Box 4, Folder 9 – General Speeches
2/17/78,Letter to Packard from James McDowell, saying they were sorry he was unable to make the Awards dinner in December and enclosing a program and their newsletter
5/31/78, Letter to Packard from Vincent Draddy saying that an invitation to attend the National Football Foundation Hall of Fame dedication is on its way to Packard and he hopes Packard will be able to attend.
8/15/78, Letter to Packard from William Spencer giving Packard some information on donations to the Hall of Fame endowment fund received thus far
8/24/78, Copy of a letter from Packard to William Spencer, saying he cannot do anything this year but will consider the request in the future.
10/27/78, Letter to Packard from James L. McDowell of the Foundation, inviting him to the 21st Annual Foundation Dinner. A note written thereon says “no.”
11/1/78, Letter to Packard from Alfred Cinelli of the Northern California chapter of the Football Foundation, inviting Packard to the Nineteenth Annual Awards Dinner. A handwritten notation thereon says. ”no.”
Box 4, Folder 21 – General Speeches
September 21, 1978, 35th Anniversary of the American Electronics Association
9/21/78, Typewritten copy of Packard’s speech
Packard says that “The best tribute to the contribution that AEA has made to the electronics industry in America is the fact that it has steadily grown from a very modest beginning thirty-five years ago to become the largest and most effective trade association for the industry.
Packard traces the history back to its beginning in 1943, during the war, with 25 member firms – 13 in the north and 12 in the south. He says “It was organized as the West Coast Electronics Manufacturing Association to deal with the current problems of that time. All of the electronics firms at that time were involved in production for the war effort, and there were labor supply problems keeping employees from being drafted. Procurement problems were severe and the controls needed for the war production effort created many common problems for our young
industry.”
Packard says he doesn’t recall that those electronics companies in the north were as concerned about [controls] as those in the south…. ”electronics firms in the Bay Area had for the most part found a special niche for themselves.
“Most of the discussions that led to the formation of the Northern California Division of WCEMA reflected concern about day to day problems dealing with government regulations rather than how to get more business out of Washington.”
“The electronics industry did survive on the West Coast, but then there were problems of transition from a war time economy to a peace time economy. However, by 1950 there were 50 members, by 1955 over 200, and today nearly 1000 member firms and 200 associate members.”
Packard reviews what he calls the “unique” history of Bay Area electronics.
“Electronics began as wireless telegraphy with the transmission of a message a mile and a half through the air by Marconi in 1895. Interest in this new science spread rapidly and attracted the attention of several young men in San Francisco. Some of these wireless amateurs put a spark transmitter on the light ship, San Francisco, which was stationed off the Golden Gate, and a receiver in the Cliff House on the beach. And, in 1899, only four years after Marconi’s demonstration of wireless, a message was sent from the light ship to shore announcing the arrival of the troop ship ‘Sherman’, bringing troops home to San Francisco from the Spanish American War.
“By 1904 the first major wireless station was built at Mare Island, and by 1908 there were Naval wireless stations all along the coast and up to Alaska.
“Somehow this new science attracted a group of unusually talented young men, often in their teens. In 1909 Henry Dickow started the San Francisco Radio Club. He was then 12 years old.
“The following year, 1910, another young man still in his teens, named Ralph Heintz, established the first wireless communication from an airplane to the ground.
“Later on we hear about Charlie Litton, age 11, with his own ham shack in 1915.
“And there was another young man, age 17, with a spark gap transmitter and a receiver consisting of a detecter and a one tube amplifier on the Stanford Campus in 1917. His name was Fred Terman.
“I have skipped an important chapter that involved another young man, just graduated from Stanford, named Cy Elwell. He was engaged to investigate some new developments in wireless and in the course of this investigation learned about the development of the Poulsen arc in Denmark. On his own he went to Denmark, obtained the rights for the arc along with several models. He returned to San Francisco, raised some money including, it is reported, $500 from David Starr Jordan, President of Stanford, and founded the Federal Telegraph company.
“The Poulsen arc made voice transmission by wireless possible, and the Federal Telegraph Company became a dominant factor in this young industry. Federal attracted many bright young men to its ranks including Leonard Fuller, Harold Elliott, Charlie Litton, Frederick Kolster and many others who became prominent as the Bay Area electronics industry developed.
“Lee de Forest came to work for Federal in Palo Alto in July of 1911. His vacuum tube had been patented in 1907 but was not yet a practical device. He was provided with a laboratory in Palo Alto and some good technical support and demonstrated a vacuum tube amplifier in 1912 and an oscillator in 1913.”
Packard explains that it would be some time before the vacuum replaced the Poulsen arc for high power transmitters. Federal continued through World War I to produce arc transmitters. Their greatest achievement in this field came in 1918 when the Navy ordered two 1000 kw arcs for a wireless station in France.
“To give you an idea of the magnitude of the magnitude of this job, the magnets for these arcs weighed 85 tons. You would be interested to know that the man who had the job of installing those transmitters is in the audience tonight. He is Harold Buttner.
“De Forest’s vacuum tube was first adopted by the telephone company and made cross country telephones a reality by 1915.
“In 1917 a man names Jensen invented the dynamic loud speaker and the Magnavox Company was founded that year in Oakland. Two years later Magnavox provided the first public address system used to address a mass audience. It was September 19, 1919 that President Wilson addressed an audience in San Diego, estimated to be 50,000 people, over Magnavox speakers.
“A man named Frederick Kolster joined Federal after the war and is credited with the development of the radio direction finder.
“In 1921 Ralph Heintz founded Heintz and Kaufman. This firm built several broadcasting stations in the early twenties and then went on to pioneer in the field of aircraft radio.
“As you can now judge, many of the roots of the Bay Area electronics industry were established at or around the Federal Telegraph Company. The University of California and Stanford also contributed in various ways from the very beginning.
“In 1924 when the radio industry was beginning to boom, a radio communication laboratory was established at Stanford and in 1925, Fred Terman was put in charge. From that time on Fred Terman’s influence on the development of the electronics industry has grown to exceed that of any other individual from those early days at Stanford until the present day.
“But the radio market was a national market, and some of the pioneering firms moved East, Magnavox to Chicago and Federal to New Jersey. GE and RCA and other Eastern firms became leaders in this new radio industry.
“In the early thirties a few electronics firms had survived this exodus to the East and a few new firms had been established.
“Charlie Litton decided not to go east in 1932 with Federal and started his own company in Redwood City that year.
“In 1934 Bill Eitel and Jack McCullough left Heintz and Kaufman to start Eimac. They were a success from the beginning making transmitting tubes for radio amateurs, but as I recall, they had only about 40 people in their company by 1940.
“Dalmo Victor, which had been founded in 1921 by a young man named Tim Moseley, then only 19 years old, stayed in San Francisco through the 1930s and built airborne radar antennas during the war. Alex Poniatoff, who was with Dalmo at this time, had a key role in the beginnings of Ampex.
“John Kaar, one of Fred Terman’s students, started a company in Palo Alto in 1936 to make two way radio equipment.
“A few years earlier Gerhard Fisher established a company to make radio frequency pipe locators.
“During the 1930s a man named Philo Farnsworth had a laboratory on Green Street in San Francisco where he developed an all electronic television camera.
“And it was in this environment that Bill Hewlett and I started the Hewlett-Packard Company in 1939.
“There was further exodus to the East during the next few years. Farnsworth moved East to exploit his new television equipment. Ralph Heintz went to Cleveland to establish the Jack Heintz Company. Charlie Litton was called back East to help ITT with a large plant to build magnetrons.
“And as a final blow to the Bay Area electronics industry, Fred Terman was called back to Harvard to establish the radio research laboratory for the war effort.
“And to top it off, Bill Hewlett was called into the service, and I was left to run the Company.
“But those who were left had ample challenge, and we developed a close personal relationship working together to do the best we could in our respective roles for the war effort.
“In a sense, WCEMA simply formalized an already existing close and personal relationship among the Bay Area electronics firms and enabled us to join forces more effectively with our counterparts in the south.
“It was not long after WCEMA was organized that the war ended, and we directed our attention to post war problems.
“Fortunately, Fred Terman returned to Stanford and strengthened the school of engineering in both research and teaching and his influence continued to increase in importance for us all.
“Russell Varian and his associates had invented the klystron at Stanford just before the war, but this work too was transferred to the Sperry Gyroscope Company in the East, but after the war Russ and his associates returned to California and established the Varian Associates in 1948.
“SRI was established in 1946 and had a large effort in electronics.
“And by 1948 Ampex had perfected the magnetic tape recorder.
“I don’t recall the immediate post war period as one of any great concern about the future, but one of great excitement with the return of all of this activity in electronics to the Bay Area.
“Our Company had reached a peak of about 200 employees during the war. We dropped back to just over 100 in 1947, but we spent the next few years trying to build for the future, and this was the goal we shared together with the other electronics firms around us.
“WCEMA was an important factor during the critical years after the War. The Association provided an excellent forum for communication and from which to deal with common problems.
“In the early 1950s the industry began to move ahead at an accelerated pace. There were 147 member companies in 1953, and twice that many ten years later.
“The story of our electronics industry in the last two decades is familiar to you – in fact, it is the story of you who are here tonight.”
Having chronicled the evolution of the electronics industry in the Bay Area, Packard looks at what he believes were the “key factors” that fostered this phenomenal development.
“First and foremost,” he says, “we have been living and working in an era which has seen wave after wave of new electronic technology. First the Poulsen arc which made voice transmission possible. Then the vacuum tube which opened the door to the radio industry. Then there was television followed by new high frequency technology: the klystron, the magnetron and traveling wave tubes.
“Solid state electronics followed, and lasers, and now large scale integrated circuits.
“Somewhat in parallel, computer technology came along with its development both dependent on and supporting other electronics technology.
“New technology provided unusual opportunities for enterprising people to establish new business ventures in electronics. This is not a recent phenomenon – it began back at the turn of the century, but it has expanded to unpredicted levels in recent years.
“More often than not firms that had been founded on earlier technology were not able to adapt to new technology as it came along. It was not GE or Raytheon or Sperry that fully exploited the klystron development, rather it was a new firm founded by the inventor, Russ Varian.
“There were many firms which developed extensive experience in high fidelity recording and audio systems; yet it took a new team at Ampex to develop magnetic tape equipment. As solid state electronics came along, newly created firms often outperformed older established companies.
“The industry will not continue to expand and prosper for many years without new areas of electronics technology being discovered. In the long run, if new electronics technology dries up, the industry will become mature and it will lose much of its excitement and much of its opportunity.
“For this reason, I believe it is essential for the industry to make a much stronger commitment to basic research and development. No one can predict where the opportunities may be, but at the same time, we will never find out if we do not make the effort.
“If we are to remain competitive with Japanese and European electronics companies, we have to stay ahead in research and development. If we get in trouble in this area, it won’t help to ask Washington to bail us out. I hope the AEA keeps this issue high on its list of priorities.
“Another key factor in the successful growth of our industry has been the availability of high risk capital. This again is not a new factor for risk capital was available in the Bay Area for Cy Elwell to found the Federal Telegraph company. Even in the middle of the depression of the 1930s Philo Farnsworth found enough risk capital in San Francisco to finance his television research and development.
“Some of us started our companies on a shoestring, but that perhaps has been the exception, and anyway, it did not require much money to start a firm in 1939.
“In recent years the facilities necessary for solid state technology and large scale integrated circuits have become very expensive and the availability of risk capital in the future will be an important determinant in the establishment of new electronics companies.”
Packard says he is aware that the AEA has taken an active role regarding the tax debate in Washington, and he hopes this effort will continue. “…it is essential,” he says, “for electronics and other high technology industries that capital gains taxes be liberalized to increase the availability of risk capital.”
Packard talks about government rules and regulations and says that when WCEMA was founded they did have some problems with the bureaucracy, but “the Government people we dealt with in those days tried to be helpful. We had a common objective – to help win the war. Often the officials who called on us would go back and plead our case in Washington. There was none of the adversary attitude between business and government that has developed in recent years. We understood that there had to be allocations of manpower, materials and other resources. Fortunately, there was a level of wisdom in Washington in those days which understood that detailed decisions could not be made at that level without creating chaos in the economy. A limited number of critical materials were allocated, a relatively simple system of priorities established, but industry was given considerable latitude to get the job done in the most efficient way possible.”
“Working together we developed plans to build up our production to meet the needs as they actually developed, and the government provided a way for us to obtain the material and manpower. From then on until the war ended, there were no serious problems with electronic instruments.
“It is too bad the bureaucrats in Washington today have not learned that lesson. Even a small industry like ours could not be managed in detail from Washington in 1942, yet they are trying to do that today for our large energy related industries, and it simply results in chaos.
Packard says he believes many legislators are beginning to realize that something is wrong with having so many regulations and regulating agencies. And he says he hopes the AEA “will continue to take strong role working with the Congress and the bureaucracy on these matters. Perhaps they will learn a lesson they should have learned thirty-five years ago.”
Packard says “It has been…a very gratifying experience to have been involved in this great adventure of the electronics industry as it has unfolded over these last thirty-five years.
“No one…can know for sure what the future holds for an industry like ours nor for our individual companies. We clearly can not all continue to grow at a rate of 20% a year forever. Some will fall by the wayside.
“If our industry can maintain its momentum in research and development and if we can convince big brother in Washington to leave us alone and let us do our job, I believe the future course of the electronics industry will continue for many years ahead in the exciting pattern of the three and a half decades of history we are celebrating here tonight.”
9/21/78, Printed invitation to the AEA 35th Anniversary Celebration dinner
9/21/78, Typewritten document summarizing with a short paragraph of AEA and electronics industry history for each year 1945 through 1962
9/21/78, Another historical record of AEA/industry history over the years 1945 to1963
5/25/78, Letter to Packard from E. E. Ferrey AEA President, asking Packard to address the Annual Meeting marking the 35th Anniversary
6/7/78, Copy of a letter from Packard to E. E. Ferrey agreeing to speak at the Annual Meeting
7/27/78, Letter to Packard from E. E. Ferrey giving details of the dinner
8/8/78, HP internal memorandum to Packard from Dave Kirby, PR Director, saying AEA would like a short description of Packard’s speech to give to the press
8/11/78, Copy of a letter to Kirby from Packard giving the following statement for AEA pre-meeting publicity:
“The West Coast was one of the important spawning grounds for the electronic industry going back to the early decades of this century. Those of us who have been involved in this activity since the late 1930s have been part of one of the great industrial revolutions of this era. Since the mid-1960s we have seen an unusual change in attitudes in the American Society. These are being reflected in governmental attitudes and actions and there is great concern that the environment for the electronic industry on the West Coast, indeed through the country, may become so hostile as to seriously limit the opportunities of our industry. It is important that these trends be recognized because there is no fundamental reason why the future for our industry should be less attractive, or less exciting, than our past.”
9/19/78, Letter to Packard from E. E. Ferrey sending AEA and industry background material. He also mentions some 700 people are signed up to come to the dinner.
9/27/78, Letter to Packard from E. E. Ferrey thanking him for speaking at the dinner and adding that ‘Your personal support, and the continuing assistance of other HP executives, is highly valued by AEA. We are pleased to have your good counsel and strong leadership on key issues in Washington.’
7/21/78, Copy of AEA publication, Update, which announces Packard as the speaker at the anniversary meeting in September
9/22/78, Copy of a newspaper clipping from the Peninsula Business, covering Packard’s speech
September, 1978, Copy of the IEEE publication, Grid
Box 4, Folder 22 – General Speeches
October 10, 1978, Statement Before the Committee on Banking, Housing and Urban Affairs, United States Senate, Washington D. C.
10/10/78, Copy of text of Packard’s prepared statement presented to the Committee
Packard says the subject of export control policy is of “great importance” to the U.S., not only because of the effect abroad, but also the effect they have on our balance of payments, inflation and economic growth.
He states that HP, has sales of $1.6 billion, about 50% of which are outside the U.S. “We estimate,” he says, “that over 8,500 of our employees in this country owe their livelihood to our international business.”
Packard tells the Committee that he will direct his remarks to three areas: “first, the traditional use of export constraints for national security and foreign policy purposes with respect to the Communist countries; second,…their use for foreign policy purposes with respect to other countries; and lastly, …some recommendations on how an improved trade policy might be achieved.”
Export Constraints with Respect to the Communist Countries
Packard says he assumes there is general agreement “that important national security aspects take precedence over the general U.S. policy to support and encourage trade on a world wide basis. In the case of the USSR and the PRC,” he says, “export controls for national security purposes have been based largely on the fact that the United States has a considerable technical superiority in terms of military weapons capabilities.”
He describes the range of opinion as to “how far we should go in controlling export of high technology products to the USSR and the PRC,” — from people who feel we should take a “hard line” restricting the export of all such products, to those who would relax controls, feeling the products could likely be obtained elsewhere anyway.
Packard’s opinion is that export of high technology products such as computers “is not as serious as it is often made out to be. In some cases, the Soviets can obtain comparable equipment through commercial channels from other countries. If this proves difficult they can always obtain a sample or two including key technical information through other means.” He agrees with a policy that would “make it more difficult for the Soviets to obtain key technical products and knowledge, but we should understand,” he adds, “that…is all we are able to do.”
Packard also points out that the USSR has “very high technical capabilities. Over the years their scientists have made many contributions to the advancement of knowledge, and most basic technical information not already in the Soviet Union is readily available to their scientists from Western sources, through publications, conferences, and private exchanges among scientists.”
Looking at economic considerations and their possible effect on export controls, Packard feels this area should have a “high priority. U.S. exports support many jobs here at home, and inflation is fueled by our inability to keep our exports and imports in better balance. I believe” he says, “encouraging trade in peaceful goods and services with [Communist countries] is an important way to increase U.S. jobs and fight inflation.”
However, Packard feels that we have not been able to develop our trade with Communist countries to “anywhere near its real potential. Some of the reasons for this are the withholding of ‘most favored nation’ treatment from the USSR and restrictions placed on export credits.” Both placed at the direction of Congress, he points out.
Packard tells the Committee that he believes the export policies of the U.S. have been a “counter-productive influence on Soviet attitudes and actions.
“There is no doubt that our constraints have caused a loss of export business for the United States….There has clearly been an economic cost to the use of these constraints in terms of lost jobs and further deterioration in our balance of trade.”
And “there is another cost,” he says, “one of considerable importance to our national interest. This is the fact that our use of these constraints has clearly raised the level of Soviet mistrust and encouraged attitudes of hostility.
“I am quite certain the leaders of the Soviet Union understand our rationale for controlling exports which involve real national security issues. They would do the same thing if they were in a position to do so. However, they clearly resent our attempts to influence matters which they consider to be their own internal affairs.”
Packard agrees that while trade among nations may not reduce conflict and avoid war, “trade, by helping keep communications open, encouraging better two-way understanding, and developing personal friendships, may help to reduce tensions and minimize conflicts. For these reasons I believe increased trade in non-strategic goods and services is vitally important and should be kept firmly in mind whenever we apply or consider applying export controls and other constraints to the USSR and the other Communist countries.
Export Constraints with Respect to Other Countries
Packard turns to “a more generalized consideration of the use of export controls and export credits to influence the policies and behavior of other countries.
“Until the present Administration took office little was attempted, outside our relations with the Communist countries, to use export constraints in harness the international activities of U.S. business for foreign policy purposes. However, President Carter, making good his campaign promise to ‘restore the moral authority of this country in the conduct of foreign policy,’ has included use of these constraints in an activist foreign policy with a strong emphasis on human rights.”
And Packard adds that Congress has supported and “sometimes even been in advance of the Administration’s efforts to inject a greater moral emphasis into U.S. foreign policy. At the present time, for example, congressionally mandated concern for human rights is expressed in a number of measures including those supporting foreign Assistance, various international financial institutions, the Overseas Private Investment corporation, and Public Law 480.
Packard names a number of “restrictions for U.S. foreign and domestic policy purposes that have been placed on U.S. private commercial activities with various Western countries:…the development and implementation of a comprehensive set of anti-boycott measures; further restrictions on the ability of U.S. firms to do business with South Africa; the denial of heavy duty trucks to Libya; the denial of Ex-Im financing for various programs, most notably and recently the long delayed off-again, on-again decision relating to electric generating equipment for an Argentine hydro-electric project; lengthy licensing delays and denials of various transactions to Argentina, Chile, and other countries the Administration has identified as gross human rights violators, etc.”
Packard says he does not believe such unilateral restraints are effective in changing policies or the behavior of the target countries. “In fact,” he says “I think about the only thing they can be guaranteed to do is lose business for the United States.”
He gives some insights into possible reactions by targeted countries:
“In the area of human rights… not all nations agree with our emphasis on personal rights; a number consider economic and social rights more important.”
“Our country is not a unique source of supply these days, so once U.S. exports are denied the target country usually can and will obtain comparable products and services elsewhere.”
Recommendations
Packard says he is pleased to see the recent statement by the President directing ‘…the Departments of Commerce, State, Defense and Agriculture to take export consequences fully into account when considering the use of export controls for foreign policy purposes.’
“I am convinced that our national interest would be better served with more consistent and more stable trading policies. To work in this direction he suggests that the Executive Branch and Congress “thoughtfully and unemotionally review and provide advice on all policies and policy changes before they are implemented.
“I also think,” he says, “that the Congress should consider the damage export constraints can do and face squarely up to its own support of the unilateral use of these devices for foreign policy purposes. After reviewing the problems I think the Congress should include some strong guidelines in the export Administration Act when it comes up for amendment and extension next year.
“For example, I think the Act should clearly state the opinion of the Congress that any decision to use export controls for foreign policy purposes should be undertaken only: (a) to support clearly defined major U.S. foreign policy objectives, (b) when based on an adequate amount of factual information, (c)when the likelihood of such unilateral action will cause a desirable change in behavior in the target country, (d) where the commodities cannot be obtained readily from a non-U.S. source, (e) when such action is in harmony with other U.S. actions, (f) when the action is unlikely to adversely affect U.S. business inn other countries, and (g) after full consideration of the potential impact on various aspects of the U.S. economy such as employment, inflation, management attitudes, the balances of trade and payments, etc.”
“Finally, I think the Congress should clearly state, as is presently the case with national security transactions, that any export license application undergoing review for foreign policy purposes should be approved or disapproved within 90 days.
Conclusion
Mr. Chairman, in concluding let me say again that I’ve appreciated the opportunity to appear before the Committee to discuss the problems I see in using export constraints for foreign policy purposes. The use of such constraints is an important and complex subject that deserves careful, thoughtful consideration and one which should be insulated from emotional reactions as far as possible.
“I believe the essence of the problem is that offering or withholding trade is not an effective way for the United States to influence the behavior of other nations, whether friend or foe. I believe we must eventually accept this as a fact of life and develop and administer our trade policies accordingly.
“Mr. Chairman, this concludes my presentation. I thank you land the members of the Committee for your attention. I’ll be pleased to respond to any questions you might have.”
Box 4, Folder 23 – General Speeches
November 16, 1978, Encroachment of Japanese Firms on Today’s Semiconductor and Tomorrow’s Electronics and Computer Industries, South Bay Chapter of the Purchasing Management Association, Palo Alto, CA
Packard was asked to join a panel of speakers on this subject. Speaking last, his assignment was to give industry’s viewpoint on the subject of Japanese competition. Packard apparently did not speak from a prepared text. His address was transcribed, and, from this, a typewritten text was made for distribution to interested parties.
11/16/78, Typewritten text prepared from a transcription of Packard’s remarks
Packard says that when he spoke to this group a year ago, all the speakers already said what he was going to say. So this time he says he is not going to deliver a prepared speech, “but rather to make some comments on what the other speakers have said.” He says he will start by reviewing “…the development of the relationships between the United States and Japan” adding that, “this [also] involves the relationships between the United States and Europe since the end of World War II.”
“At the end of World War II,” he says, “our two principal enemies – Germany and Japan – were nearly completely in a state of devastation, and in the wisdom of our leaders at that time we undertook to provide for the rehabilitation of both of these countries. This involved a substantial commitment of American resources of dollars and manpower, and it was done with the idea that in order to build a stable world for the future we had to bring these two nations back into the community of nations in a way they would be able to participate with the free world and the future development of our joint venture.
“In the cases of both Germany and Japan we invested rather substantial amounts of money to help them rehabilitate their industry, to rebuild their country, and we did this because we felt it would be in the best interests not only of the United States, but of benefit to all of the free world.”
“This process continued through the 1950s. We undertook to provide for the defense of Japan at that time, and then moving on into the 1960s we became involved in Viet Nam, and toward the end of that decade we were spending 91/2 % of our Gross National Product on defense. Japan was spending less than 1% of her GNP. We were diverting a very substantial part of our resources to the national security of Japan, and what we thought would be the security of the Asian theater, and of Europe and NATO, etc., and this was a very tremendous burden that Japan and Germany and the other countries did not have.” Packard does point out that there was some benefit to U.S. industry in this U. S. defense effort by providing “a very important and broad base of research and development that really enabled the electronics industry to make the progress that it made through the 1950s and the 1960s. But it also provided a background from which Japan could begin to build with a substantial degree of [partnership] …between its government and its industry.”
Packard says that during the 1970s the U.S. began to reduce its military commitments which were down to 3% of GNP by 1978 – “…still a substantial burden for our economy,” he says, “and during this period the Japanese were able to concentrate their entire resources toward building up their industry. The effect of this was different in different types of industry – in the case of iron and steel, what it made possible was for the Japanese to have a completely modern facility that was competitive in any sense, whereas we, during this period, had not devoted resources to rebuild our facilities in the steel industry.
”As far as automobiles are concerned Packard says that “…the Japanese took advantage of their relatively better allocation of economic resources, and also the fact has been indicated that they had a substantial benefit in terms of cost, as their labor costs during the early part of this period were something like 10% of ours, and this really enabled them to move in on some of those areas such as television, semiconductor receivers, etc., with a good deal of success.”
A commitment to quality was also a factor in favor of the Japanese, Packard believes. “[They] were smart enough to make a very firm commitment to quality after the war, and they undertook to design and develop and manufacture products which would meet the highest quality standards of anywhere in the world, and they tried to deal with the requirements of their customers…. The fact they had very close cooperation between industry and government, the fact that they made a substantial commitment, the fact that they had a very important reason to work hard to rebuild their economy, whereas we were sort of the ‘top’ poking along, and did not have a corresponding commitment – I think all of these factors were conducive to the very impressive development that the Japanese economy has made during the last few decades, whether it be in electronics, semiconductors, or in other aspects of their industry.”
“Packard says he thinks “…one of the significant factors of our foreign policy during [the post war period] is that we did not have any high priority to relate our foreign policy to our own economic well-being. We were looking primarily during this period toward improving the economy of Japan, toward improving the economy of our Western European allies. Our foreign policy was directed at maintaining Japan as an important ally in the Pacific Theater and corresponding priorities in terms of Europe and NATO. The fact that our government has not been very helpful in the in the economic field, I think, is in large part due to the fact that there was no particular reason for our government to do so during this period. In terms of foreign policy we simply had things we thought were more important, and, after all, the American free enterprise system was supposed to be self sufficient and self reliant, and not require government assistance….I don’t see that there is any great concern, the statistics you have heard tonight – indicate that American industry, the semiconductor industry, is still doing fairly well on a world-wide basis.”
Packard says he thinks “we now have things that are moving in a direction that is eminently more favorable. In the first place, the cost of Japanese labor, relative to United States labor, has changed drastically, partly because of a more rapid rate of inflation in Japan, and changes in the international monetary situation. Costs in Japan now, as we measure from our operation there, are now about 10% less than they are in the United States. They are not quite equal, but are approaching that, whereas six or seven years ago it was a very substantial advantage in terms of costs to the U.S. As a matter of fact, in Germany our costs are now about ten percent higher than the United States, and we can manufacture all the various products here in the U.S. and ship and sell them in Germany or in Europe at a lower cost than we can manufacture in Europe.”
“Packard talks about HP sales in Japan. “…this year our business with Japan, our sales from the U.S. to Japan, have increased very substantially, and it is in large part due to the fact that our products now are less costly in Japan. It is also the result of another thing that I think is important for us all to recognize – we have not done a very good job in our selling and marketing efforts in Japan. We are working hard to try and do a better job, and that effort is now paying off, and we are indeed penetrating the market better. We aren’t doing as well as we should do by any means, but this indicates that the combination of more favorable environment and a little more effective effort on our part is resulting in improved sales from the U.S. to Japan.”
Packard talks about working relationships with legislators in Washington. “They are trying to do their best for their country and they are very anxious to have help and assistance in doing what will improve the welfare of the country. I think if we would spend a little less time bitching about it, and a little more time trying to help, it would be all to the good….You would be surprised if you knew how much of an effect communication [from] the guy back home has. It’s fine for a Washington representative to call on one of these fellows, but when they begin to get a lot of letters from the individuals they know back home they’ve got to receive them, and they’ve got to take them into consideration, so you’ve got an opportunity to have a substantial influence here, but it has to be done in a thoughtful, constructive way, and I’m sure that whether they be Republicans or Democrats they will try and respond to things which will help our industry, which will help our community, and if we don’t do our job in giving these people some backup we’re going to be the ones that lose.”
“As far as trade negotiations are concerned Packard reminds his audience that they must understand that “There has to be a certain amount of trade-offs, and we have had the opportunity to work very closely with the people filing the trade negotiations, and working on them; and I think, all in all, we are going to come out with a pretty good package, but I think you have to understand that there will be trade-offs at the last minute. You can’t expect them to simply look upon our industry as the only industry in the country and come out with exactly what we want, and I think things are moving along very well.”
Packard says he has been “looking at our foreign policy in these larger aspects and the impact of foreign policy on trade has not had a very high priority. Recently, there has been a good deal of talk about human rights, and emphasis on human rights, and there is no question but that this emphasis on human rights has resulted in serious damage to our trade, not only with our trade with the Soviet Union and the Iron curtain Countries, but with countries like Brazil, and other countries which traditionally have been good friends. In the case of brazil, they simply resent our telling them how they should handle their domestic affairs, and they have placed some very substantial orders for electrical equipment with Europe simply because they resent the way our government has handled this human rights matter….I think this is something you people can help with because this indeed has damaged our ability to do business with some of these countries, and it has not, in fact, improved any of the human rights things, which I know no one disagrees with the desirability of encouraging people to improve their recognition of individual freedom and human rights, but it simply won’t work. All we do by following these policies is lose business, and there is nothing else that is going to come up. Any extent that you can convey that message to your friends in the congress, I think, will help get this policy turned around a bit.”
“One of the things that is a very important element in this equation is productivity. During the last three, four, five, or six years our government has done everything that they possibly could have done to reduce the productivity of American industry. Indeed, if you want to do something you just work on getting rid of some of these problems we have dealing with OSHA, …, ‘Equal Opportunity,’ and all the other things, and if we could simply take the people and the energy and the money we spend on some of these nonsensical things, and put them into Research and development we’d be way ahead of the Japanese.
Talking about military Research and Development, Packard says “Over the period since World War II there is no question but that the benefits of military research and Development have been a very important and constructive factor in our industry. The level of military expenditures should not be determined in any sense by that, but rather by what our needs for security may be, but there are some details of the policy which could be helpful. A few years ago an amendment was put in called The Managerial Amendment, which prohibited firms which were doing work for the government from spending any of their Research and Development money available in the contract for projects which were not directly related to military requirements. Now this is a completely non-productive way of doing things because if you look back upon the fall-out that has come from military Research and Development over the years we have benefited in many ways from things that were done initially for the military, and it turned out to be useful for civilian use. It seems to me, then, it would be wise to encourage defense contractors to spend a little time and a little effort thinking about how they could apply the technology they are developing for military weapons in products and applications for peaceful uses. This would generate a fallout – and this is specifically prohibited in the law…. “
In closing, Packard reminds all present of a point made by a previous speaker, saying that “The supplier relationship is extremely important, and [there is] the urgency to meet sales quotas and …other things. [However,] if all of us can think a little more about the other guy, and not place double orders, have a better understanding, better rapport, and communications, I think we’re going to improve the quality that [will bring] success in the future for the entire industry. And I want you to think very seriously about what our initial speaker said, and all of you guys that are down on the firing line, no matter what your bosses say, let’s see if you an do a little better in the future. Thank you very much.”
11/16/78, Copy of printed announcement for the Second Annual top Management Night sponsored by the south Bay Chapter of the Purchasing Management Association of Northern California
7/20/78, Internal HP memo to Packard and Hewlett from Purchasing Manager, John Nicolic asking if Packard would be willing to join a panel of speakers at their annual meeting, discussing the general subject of Japanese competition. A pencilled note thereon from Packard says “Advise John no on this.”
8/9/78, Internal HP memo to Packard from John Nicolic, following up on his memo of July 20
8/11/78, Copy of a letter from Packard to John Nicolic saying he would be “most pleased” to join the panel of speakers. He does suggest that the subject be narrowed down a little.
8/15/78, Memo to Packard from John Nicolic saying they are delighted that Packard will join the meeting
10/23/78, Memo to Packard from John Nicolic giving details on arrangements for the meeting
10/30/78, Memo from John Nicolic to Packard sending an article from the Harvard Business Review titled, “Can U. S. Business Survive Our Japanese Trade Policy?.” A copy is in this folder.
11/2/78, Memo to Packard from Ray Demere, HP VP Manufacturing, giving some analysis on HP’s buying practices in Japan
11/2/78, Memo to Packard from John Nicolic sending a copy of the “Pacific Purchasor,” pointing out some articles he thinks might be of interest, including a description of the forthcoming annual meeting. A copy of the magazine is in this folder.
11/7/78, Memo to Packard from John Nicolic giving additional arrangements for the meeting
11/27/78, Memo to Packard from John Nicolic thanking Packard for participating in their meeting. He adds that they transcribed the speech and will send a draft to Packard for review
