment here that Americans don’t as a whole feel personally very friendly with Japanese people either. This is not surprising since we have completely different cultural backgrounds, religions, family customs, etc. This cultural barrier to a better understanding is breaking down, but it will take time. At least it is moving in a positive direction.
Turning to common national security problems, Packard says “Japan is making an immense contribution to the U.S. security position in the Western Pacific. One needs only to consider what the U.S. capability in that area would be without the availability of Japanese ports for our ships or Japanese bases for our aircraft.
“The security relationship is fortunately moving in a positive direction. Cooperation between the U.S. military people and the Japanese self defense people is excellent.
“Japan is now much more aware of the Soviet threat in the Western Pacific and has agreed to undertake the defense of the sea lanes 1000 miles from Japan.
“The Commission recommended that the United States should stop complaining about the percent of GNP spent on defense in Japan and instead concentrate on joint efforts to increase the effectiveness of our security forces in that theater. In particular, we recommended that the Japanese ability to produce high quality high technology products should be harnessed more effectively to improve our joint military capability.
“While it would be desirable for Japan to carry a larger share of the national security burden in the Western Pacific it must be recognized that this must continue to be largely the responsibility of the United States.
“A completely rearmed Japan would be a matter of great concern to all of the people in that area. People in that area have not forgotten how it was when Japan was the dominant power and actually occupied Korea, parts of China, the Philippines, Malaysia and Singapore, and even threatened northern Australia.
“Despite the historical involvement of Japan in the Western Pacific , it can have a very positive influence in diplomacy and in economic aid in the future.
“Many of the developing nations in the Western Pacific have a free enterprise economy and must have receptive markets for their products. Japan and the United States must keep their markets open for the industrial products of these developing countries – Korea, Taiwan, Mainland China, and all the rest. This will cause additional strains on both the Japanese and the U.S. economy.”
Looking at the subject of industrial policy, Packard says it has two distinct elements. “One is the appropriate role of the government and the private sector in the national economy. The second question is the degree to which the relationship affects the competitiveness on a country.
“Both the United States and Japan have industrial policies. Japan’s policy is directed more at increasing foreign trade than the U.S. policy, which has a stronger focus on the domestic economy.
“Our recommendations suggest that both the past Japanese industrial policy and the past U.S. industrial policy have developed on the basis of the economic objectives of the two countries and there is no reason to bring them into any sort of conformity. If anything, the U.S. has more to learn from Japan about how to utilize industrial policy than the other way around. At the same time, there is no reason for the United States to try to emulate the Japanese industrial policy.”
Packard turns to the recommendations made by the commission regarding the flow of trade between Japan and the U.S. and he says “A major cause in the growth of the imbalance has been the different macroeconomic policy mixes in Japan and the United States. We recommended that U.S. interest rates should be reduced and Japan’s growth rate should be increased by increasing its domestic investment and reducing its saving rate. While these adjustments would, we believe, help in reducing the trade imbalance, both countries maintain these policies for a number of other reasons. I doubt that our recommendations in regard to macroeconomic policy will have much influence on either government.
“The exchange rate is a major factor in the trade imbalance between the United States and Japan and it also makes U.S. industry less competitive with Japanese industry in other world markets.
“This issue was considered in detail last fall and the Commission made a number of recommendations that would help make the yen more of an international currency.
“Our recommendations were given to President Reagan and Secretary Regan before the President’s trip to Japan last fall. In the meeting last November, the Prime Minister agreed to implement many of the recommendations.
“There was excellent follow-up work by Secretary Regan. In May of this year the U.S. Treasury Department and the Japanese Minister of Finance agreed to a number of important measures relating to the internationalizing of the yen and the liberation of the capital markets in Japan. These steps alone will not correct the yen-dollar imbalance but they are a significant step in the right direction.
“We hope that these steps toward financial deregulation will not be viewed in Japan as dictated by foreign pressures but as a desirable path in Japan’s own economic interest.
“In the meantime as you know the dollar has continued to strengthen in relation to the yen and it will continue to be strong as interest rates are high and the United States is considered a safe haven for investment.
“We discussed the desirability of Government intervention in trade matters and agreed that it should be avoided or at the most be only temporary to allow breathing time for industries to adjust to market forces. We also felt it would be desirable for such actions to be voluntary and with substantial industry to industry involvement.
“The quota on Japanese automobiles is a good case in point. It was generally accepted by the industry in both countries. The automobile industries in both Japan and the United States have benefited at the expense of the American consumer who is now paying higher prices for both Japanese and American automobiles. At the same time, the quota has resulted in more jobs in the United States, including jobs created by Japanese investment in manufacturing plants in the U.S.
“Although the Commission agreed that the quota on U.S. imports of Japanese automobiles should not be a permanent arrangement, we did not recommend a specific time table to eliminate the quotas.”
11/1/84, Letter to Packard from David MacEachon of the Japan Society saying they are delighted he has agreed to discuss the Report on U.S.-Japanese relations
11/1/84, Letter to Packard from Emi Lynn Yamauchi, Press Attaché in the U.S. Embassy in Japan, sending a copy of a speech recently made by Ambassador Mansfield on the subject of U.S.-Japan relations
11/13/84, Copy of a letter from Packard to David MacEachon discussing travel times
11/27/84, Printed flyer invitation to hear Mr. Packard’s address ‘Challenges and Opportunities in United States-Japan Relations
Undated, Publication of the Foreign Policy Association