Ask the Scholar
Document scope · 1 page
Scholar
Ask about this object, its catalog metadata, its source description, or the page inventory.
For page-specific OCR and visual context, open one of the page chats.
Source Description
Records pertain to the Office of Science and Technology Policy.
Scholar Source Context
Document identity
localId
285791575
label
Industrial: Economic Competitiveness [2 of 2] [1991]
core
doc
dtoType
document
citationUrl
pageCount
1
Source metadata
id
285791575
contentType
document
title
Industrial: Economic Competitiveness [2 of 2] [1991]
description
Records pertain to the Office of Science and Technology Policy.
citationUrl
identifierLocal
62036-003
collections
Records of the White House Office of Science and Technology (George H. W. Bush Administration)
Allan D. Bromley Files
largeImageUrl
imageCount
1
hasImages
yes
source
import
hasTranscription
no
Source extras
naId
285791575
levelOfDescription
fileUnit
recordType
description
ocrSource
nara-archive
Single page context
seq
1
pageIndex
0
type
document
mediaId
71b49da35bd1ab21
ocrText
Originally Processed With FOIA(s):
FOIA Number:
2005-0336-F
2005-0336-F
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the George Bush Presidential
Library Staff.
Record Group/Collection:
George H.W. Bush Presidential Records
Collection/Office of Origin:
Science and Technology Policy, Office of (OSTP)
Series:
Bromley, D. Allan, Files
Subseries:
General Science Files
OA/ID Number:
62036
Folder ID Number:
62036-003
Folder Title:
Industrial: Economic Competitiveness [2 of 2] [1991]
Stack:
Row:
Section:
Shelf:
Position:
0
0
0
0
"CORRESPONDENCE TRACKING"
TYPE:
ACTION
DOCUMENT NUMBER: 9123523
ORIGINATOR: 02
STATUS I
DIRECTORATE STATUS
FROM:
MATHEWS, CHARLES W.: PRESIDENT, NASA ALUMNI LEAGUE.
TO:
DR. D.A. BROMLEY
DATE OF
CORRESPONDENCE: 08/15/91
SUBJECT: REQUEST TO REVIEW THE ENCLOSED FINAL REPORT FROM A
WORKSHOP SPONSORED BY THE NASA ALUMNI LEAGUE TO
EXAMINE THE SUBJECT OF INTERNATIONAL COMPETITIVENESS
FROM THE ASPECT OF APPLYING ADVANCED TECHNOLOGIES.
DIRECTORATE
STAFF
ASSIGNED: INDUSTRIAL
ASSIGNED:
ACTION
STAFF
REQUIRED:
DRAFT RESPONSE FOR DAB
ACTION:
SENDER'S DUE DATE:
OSTP DUE DATE:
09/04/91
STAFF DUE DATE
DATE COMPLETED:
DATE COMPLETED/DEPT: 8/26/91
COPIES TO: D. Allan Bromley
PHYSICAL SCIENCES
INTERNATIONAL/POLICY
WHITE HOUSE TRACKING #:
CONTACT PERSON:
PHONE:
EXT:
REMARKS: ENCLOSURE TO INDUSTRIAL. PLEASE FORWARD ENCLOSURE WITH DRAFT TO
DAB.
CLOSED
OSTP RECEIVED: 08/19/91
FILE: P-INDUSTRIAL-ECON COMP
DEPT RECEIVED:
THE WHITE HOUSE
WASHINGTON
August 26, 1991
Dear Mr. Mathews:
I deeply appreciate receiving a copy of the results of the Workshop on international
competitiveness conducted by the NASA Alumni League last September. Such
discussions involving industry, government and academic leaders are essential as we
make the adjustments necessary to ensure our continued economic growth. Although
I realize that your conclusions extend beyond the aerospace sector, that sector,
nevertheless, is of such importance that attention such as you have given it is
essential.
You may expect increased attention to the aerospace sector on the part of OSTP in
the coming months. I assure you that the input of the Workshop will be carefully
considered.
Sincerely,
DAnan Reamby
D. Allan Bromley
The Assistant to the President
for
Science and Technology
Mr. Charles W. Mathews
President
NASA Alumni League
922 Pennsylvania Ave., S.E.
Washington, D.C. 20003
NASA
ALUMNI LEAGUE
922 Pennsylvania Avenue, SE
Washington, DC 20003
(202)543-3587
August 15, 1991
FAX (202)546-4189
Dr. D. Allan Bromley
Assistant to the President for
Science & Technology
Old Executive Office Bldg. #360
Washington, DC 20506
Dear Dr. Bromley:
Because of concern with the eroding U.S. position in the application of advanced
technology from the perspective of international competitiveness, the NASA Alumni
League conducted a Workshop on this subject. Five aerospace areas were examined by
special panels: Civil Aeronautics, Satellite Communications, Earth Observations from
Space, Software and Microgravity Applications. Although the results of the Workshop
apply directly to these subjects, the League believes that they apply broadly to other
high technology areas as well.
Sixty technically oriented individuals from industry, government and academia
participated in the Workshop. Almost all had industrial experience. A few represented
the NASA Alumni League directly.
The Workshop panels prepared individual reports. These reports were analyzed by
League members and resulted in a Final Report prepared by the League.
We are enclosing a copy of the Final Report, which we believe will be of interest
to you. The League requests that you review this report and distribute it to appropriate
members of your staff. If you desire additional copies of the Final Report or any of the
panel reports, (executive summaries are included in Appendix C), they may be purchased
at $5.00 a copy by submitting the appropriate amount to us along with your request.
The NASA Alumni League would be very interested in hearing your views of the
Workshop Findings/Recommendations.
I look forward to your response on this important matter.
Sincerely,
Charles W. Matha
Charles W. Mathews
President
The NASA Alumni League is a private, nonprofit organization and is not affiliated with any agency of the United States Government.
NASA ALUMNI LEAGUE WORKSHOP
ON
TECHNOLOGY APPLICATIONS AND COMPETITIVENESS
FINAL REPORT
NASA ALUMNI LEAGUE
922 Pennsylvania Avenue, S.E.
WASHINGTON, D.C. 20003
April, 1991
ACKNOWLEDGMENT
The NASA Alumni League gratefully acknowledges the following Workshop Sponsors.
Allied Signal Company
LTV Corporation
The Boeing Company
George C. Marshall Instituteᵃ
Center for Space and Advanced Technology
Martin Marietta Corporation
Computer Sciences Corporation
McDonnell Douglas Corporation
Environmental Research Institute of Michigan
Mitre Corporation
General Dynamics Corporation
National Aeronautics and Space Administration
General Electric Company
Orbital Sciences Corporation
Hughes Aircraft Corporation
Rockwell International Corporation
International Telephone and Telegram Corporation
Thiokol Corporation
Lockheed Missiles and Space Company
TRW
Bernard maggin
Bernard Maggin, Project Manager
Chack A Mather
Charles W. Mathews, President
NASA Alumni League
(a) Robert Jastrow of the Institute made a personal contribution.
i
CONTENTS
Page
Acknowledgment
i
Contents
ii
Preface
iii
Introduction
1
Findings
2
Recommendations
7
Summary
8
Appendix A, Workshop Participants and Speakers
9
Appendix B, Special Papers and Questions
11
Appendix C, Panel Executive Summaries
15
Civil Aeronautics
15
Satellite Communications
15
Earth Observations
17
Microgravity
18
Software
18
ii
Workshop
on
Technology Application and Competitiveness
Final Report
PREFACE
In the week of September 11 to 14, 1990, the NASA Alumni League* conducted a Workshop at
Airlie, Virginia, to consider systemic problems in U.S. competitiveness in five areas related to the
commercial application of advanced technology. Workshop discussion focused on national interests
rather than the institutional or programmatic interests of government or industry. The areas addressed
were Civil Aeronautics, Satellite Communications, Earth Observations from Space, Microgravity
Applications, and Software.
About sixty experts and generalists from industry, government, and academia, including NASA
Alumni League members, were organized in five panels to address the subject areas. The names of the
workshop participants and their panel assignments, and the names of the introductory speakers are
presented in Appendix A. The listing does not imply agreement by any individual with judgments
expressed in the Workshop panel reports or in the Final Report of the Workshop prepared by the League.
In preparation for the Workshop, special papers and questions were given to the participants.
The titles and authors of the papers and the set of questions are presented in Appendix B.
*The NASA Alumni League is an organization of former NASA managers, engineers and scientists. It is
not affiliated with government or private institutions.
iii
INTRODUCTION
The NASA Workshop on Technology Applications and Competitiveness focused on possible
remedies for the relative lagging of U.S. performance in the commercial application of advanced
technology rather than on the facts or causes that have been widely analyzed. While emphasis varies, a
gross consensus says that causes involve issues such as the short-term planning and operational
perspective of U.S. industry and financial institutions, the widespread foreign government intervention on
behalf of its industry through both stimuli and protection, and the inability of even large U.S. firms to
independently take on the risks and costs of major new technological developments or their application.
These and related well-known factors helped shape the remedies that emerged from the workshop.
It may be helpful in dealing with the discussion that follows to note that the U.S. government's
expenditures for civil and defense research and development (R&D) are considerable. The FY 1991
budget proposed to Congress by the President is $79 billion. The technologies developed in government
sponsored programs are applied mainly to agency missions, with little consideration of commercial
interests. The effectiveness of support of mission oriented programs is affirmed by the success in the
Gulf War and decades of success in space exploration. These programs totally supported by the
government do not and are not intended to respond to the dynamic and often random market forces of
the commercial sector.
The question facing the Nation is will this approach to the use of the government's R&D funds
serve us well in a future in which U.S. industry is faced with growth in both foreign technological
competence and economic competition? Currently, the responsibility for providing for the Nation's
economic security and its commercial competitiveness with other countries is left substantially to market
forces and the private sector. For example, in the U.S. commercial sector there is no national
assessment of direction, competitive goals, needs, priorities, or program support requirements, as there
is for national defense.
Until the last decade or so the U.S. civil system in support of commerce has worked fairly well,
albeit with considerable cyclical and other disturbances. The Nation's commerce, while continuing to
1
grow overall in most sectors, has nevertheless experienced a significant decline relative to other nations.
Chamidy
The U.S. balance of trade has fallen to serious negative values in all manufacturing sectors except
aerospace. Technology and business assessments show a continuing shift in capabilities in favor of
overseas competitors.
This simplified but nevertheless broadly true portrait of the different management of the nation's
defense and commercial interests does not suggest that commercial activities be reorganized in the
image of the Defense department. For one thing, the industrial and consumer requirements imposed on
commercial industries are far more varied and complex than those for defense. Clearly the mechanisms
for meeting the two sets of requirements must differ. However, the private sector could benefit from
some form of coordination or cooperation, along with some carefully limited assistance from the
government. This assistance should be organized to address priorities and other competitive matters,
always within the framework of the market system and only where the market system is not by itself
meeting national interests. In the special case of advanced technology the vital economic interests of
government and industry appear to establish, on a prima facie basis, the validity of such a modest
proposition for government assistance. Hence the workshop was undertaken.
Generally, the U.S. government avoids assistance to industry because it is reluctant to cater to
selected commercial interests. Industry shies away from research and development difficulties when
technical risks and early market uncertainties exceed the capacity of the individual firm or when the
short-term exigencies of financial performance in the market place, dominate business decisions. The
victim of this situation is the U.S. public, in whose interest it is vital that the Nation performs well
economically in both the near and long-term in a growing, competitive international arena.
FINDINGS
The Executive Summaries of the five Workshop panel reports are included in Appendix C. The
panels identify a generic problem: a shortfall of action by both government and industry in exploiting
important, current or prospective, commercial application of advanced technology. In recognition of this
dilemma the five panels call for action to engage the government--constructively and minimally and in the
public interest--in technological progress and commercial application of advanced technology. The
2
panels believe firmly that such action is necessary and important to enhanced U.S. commercial
competitiveness.
In recommending remedies, the guiding principle adopted by the panels is not to disturb the
character of the market system. Thus, where joint industry and government mechanisms are suggested,
the principal responsibility for leadership is placed on industry; where government funding is required, the
panels propose that the funding be of a catalytic nature, such as the purchase of products or services
when appropriate.
Panel recommendations differ in some instances and agree in others. This suggests that a
variety of solutions is possible and needed for different areas of activity and situations.
In addition to the areas examined, it is likely that the suggested solutions are applicable to other
areas of stalled technological development and application.
The major League findings derived from the Workshop results are:
1. Increase Attention to Commercial Competitiveness
The Satellite Communication panel and other panels express, concern about how little the
government, in evaluating its research and development (R&D) programs, factors the commercial
application of technology into its judgments. As has been noted, the government has a very large
investment in R&D, and the innovative technology that has been developed has been successfully
applied to the missions of its agencies. However, the trickle down of those technologies to commercial
products is not adequate for the maintenance of a satisfactory U.S. competitive position in the world
marketplace.
It is essential to the national interest that the federal government identify technological activities
in its own agencies that have significant potential for commercial application. It is also essential that the
government give such activities appropriate priority. Industry's attention and advice to the government
should be brought to bear on commercial implications of government R&D programs at an early stage
through mechanisms designed for efficiency, transparency, and fairness.
3
2. Improve Industry/Government Interaction
All panels cite the need for better industry-government communications and interaction related to
R&D program identification, development, and oversight in areas critical to U.S. competitiveness.
Currently, opportunities for new, competitive advances are lost because of limited communication,
coordination, and cooperation.
When both government and industry have substantial interest in an important technology (for
example, aeronautics and software) or when progress in application may not match foreign competition
(remote sensing, for example), consideration should be given to establishing mechanisms for
coordination and cooperation on projects and programs of mutual benefit, whether jointly or separately
pursued.
Several panels propose the use of a system of working committees similar to that employed by
NASA's predecessor, the National Advisory Committee for Aeronautics (NACA), which served the
aeronautics industry and the country so well in both commercial and military aviation. The NACA
committees and their working subcommittees had broad industrial, academic and government
representation. These committees assisted in the identification and development of advanced
technology programs, followed their implementation, expedited technology transfer, and considered
program changes. A description of such a mechanism--a National Program Committee for Software-- is
briefed in the Software Panel Executive Summary (Appendix C) and is detailed in the Software Panel
report. The panel suggested that such joint mechanisms be led and funded primarily, but not necessarily
exclusively, by industry.
The Microgravity Panel report encourages broader use of the NASA Centers for Commercial
Development of Space for stimulating industrial involvement. These centers use academic or similar
institutions as industry-government middlemen.
The Communications Panel report recommends that the government develop better mechanisms
for joint demonstrations of new communication satellite capabilities through creation of strategic industrial
partnerships.
4
3. Ready Technology for Application
All the panels emphasize the importance of getting advanced technology ready for application.
The objective is to validate technology that has high potential for commercial applications so that
technical and financial risks are reduced to practical levels when the technology is applied by industrial
firms. It should be understood that this effort does not include the application of the technology to a
specific product or system.
The panels agree that the federal government should establish means for facilitating industry
development and application of technology of high public-commercial potential where industry is unable
to move forward because of pre-market or other high-risk factors. Such assistance should be given only
until a stage of reasonable business risk is reached. In this connection, the Dutch and similar pre-market
technology readiness models may be considered. These are models in which government funding is
provided as loans, and if commercial application ensues, is paid back into a revolving fund.
The Aeronautics Panel report notes that U.S. civil transport aircraft competitors (notably Airbus
Industrie, a joint European venture) have applied advanced technology sooner and more rapidly than has
been possible in the U.S., in part because of the type of R&D support their governments provide. As has
been stated, the ability to apply advanced technology is a function of the state-of-readiness of the
technology and the associated risks inherent in the application process. This panel strongly supports
industry-government technology programs that help remove technological uncertainties that can
adversely and unduly affect performance, reliability, development time, or aircraft certification.
The Satellite Communications Panel and Earth Observation Panel reports note the need to
support system demonstrations when the system concept is new or the market is not developed but
when the commercial potential is great. In the case of earth observation systems it is likely that the
government could be a major user of new products before self-sustaining commercial markets develop.
Thus, shared support for R&D as well as the initial design, development, and operation of new systems
may be justified. Government support could take the form of guaranteed purchase of services and
products, and the supporting industry(s) could be given special rights to the technology gained in a joint
5
endeavor. The panel notes that industry has to be the major and probably the primary player in these
gap-filling activities. However, government involvement is necessary and critical.
In the case of major technological developments in which the national economic security
(whether in the sense of public well-being or commercial competitiveness) requires broad and costly
advances, federal support of the nature discussed would seem to be an obvious recourse in the public
interest.
4. Establish a Focal Point in Government for Technology Commercialization
The panel reports indicate that more focused and coordinated oversight by the federal
government in the area of commercial application of technology is needed as is the appropriate expertise
for the function. In the aerospace areas examined this important capability is lacking. The Earth
Observations and Software panels state that this important focus and coordination does not exist at all in
their disciplines. Although the Aeronautics and Satellite Communications panels look to NASA for this
kind of activity, the panels recognize that NASA alone can not provide all the necessary support since
other government agencies play important roles (for example, FAA and DOD in aeronautics, and FCC
and DOD in communciations).
The above finding implies the need for a new level of government concern and engagement in
pursuing the national interests in the commercial application of advanced technology. Both focused and
expanded capabilities are essential for efficient technological assistance, similar to those provided by
government for agricultural development and aid to the farmer. This effort helped achieve an
unparalleled American agricultural system. Some government support in assisting industrial
competitiveness in other areas is only rational. Accordingly, the panels suggest that a government
umbrella organization be set up to assist and encourage government agencies and industry in the
development of technology and its commercial application and to manage rotating or other funding in
order to strengthen U.S. international competitiveness.
These findings have important similarities but also significant differences (for example,
constituencies, state of commercial development and future program needs) that warrant selective
attention, especially when extending the findings more broadly to other technology areas. However, this
6
situation in itself emphasizes the need for a more coordinated and cooperative effort for the handling of
technological competitiveness considerations within government and for providing a more effective
interface between government and industry.
RECOMMENDATIONS
Based on a review of the panel reports and its own deliberations, the League presents the
following recommendations:
1. Greater emphasis must be placed on R&D that has commercial potential. R&D programs
sponsored by the federal government can be major contributors to our nation's commercial
technological base. Therefore, the League recommends that a Presidential directive be
issued or legislation enacted requiring that the identification of commercial
opportunities and proposed actions be an integral part of the submission and approval
process for all government R&D programs.
2. Improved interaction and more open communications among industrial firms and between
industry and government must take place to assure that government and industry R&D plans,
programs, and future thrusts are focused on critical technologies and the marketplace.
Therefore the League recommends that mechanisms similar to those employed by NASA's
predecessor, the National Advisory Committee for Aeronautics (NACA), be implemented
to affect better government-industry Interaction for selected industrial sectors. The
NACA working committees provided a highly effective means for industry, academia, and
government to address priorities and strategies for aeronautical R&D that was of commercial
interest as well as of interest for defense.
3. Support from the government of readying technology for commercial application (proof of
concept) is important and should be provided in cases where the application has great promise
but reduction to practice by industry is too long-term, too risky, or requires development of new
markets or levels of resources only the government can provide. Therefore, the League
7
recommends that federal support be provided, including funding when necessary, to help
ensure that technology and systems that have real commercial potential are truly ready
for application and commercialization. The federal support should be catalytic in nature
employing concepts such as guaranteed purchase of industry products and services, a
revolving fund based on industry paybacks, or a time period for exclusive use.
4. A focal point for commercial technology should be established within the government.
Currently each government agency has cognizance over and usually sponsors only those
technological enterprises needed to perform its own mission. The complex dynamics of
commercial technology and markets are important and require broad consideration. Economic
competitiveness demands careful attention to technology efforts in both government and
industry. No organization in government exists that fulfills this role and assures active
involvement of industry and academia. Therefore, the League recommends that a focal point
for commercial technology be established within the Executive Branch and that
appropriate resources be provided to accomplish these purposes. The objective could be
satisfied by extending the charter of an existing organization such as the National Science
Foundation or the National Institute for Science and Technology or through creation of a new
entity such as a National Technology Foundation.
SUMMARY
The U.S. has adequate resources and currently outspends our competition for R&D. What is
needed in the growing competitive environment are ways to ensure that our priorities are right and that a
more cooperative effort between industry, academia and government, is brought to bear in the use of our
valuable technological resources. The League feels strongly that action should be taken now, by the
President and the Congress along the lines recommended in this report: action to ensure that our
national R&D is adequately directed at technologies and their application that provide the foundation for
future commercial products and services, action to improve our nation's future competitive posture. Such
actions for sustaining or establishing leadership in the development and commercial application of
technological innovations are critical to the nation's economic well-being.
8
APPENDIX A
WORKSHOP PANELS
AND
INTRODUCTORY SPEAKERS
WORKSHOP PANELS
Civil Aeronautics
Sally Bath
U.S. Department of Commerce
James Beggs
SpaceHab
Crawford Brubaker-Moderator
Consultant (Lockheed, Ret.)
Richard Golaszewski
Gellman Research & Associates
Gerald Kayten
NASA Alumni League
James Kramer
General Electric
Bernard Maggin-Rapporteur
Consultant (NASA Alumni League)
Richard Peal
The Boeing Company
Roger Schaufele
McDonnell Douglas Corporation
Calvin Watson
The Boeing Company
Satellite Communications
Ray Arnold
NASA
Robert Briskman
GEO Star
Gene Cacciamani
Hughes Network System
John Clark
Consultant (RCA VP, Ret.)
Dennis Curtin
Orion Satellite Company
Burton Edelson-Rapporteur
Johns Hopkins University
Troy Ellington
GTE Space Net Corporation
Jack Hannon
Comsat
Leonard Jaffe-Moderator
Computer Sciences Corporation
John Johnson
Consultant
Larry Kasulka
U.S. Department of Commerce
Wilbur Pritchard
W.L. Pritchard & Company
Thomas Quaid
Motorola Incorporated
Chuck Roof
TRW
Earth Observations
Murray Felcher
Washington Remote Sensing Letter
Marvin Holter-Rapporteur
Consultant (ERIM VP, Ret.)
Charles Mathews-Moderator
President, NASA Alumni League
John McLucas
QUES TECH
Richard Mroczynski
EOSAT
Willis Shapley
NASA Alumni League
Jerry Simonoff
Citibank
William Stoney
MITRE
James Taranik
Desert Research Institute
David Williamson
NASA Alumni League
9
Microgravity
Charles Bugg
University of Alabama-Birmingham Center
L.J. (Bud) Evans
Center for Space and Advanced Technology
Thomas Glenn
Biocryst, Inc.
Frank J. Jelinek-Moderator
Battelle Advanced Materials Center
Gilbert Keyes
Boeing Commercial Space Development Company
Jack R. Knox
Consultant
Simon Ostrach
Case Western Reserve University
Frank Penaranda-Rapporteur
NASA
Software
Robert Beland
IBM
William Brown
Environmental Research Institute of Michigan
Arnold Frutkin-Moderator and Rapporteur
Consultant (UNISYS VP Ret.)
Brian Fugate
MCC
Douglas Jerger
ADAPSO
David Kessell
Bellcore
Jack Munson
UNISYS
Jerry Rosenberg
Exec. Dir. NASA Alumni League
William Schneider
Consultant (CSC VP, Ret.)
Robert Valleni
TRW
At-Large Attendees
Robert C. Seamans, Jr.
Chairman, NASA Alumni League
Lawrence Vogel
NASA Alumni League
INTRODUCTORY SPEAKERS
Sally Bath, Director
Aeronautical Competitiveness
Office of Aerospace Policy and Analysis
U.S. Department of Commerce
James Beggs, Chairman
Space Habitat Experience
Space Hab Incorporated
William Brown, President
Technology Transfer
Environmental Research
Institute of Michigan
Edward Donley, Past Chairman
Commercialization
Air Products and Chemicals, Inc.
Aaron Gellman, President
Competitiveness
Gellman Research and Associates
Clyde Prestowitz, President
MITI
Economic Strategy Institute
James Rose, Assistant Administrator
NASA Commercial Programs
NASA, Office of Commercial Programs
10
APPENDIX B
SPECIAL PAPERS AND QUESTIONS
PAPERS (UNPUBLISHED)
Aeronautical Technology
G. G. Kayten, Consultant
Communications
L. Jaffe, VP CSC
Microgravity
R. E. Halpern, CSAT
Software*
A. W. Frutkin, UNISYS VP, Ret.
Earth Observations
M. R. Holter, ERIM VP, Ret.
WORKSHOP GENERAL QUESTIONS
Please note: These questions are intended to stimulate the thinking of the members of the Workshop. It
is not intended nor expected that responses to these questions will be developed by the Workshop. However, it
is intended and expected that the special panels to be organized at the Workshop will identify their own sets of
questions and issues, and possible responses related to improving U.S. technology applications and
competitiveness from policy and institutional prospectives.
TECHNOLOGICAL OPPORTUNITIES
Are there significant technological requirements, opportunities or developments, with potential
commercial or public interest, that are not moving forward in the United States?
Does industry consider such opportunities not ripe for independent commercial exploitation (for
whatever reason)?
Does the government consider the sector reserved for industry?
Is there general agreement that for these technology sectors we face a situation in which commercial
advances are not taking place because neither government nor industry is stepping up to it?
UNITED STATES POLICY
From competitive considerations are current NASA, DOC, OSTP and OTA positions regarding the
aeronautical and space technology utilization adequate?
*The Software panel also used Software Working Paper, AIAA Software Systems Technology
Committee.
11
What do panel members perceive to be the competing foreign practices and their effectiveness in
England, France, Germany, Japan, etc.?
Are there foreign practices that the United States should consider adopting?
OBSTACLES AND PROBLEMS
What are the commercial obstacles--financial risk, capital availability, manufacturing technology,
market development, production costs, government regulation, manpower, etc.--to improving
competitiveness?
Are the key problems essentially technological, commercial, governmental, political, or a combination
of these?
Do these apply mostly within the United States market or are they influenced by international
competition?
What is the nature of the political obstacles--ideology, budgets, fragmented government agency
responsibility, tax or legal discouragement, etc.?
What are the key problems (for the sector) that need to be solved in the United States so that
competitive advances may be made and/or the public interest served?
What are the conditions under which industry can evaluate and accept technology as ready for
application? How is technology brought to that stage?
FOREIGN APPROACHES
Is United States industry at a serious disadvantage relative to its foreign competition?
Is this for technical, commercial or political reasons?
Are foreign groups making better progress in technology? If so, why?
What mechanisms or processes do they use?
To what extent are they applicable in the United States?
Does the foreign competitor benefit from his government policies and institutions?
12
Should United States industry expect to compete without comparable assistance?
Is it important to protect "United States" technology, and if so how, when United States firms
joint-venture with foreign firms?
ADDRESSING PROBLEMS
How can key problems be addressed?
Are there specific government actions which could serve?
Should government actions be limited to catalysis or should there be a government or
government/industry/mechanism(s)?
Are there specific stages and circumstances of technological development and application appropriate
for government assistance and if so, what kind?
How can industry be assisted, guided or postured for improved competitiveness and support of public
interests while preserving private enterprise?
How can government support be contained so as to avoid excessive support, micro-management,
etc.?
Are there cases where there should be a "middleman" between government and industry?
If we could legitimately factor residual commercial/economic value of proposed aero and space
programs into decision making, would we arrive at different sets of national program priorities?
INDUSTRY/GOVERNMENT ACTIONS
If specific industry action is warranted, what is it?
If industry is caught between short-term and long-term considerations, how can industry be induced to
act in the long-term national interest?
How can appropriate constituencies be cultivated to properly advise the Federal Government (including
NASA) regarding the priorities and needs for technology to support industries that have not been
traditionally supported through Federal programs.
13
What can be done to bring better balance to the advice given Government and to place priority on
those programs which can enhance the nation's economic well being?
14
APPENDIX C
EXECUTIVE SUMMARIES OF PANEL REPORTS
CIVIL AERONAUTICS SUMMARY
The aeronautics panel reviewed the nature and general state of aeronautical competition and identified
actions required if the U.S. industry is to maintain a strong competitive posture in the future. The panel
concentrated primarily on technology and technology application but recognized that other factors must be
examined to fully assess and resolve competitive issues.
For several decades foreign governments have, in effect, subsidized their industries to gain market
share, and they continue to do so. Their products are essentially on a par technologically with those of U.S.
manufacturers, and because of government assistance they are more than price competitive despite the
productivity edge still held by U.S. industry. Meeting price competition under such conditions reduces U.S.
manufacturer's profits, reduces their ability to invest in research technology and development (RT&D) and
reduces their future profits. To help decrease investment risk and increase market access, U.S. industry has
actively pursued joint ventures, as has foreign industry. The possibility of technology transfer may be more
injurious to U.S. industry because it has apparently been slower, for business and other reasons, to apply
advanced technology.
The Workshop devoted its primary attention to the theme of technology applications. Other factors
affecting competitiveness, such as education (and training), tax structure, capital formation, and business
strategies, were addressed briefly.
The panel believes that the strong and growing competition in both Europe and the Orient will seriously
challenge our goal of continuing leadership in aeronautics. The panel believes that the U.S. response must be to
not only continue aggressive investment in innovative technology, but to also significantly accelerate the
readiness of state-of-the-art technology for rapid application with low technical and financial risk. The latter
requires industry-government cooperation in the selection and support of appropriate technology readiness
activity and the structuring of an industrial environment to speed specific application of the technology. The
development of a framework for such action is a matter of high priority and is important to improvement of U.S.
competitiveness. The panel also recommends that the review and assessment of foreign RT&D activity be
improved.
SATELLITE COMMUNICATIONS SUMMARY
The Satellite Communications panel considered the status of technology and the U.S. industrial posture
and future in its deliberations. The panel finds that this industry is so successful that it is targeted by foreign
15
competitors as an area for future growth. Part of the growth will come from demand and part from evolving and
new technologies for both the space and earth segments of communications systems.
Communications satellites will undergo major changes in the next decade or two. Their size and
complexity will grow in order to remain competitive with fiber optic cable in the area of conventional long-distance
services. In addition, satellites will be used for new communications services, such as mobile services and
broadcasting services. The competition for radio frequency spectrum and space in the geosynchronous orbit will
increase. All of this will require continued advances in technology.
The panel's basic recommendation for improving the Nation's competitive posture in world markets is that
the government should change the way it prioritizes and selects its research technology and development
(RT&D) programs and the way it is organized to direct and support its RT&D expenditures. It should continue to
support basic research but balance that with the development of technology and its application.
The panel made the following observations and recommendations:
1.
Review policies and plans for satellite communications. Strategic planning for satellite communications in
the U.S. is severely segmented and the policies that exist come from a series of public laws, executive
orders, regulations, and court decisions that are in many cases confusing or conflicting and potentially
detracting to U.S. competitiveness.
2.
Reestablish NASA RT&D leadership with secure long-term funding so that industry is assured of needed
technology in a timely manner.
3.
Establish a NASA Satellite Communications Advisory Committee patterned after the old NACA Advisory
Committees to ensure that industry's needs are accommodated as well as those of government and
academia.
4.
Provide incentives for industrial development of technology and new applications development. The
government should establish policies and procedures that offer incentives for industrial funding. For
example, government should give prompt, preferential consideration to such proposals from industry and
give the investor exclusive use of the resulting technology for an appropriate period of time.
5.
Make early commitment to government use of commercial systems. Early commitment to legitimate
governmental use of new applications of satellite systems can make introduction of such services
worthwhile and accelerate market development.
6.
Provide NASA Office of Commercial Programs with funds to support greater industry-academia
involvement in the ACTS program. Allow broader participation in ACTS, for example, INTELSAT use of
ACTS to conduct experiments.
16
7.
Support radio frequency and orbit utilization efforts. NASA's R&D program should support the
Department of State and the FCC in international frequency and orbit utilization negotiations.
8.
Support development of low cost expendable boosters and services. An important factor in the
application of space technology is the cost of successfully placing a satellite in orbit.
9.
Balance priorities for government R&D. Federally funded programs are a major contributor of new
technology and therefore a major contributor to the competitive posture of U.S. industry. The potential
return on investment that can result from certain R&D should be a significant factor in programming our
nation's R&D expenditures. An executive order should be issued by the President, requiring that all
federal agencies give high priority to R&D programs that enhance this country's competitive posture.
EARTH OBSERVATIONS SUMMARY
The Earth Observations panel analyzed the civil applications of U.S. earth observations from space. The
analysis focused on the need for and value of such information, as well as its bearing on U.S. economic
competitiveness. The panel found that space remote sensing, which provides data on conditions at or near the
earth's surface, has great value. It is particularly important in such applications as land-use evaluation,
agricultural production estimation, mineral exploration, pollution detection, sea state determination, and weather
forecasting.
For a number of reasons the civil market for space-based land and sea observations remains immature.
However, the market for such information and products is expected to have explosive growth partly as a result of
advances in and application of computer-based geographic information systems. Market growth is expected to
sustain total system capabilities in about a decade.
The application and potential of earth observations from space has caused other nations to aggressively
pursue the commercial development of earth sensing techniques and products. The panel finds that a U.S.
response is imperative. The response in part requires the federal government, as a matter of policy, to assure a
continuing U.S. earth observations capability. This would mean providing sufficient funds for bridging from
government to private support.
The panel also finds that the private sector should identify new civil earth observations capabilities and
propose programs to the government. The private sector is in the best position to determine the nature of
systems and services that will have the greatest market potential. The panel proposes that program costs be
shared between the government and the private sector with decisions on bridging support made by the
government. It is expected that federal budget increases are not needed. Better integration and coordination of
federal agency earth observations programs should allow support of this effort without additional government
funds.
17
The panel recommends that the responsibility for managing the government's support to the private
sector be vested in a government agency that is capable of coordinating the civil remote sensing mission
requirements of all the interested agencies.
The panel also recommends that to stimulate the growth of the U.S. market share in the face of foreign
competition, the existing U.S. civil systems ground resolution constraints be relaxed. The allowable resolution
should be in the range of three to five meters. In addition, the federal government should encourage the private
sector to supplement the usual optical sensors with a synthetic aperture radar by providing appropriate financial
support or else by deploying such a sensor as a part of the government's own civil program.
MICROGRAVITY SUMMARY
The Microgravity panel restricted its deliberations to the better understanding and improving of processes
in the near-zero gravity environment. Emphasis was on metals, organics, inorganics, polymers, and biological
materials. The panel made the following recommendations:
1. Broaden the scope of the microgravity program. Most microgravity effects are not yet completely
understood. Additional basic cross-disciplinary work is needed to improve fundamental understanding
and provide a sound foundation for commercial applications (for example, physico-chemical transport,
heat and mass transport, and chemical reactions).
2. Increase flight laboratory time. There is a need to increase experimental time at low to zero gravity.
Limited time and access has resulted in limited data. These factors as well as high risk and cost and
long-term payback have limited commercial interest in microgravity program involvement. Attention to
increasing flight laboratory time is critical.
3. Establish mechanisms to enhance programs. There is a need to strengthen partnerships between
industry, government, and academia and for the structuring of advisory (and advocacy) groups to
identify and proritize technology. Joint-cooperative research and development as well as proprietary
programs involving industry and academia are needed. Mechanisms to accomplish these ends are
required.
SOFTWARE SUMMARY
New data and competent judgment indicate that the current U.S. lead in software is diminishing and has
in fact been lost in certain key sectors that are critical for future leadership and market share. The issue is a
matter for major national concern since software is a central element in vital civil and military systems and is the
critical infrastructure that undergirds virtually all other high industrial and defense technologies as well as an
increasing range of consumer technologies.
18
Apart from the issue of competitive standing, software systems and applications are inordinately
labor-intensive, plagued by excessive cost in time and money. All could be substantially reduced by deliberate
improvements in design, development, and testing.
The implications are obvious when it is seen that the Department of Defense spends about 30% of its
annual budget on software design, acquisition, and support, that 85% of the development costs of virtually all
computerized applications go for the software component (in both military and civil sectors), and that 75% of the
national software expenditure is for maintenance (fixes of one kind or another).
On the international scene, the U.S. share of the computer equipment and software market fell from 81%
to 61% between 1983 and 1989. While the hardware component is a large part of this drop, the linkage to
software is integral and inescapable. The U.S. lead is expected to continue to diminish in key software segments
and is judged already to have been lost in formal methods, modeling, and tool development, software segments
critical for future competitiveness. These basic issues are compounded by cultural and institutional factors
including greater receptivity abroad for advanced techniques and long-term solutions, intervention by foreign
governments, and acquisition of U.S. software skills by foreign firms.
To deal with a national issue possessed of such pervasive implications for technological and economic
well-being, as well as for leadership, the panel recommends that a national mechanism be established to assure
the design and implementation of a program to preserve U.S. software leadership. That mechanism would be
modeled in many respects on an outstandingly successful precedent, the National Advisory Committee for
Aeronautics. This suggested mechanism, a National Program Committee for Software, would include industry,
government, and academic personnel. It would be jointly funded by government and industry, but its largest
representation and support, and its leadership, would come from industry. This mechanism would address the
priority concerns of the industry at a national level by all appropriate means and by using existing institutions and
capabilities. An illustrative program for the recommended organization is described in some detail in the
individual software panel report. This report describes the organization's central objective, and its programs for
enhancing productivity and reliability, strengthening standards, supporting intellectual property rights activities,
and addressing education requirements.
19
"CORRESPONDENCE TRACKING"
TYPE:
ACTION
DOCUMENT NUMBER: 9122944
ORIGINATOR: 02
STATUS I
DIRECTORATE STATUS
FROM:
CALLAHAN, William M.: AMERICAN PRIDE IS AMERICA'S FUTURE
TO:
DR. D.A. BROMLEY
DATE OF
what KY s this celler ?
CORRESPONDENCE: 07/23/91
a form
SUBJECT: REQUEST TO SIGN AND RETURN THE ENCLOSED CARD, RE:
REGAINING AMERICA'S COMPETITIVE EDGE.
7
yes
DIRECTORATE
STAFF
ASSIGNED: D. Allan Bromley
ASSIGNED:
suchet see Bill the
ACTION
STAFF
REQUIRED: AS APPROPRIATE
ACTION:
BPhillips require
Does any action part?
mDABs it? it
SENDER'S DUE DATE:
OSTP DUE DATE:
08/12/91
STAFF DUE DATE
what
DATE COMPLETED:
DATE COMPLETED/DEPT:
what's Damar
*
7/31
COPIES TO:
WHITE HOUSE TRACKING #:
CONTACT PERSON:
PHONE:
EXT:
REMARKS:
CLOSED
OSTP RECEIVED: 07/29/91
FILE: P-IND-ECONOMIC COMPETITIVENESS
DEPT RECEIVED:
AmericanPride
19USA
IS AMERICA'S FUTURE
American Pride
IS AMERICA'S FUTURE
WILLIAM M. CALLAHAN
PRESIDENT & FOUNDER
AMERICA'S PRIDE
SUITE 111
AMERICA'S PRIDE
SUITE 111
10028 MANCHESTER RD.
10028 MANCHESTER RD
GLENDALE, MO 63122-1827
GLENDALE, MO 63122-1827
314-821-8341
This 5 a as a patient
trying to do his hit
and just incidentally,
high buel endorsment see
VOP
dh
trying to gt some
DAB should not
As above, file
Dowar
last page.
respond.
MS
2944
American Pride
RECEIVED
IS AMERICA'S FUTURE
July 23, 1991
91 JUL 29 54
Mr. D. Allan Bromley
OFFICE OF THE
The White House Office
1600 Pennsylvania Avenue, NW
Washington, DC 20500
Dear Mr. Bromley:
As a member of the Executive Office of the President,
you can have a tremendous impact on the redirection of
America's efforts to ensure America has the strengths
and resources required to compete in today's fiercely
competitive markets. It is imperative we take immediate
action to improve America's position among its foreign
counterparts.
America's Pride is a not-for-profit organization
committed to building a coalition of leaders to effect
the changes necessary to fortify the foundation for
America's future.
The first phase of the awareness campaign is directed
towards government, industry and labor leaders, the
media and private citizens to enlist their support and
commitment to our efforts. The campaign will emphasize
the major areas of concern that must be addressed to
develop a long-term approach to improve our competitive
ability in the global marketplace. The attached fact
sheets briefly describe the serious nature of the
concerns affecting America's ability to compete.
You can play an important role in providing the
leadership necessary to ensure America is a country
with the strength and ability to forge into the future
with the same dynamism and pride that made it a world
leader only a generation ago.
Americans are entitled to the assurance that their
country has the capability to provide the foundation
for a secure economic future. Will history look upon
us as a courageous people committed enough to making
the needed sacrifices to ensure we regain our
competitive edge? Signing and returning the enclosed
card demonstrates your personal commitment to making
that answer a resounding "YES".
Sincerely,
Willi-Mallol-
William M. Callahan
President and Founder
AMERICA'S PRIDE
SUITE 111
10028 MANCHESTER RD.
GLENDALE, MO 63122-1827
American Pride
IS AMERICA'S FUTURE
AMERICA'S PRIDE MISSION STATEMENT
OUR MISSION IS TO INCREASE THE AWARENESS OF THE
AMERICAN PUBLIC OF THE NEED FOR AMERICA TO IMPROVE ITS
ABILITY TO COMPETE IN THE GLOBAL MARKETPLACE, AND TO INSTILL
THE COMPETITIVE SPIRIT BACK INTO THE AMERICAN CULTURE.
BY ADDRESSING THE ISSUES AFFECTING AMERICA'S
COMPETITIVENESS, WE CAN IMPROVE THE QUALITY AND PERCEPTION
OF AMERICAN PRODUCTS AND SERVICES. PRIDE IN QUALITY
PRODUCTS AND SERVICES CAN BECOME THE COMMON BOND THAT WILL
UNITE AMERICANS FROM ALL WALKS OF LIFE AND ENABLE THE UNITED
STATES TO REGAIN ITS COMPETITIVE EDGE AND CONTINUE TO
AGGRESSIVELY COMPETE IN TODAY'S MARKET.
AN ECONOMICALLY SOUND COUNTRY CAN ENSURE THAT EACH AND
EVERY AMERICAN IS AFFORDED THE OPPORTUNITY TO ATTAIN THE
QUALITY OF LIFE TO WHICH THEY ARE ENTITLED. IMPROVING OUR
COMPETITIVENESS IS A CRUCIAL STEP IN ENSURING A SECURE
FUTURE FOR ALL AMERICANS.
AMERICA'S PRIDE
SUITE 111
10028 MANCHESTER RD.
GLENDALE, MO 63122-1827
American Pride
IS AMERICA'S FUTURE
BY NOW YOU MAY BE ASKING
"Who is Bill Callahan, and why is he asking for my
help?"
As a concerned citizen, husband, father and business-
man, I feel a strong responsibility to do my part in
making America the best it can be.
Since I can remember, I've had a deep sense of pride in
my country. Deteriorating conditions over the past
decade have been very disheartening to me. As far back
as 10 years ago, I was moved to do a commentary on a
local television program stating the need for America
to improve the quality of American products and to
develop a new sense of pride in our country.
Not a day has passed that I haven't thought there must
be something I can do to reverse the downhill slide of
America's competitiveness. I realized to really make a
difference, I needed help - that's when America's Pride
and you came into the picture. I concluded that if I
could get the American people to pull together and
combine their resources, there would be no problem we
could not overcome.
I have invested hundreds of hours of my personal time
and made a financial commitment to this cause for one
reason and one reason only: My heartfelt and sincere
interest in the future of America and its people. It's
very distressing to see our great country losing ground
to foreign competition; it is especially distressing to
know we are letting it happen without making the effort
to preserve what our parents and grandparents worked so
hard to build.
But, no matter how distressing it may seem, I am still
optimistic that we can turn things around; however, we
must start today. We can no longer say, "There's
always tomorrow. Tomorrow will be too late.
AMERICA'S PRIDE
SUITE 111
10028 MANCHESTER RD.
GLENDALE, MO 63122-1827
American Pride
IS AMERICA'S FUTURE
WILLIAM M. CALLAHAN
PRESIDENT & FOUNDER
AMERICA'S PRIDE
SUITE 111
10028 MANCHESTER RD
GLENDALE MO 63122-1827
314-821-8341
The first step to success is making a commitment.
By signing below and returning this card you can join the list
of Americans who are committed to America's future.
(Signature)
(Printed Name)
American Pride
IS AMERICA'S FUTURE
The attached information compiled from various sources
highlights the areas where America must make an unprecedented
commitment to reverse the current unfavorable trends. The
material will address:
* Competitiveness
* Technology
* Productivity
*
Investment
* Manufacturing
*
Research & Development
* Education
* U.S. Deficits
There are many theories on the best approach to solving
America's problems; but no matter which theory America adopts, it
must be a long-term approach dedicated to insuring a better
quality of life for all Americans.
The facts speak for themselves: To be more competitive in
today's world economy, we must improve our productivity.
Achieving a labor productive average increase of less than 1
percent a year is not acceptable in today's fiercely competitive
markets; we must move back into the 2 to 3 percent range.
In manufacturing, revitalization is imperative for the
industries that are fundamental to our ability to be competitive
and that are the foundation of a strong economic system.
Education must take a broad approach to developing new
strategies for improving America's educational system. We need
to look at options such as, lengthening the school year, more
stringent minimum requirements for graduates and increasing
project/experimental learning.
And, of course, the U.S. federal deficit must be reduced.
We cannot operate effectively under current conditions;
Washington must take immediate action to demonstrate to the
American people that the American government is in control of the
situation. The uncertainty plays havoc on the economy - how can
Americans have confidence in their government if that government
cannot demonstrate the ability to manage its own affairs.
It is imperative we increase cooperation among leaders of
government, industry, labor and the educational system to find
solutions to our nation's problems.
After reviewing the enclosed information, I hope you, too,
will be driven to make a personal commitment to becoming part of
the solution. By signing and returning the enclosed card, you
will be joining a coalition committed to building a stronger
America.
AMERICA'S PRIDE
SUITE 111
10028 MANCHESTER RD.
GLENDALE, MO 63122-1827
COMPETITIVENESS
AMERICAN SAMURAI,
WARRIOR FOR THE COMING DARK AGES OF AMERICAN BUSINESS
By William Lareau, New Win Publishing Inc.
American business is facing a crisis of incredible
proportions. Unless we face some hard facts and deal with the
coming disaster immediately, we will be lost as a world economic
power. We will enter the Dark Ages of American business, unable
to compete and cut off from world markets.
America is headed for a drastic reduction in the quality of
life as a direct result of the escalating inability of American
business to be competitive in the rapidly changing international
marketplace. No longer can intelligent workers hide their heads
in the sand and simply go blindly along for the ride. They won't
like the destination. Business life and careers from now on will
be zero-sum games (there's only so much to go around), with a
decreasing sum and more players. Those who act as if things
haven't changed since the 1950s will be the losers. Our future
demands a new work credo and a new American worker--a warrior who
will battle to hold off the coming Dark Ages and lead us to
rebirth as the preeminent world economic power.
WE'RE NOT NUMBER ONE ANYMORE
The data in the table below, which shows that eight of the
world's top ten largest publicly held companies were Japanese,
was shocking when is first appeared in 1987. Now such informa-
tion is commonplace. The reaction has become, "So, what else is
new?" What else is new is that it's getting worse every day. If
we want to survive as an economic power, much less recover the
number one spot, we had better do more than furrow our brows and
turn on the television set (made in Japan, of course) to escape
reality.
The ten largest publicly held companies in
the world in 1987.*
1. Nippon Telegraph and Telephone (Japan)
2. IBM (U.S.)
3. Exxon (U.S.)
4. Sumitomo Bank (Japan)
5. Industrial Bank of Japan (Japan)
6. Tokyo Electric Power (Japan)
7. Nomura Securities (Japan)
8. Dai-Ichi Kangyo Bank (Japan)
9. Fuji Bank (Japan)
10. Mitsubishi Bank (Japan)
*Parade Magazine, November 22, 1987
- 1 -
COMPETITIVENESS
The situation hasn't gotten any better in the last three years.
Listed below are the world's top 20 companies in terms of total
market value. Thirteen of the 20 are Japanese (as are 43 out of
the top 100). This is a pattern of almost complete domination.
Whatever Japan is doing is working.
The world's top 20 companies in
total market value in 1990.*
Market value
(billions
Rank
Company Name
Country
of dollars)
1.
Nippon Telegraph & Telephone
Japan
118.79
2.
IBM
U.S.
68.89
3.
Industrial Bank of Japan
Japan
67.71
4.
Royal Dutch/Shell Group
Neth/Britain
67.14
5.
General Electric
U.S.
62.54
6.
Exxon
U.S.
60.00
7.
Sumitomo Bank
Japan
55.81
8.
Fuji Bank
Japan
53.17
9.
Toyota Motor
Japan
50.54
10.
Mutsui Taiyo Kobe Bank
Japan
49.80
11.
Dai-Ichi Kangyo Bank
Japan
49.57
12.
Mitsubishi Bank
Japan
47.17
13.
AT&T
U.S.
46.96
14.
Sanwa Bank
Japan
45.60
15.
Tokyo Electric Power
Japan
41.68
16.
Philip Morris
U.S.
39.11
17.
Hitachi Ltd
Japan
33.04
18.
Merck
U.S.
32.72
19.
Nomura Securities
Japan
32.54
20.
Long-term Credit Bank of Japan
Japan
32.44
*Business Week, July 16, 1990
- 2 -
PRODUCTIVITY
U.S. PRODUCTIVITY PERFORMANCE
Perspectives '91; American Productivity & Quality Center
By Carl G. Thor
Following World War II, the United States was able to
improve labor productivity at a steady 2 to 2.5 percent per year
for more than 20 years. As international competition revived in
many industries, the going became tougher and the labor produc-
tivity improvement rate began to slip to an overall average of
less than 1 percent per year for the 1970-89 period. What this
means for the average U.S. citizen is shown below.
If the productivity improvement rate of the 1950-70 period
had continued for 1970-89, the 1989 Gross National Product per
member of the labor force would have been $53,337 in 1989
dollars. But the actual value was only $41,686. The difference
of $11, 651 is the amount of additional standard of living that
each worker would have had in 1989 if the nation had taken
productivity improvement seriously!
Standard of Living, Actual and Potential
$55
Potential*
50
GNP/Labor Force Member
45
(1989 $000)
40
Actual
35
30
25
$20
1950
1960
1970
1980
1989
* Potential: 1950-70 Growth Rate in GNP/Labor Force Member Applied Beyond 1970.
Source: American Productivity & Quality Center
- 3 -
PRODUCTIVITY
INTERNATIONAL PRODUCTIVITY
Perspectives '91; American Productivity & Quality Center
By Carl G. Thor
The U.S. is still the world leader in gross domestic product
(GDP) per employee if the currency translation basis used is
purchasing power parity. With the U.S. 1989 level set at an
arbitrary 100, the figure below shows the nearest competitor is
Canada at 94. Most of Europe is in the 80's and Japan is almost
73. However, the productivity growth story is very different.
Japan's growth rate in labor productivity over 1979-89 is 3.0
percent. The Europeans are around 2 percent. The United States
is growing at only 1.1 percent.
If an extrapolation were made from 1989 levels using 1979-89
growth rates, France, Italy and Japan would all pass the U.S. in
the first decade of the twenty-first century.
INTERNATIONAL LABOR PRODUCTIVITY
(GDP/EMPLOYEE, PURCHASING POWER PARITY)
Hypothetical
Relative Levels*
1989 Level
Avg % Growth
Country
(U.S. = 100)
1979-89
2000
2010
United States
100.0
1.1
100
100
Canada
94.0
1.3
96
98
France
85.9
2.0
95
103
Italy
87.3
1.9
95
103
West Germany
82.0
1.7
87
93
United Kingdom
71.5
1.8
77
83
Japan
72.7
3.0
89
107
Korea
39.8
5.2
62
92
*Using 1979-89 Growth Rates
Source: Bureau of Labor Statistics
- 4 -
PRODUCTIVITY
The following graph taken from Fortune; A New American
Century, Spring/Summer 1991, illustrates America's productivity
performance in relation to Japan and West Germany.
PRODUCTIVITY GROWTH
2,500
Index: 1950=100
Change in hourly
output in manufacturing
2,000
JAPAN
1,500
1,000
WEST
GERMANY
500
U.S.
100
0
1950
'55
'60
'65
'70
'75
'80
'85
'89
FORTUNE CHART
*
*
*
*
*
*
*
*
*
*
*
INTERNATIONAL PRODUCTIVITY
Perspectives '91; American Productivity & Quality Center
By Carl G. Thor
In the manufacturing sector (see figure below), the relative
growth spreads are even larger. Japan has consistently improved
manufacturing productivity at over 5 percent per year. The U.S.
record is variable, over 3 percent in 1979-87, but only around 2
percent in 1973-79 and 1987-89. Most of Europe is again between
the two in most years.
INTERNATIONAL MANUFACTURING LABOR PRODUCTIVITY
(PERCENT GROWTH PER YEAR, OUTPUT PER HOUR)
Country
1987-89
1979-87
1973-79
Japan
5.2
5.5
5.5
United Kingdom
5.2
4.7
1.2
France
4.9
3.0
4.6
West Germany
4.5
1.4
4.2
Italy
2.8
4.2
5.7
United States
2.1
3.4
1.6
Canada
1.9
1.7
2.1
Source: Bureau of Labor Statistics
- 5 -
MANUFACTURING
COMPETING IN WORLD CLASS MANUFACTURING -
AMERICA'S 21ST CENTURY CHALLENGE
By T. Olson, C. Giffi, A. V. Roth and G. M. Seal
Business One Irwin
The U.S. must regain a globally competitive position in
manufacturing if it expects to maintain its current standard of
living. To make matters worse, many U.S. business leaders are
still unaware of the problem, unsure of how to address it, or
unwilling to step up to the challenge. If they do not act soon,
America's long-term future will be at risk. The United States
could follow in the footsteps of England, declining from a
position of industrial and economical leadership to a second-rate
status among industrialized nations.
THE WORLD SURPASSES AMERICAN MANUFACTURING
The U.S. real GNP growth is modest. Relative to the rest of
the world, the rate of U.S. productivity growth had been
declining. By 1988, annual productivity growth in manufacturing
was smaller in the U.S. than in any of its global rivals. Japan,
once ridiculed for cheap products and poor quality, became
America's worst competitive nightmare. Alone among advanced
industrial countries, Japan managed in the 1980s to combine great
productivity growth in manufacturing with rising manufacturing
employment, wages, benefits, and output (see chart below).
FIGURE 1-4 Average Annual Productivity Growth in Manufacturing-1960-1988
8
c
7
G
,
6
o
n
5
n
4
O
U
3
1
P
2
P
1
H
o
0
U
U.S. Canada U.K. FRG France italy Japan
Source: U.S. Department of Labor, Bureau of Labor Statistics, "International Comparisons
of Manufacturing Productivity and Labor Trends, 1988." June 1989, Table 1.
- 6 -
MANUFACTURING
AMERICAN SAMURAI,
WARRIOR FOR THE COMING DARK AGES OF AMERICAN BUSINESS
By William Lareau, New Win Publishing Inc.
The table below shows what has happened to the world market
share of U.S. companies in basic industries between 1970-1987.
Changes in basic industry share, 1970-1987*
Share of world market
held by U.S. companies
Industrial category
1970
1987
Loss
Black and white televisions
65%
3%
62%
Color televisions
90%
10%
80%
Phonographs
90%
1%
89%
Ball bearings
87%
70%
17%
Machining centers
95%
35%
60%
Semiconductors
90%
64%
26%
VCR
10%
1%
9%
Audio tape recorders
40%
1%
39%
Telephone sets
97%
25%
72%
*U.S. Department of Commerce data.
The VCR situation is the best of the list, with a loss of
only 9%. of course, we only had 10% to start with. It just goes
to show you that one way to avoid being beaten badly is never to
show up for the fight in the first place! As you can see, the
situation in the automotive industry isn't unique; it's all too
typical. American business has been beaten to the barroom floor
of the world economy and is now being kicked into unconscious-
ness. Is there time to fight back and get up before a fatal blow
is struck? Who can say? But we had better do something fast,
both as individual American Samurai and as an economy as a whole,
or we're finished as an industrial power of any consequence.
Things are looking even darker in the areas of advanced
technology. The Japanese are poised to do the same thing to the
computer industry that they're doing to the automotive industry.
Japan already has the lead in such critical computer-related
technologies as flat-panel displays, color flat-panel displays,
CD-ROM (compact disk-read only memories) drives, erasable optical
disk drives, key laser printer components, and tape-automated
bonding.
A key element in manufacturing computer semiconductor chips,
which is the basis of the entire industry, is stepping aligner
equipment. The United States manufactured more than 90% of this
equipment in 1979, compared with about 5% for the Japanese. The
U.S. share had fallen to about 20% in 1988, whereas the Japanese
share increased to more than 70%. More layoffs and plant
closings, anyone?
- 7 -
EDUCATION
PRODUCTIVITY BRIEF, AMERICA'S THIRD DEFICIT: EDUCATION
By C. Jackson Grayson, Jr. and Carla S. O'Dell
America's economic pre-eminence is threatened by a deficit
triad: the trade deficit, the budget deficit, and perhaps most
dangerous of all, the education deficit.
Behind America's vibrant growth in the golden 50s and 60s
was a deteriorating educational system.
First came the beeping of Sputnik, spotlighting the shortage
of scientific and engineering skills. Then there was the down-
ward trend in SAT scores.
Startling figures on "functional illiteracy" followed.
Exact numbers are debated, but anywhere from 46 million to 60
million Americans up to one third of American adults - can't
function well in a literate economy.
The most shocking indictments have come in the past four
years in a flurry of reports on deficiencies in content areas in
primary and secondary schools. American students' low ranking on
international comparison tests, low teacher pay, inadequate
teacher skills, and more.
EDUCATION AND COMPETITIVENESS
Education is directly linked to competitiveness. No society
can have high quality outputs without having high quality inputs.
Education provided "human capital" to combine with "physical
capital" for increased productivity and quality.
One well-publicized area is the high rate of illiteracy in
the U.S. The education system is not producing an educated
citizenry nor a trained workforce.
"We are in a life and death struggle with the Japanese," one
electronics industry corporate executive has said. "We try to
employ high school graduates in our semiconductor plant, but they
can't read or write. They don't understand simple graphs and all
too often they can't add, subtract, or multiply numbers."
- 8 -
EDUCATION
RENEWING AMERICAN INDUSTRY: EDUCATIONAL WARNING SIGNALS
By Paul Lawrence and David Dyer
*
An estimated 60 million people, one third of the entire U.S.
adult population, are functionally illiterate.
*
About 15 percent of recent graduates of urban high schools
read at less than sixth grade level.
*
In 1983-84, 16 percent of college freshmen were enrolled in
remedial reading and 25 percent in remedial mathematics.
*
The average achievement level of high school students on
most standardized tests is lower than it was 26 years ago
when Sputnik was launched.
*
Illiteracy costs an estimated $20 billion a year in welfare
payments, jail costs, and lost productivity.
*
Almost 90 percent of Japanese students finish high school,
compared to 75 percent of American students--a dropout rate
of one in four for the U.S., one in fourteen for Japan.
*
Japanese students attend 240 days of instruction per year;
Americans about 180. When a Japanese student completes high
school, he or she has completed about four more years of
school than an American high school graduate.
*
In a fourteen-nation International Mathematics study of
students in the eighth grade, Japan ranked number one and
the U.S. ranked number twelve.
*
The percent of U.S. doctoral degrees awarded to foreign
students has risen steadily for many years. In 1984, 55
percent of all doctoral engineering degrees awarded in the
U.S. were awarded to foreign students, along with 39 percent
of those in mathematics and 37.5 percent of those in
computer sciences.
*
The U.S. graduated 67,000 engineers in 1982; Japan graduated
74,000. On a per capita basis, that's about twice the U.S.
rate.
- 9 -
EDUCATION
THE DECLINE OF EDUCATION
National Science Foundation
A strong national economy requires sustained growth in
productivity. In today's competitive, interdependent worldwide
marketplace, such growth is produced by scientific and
technological innovation and by the ability to efficiently
convert creative ideas into high-quality, marketable products.
The deterioration of our educational capabilities in math
and science at all levels poses a fundamental threat to the
ability of the nation to compete in the next century. The
nation's elementary and secondary schools are simply not doing an
adequate job of preparing students in the math and science skills
necessary to compete in the job market of the future. The short-
coming in this educational "pipeline" will be made even worse by
demographic trends. Finally, at the university level, there is a
shortage of faculty in key scientific and technical fields, a
shortage that will grow worse as the generation of technical
faculty hired during the 1960's retires in the 1990's. Three
years ago, the National Commission on Excellence in Education
offered this assessment: "If an unfriendly foreign power had
attempted to impose on America the mediocre educational perform-
ance that exists today, we might well have viewed it as an act of
war. "
Student Achievement in Science
Fifth Grade
Ninth Grade
1. Japan
1. Hungary
2. Korea
2.
3. Finland
3. Netherlands
4. Sweden
4.
5. Hungary
5. Finland
6. Canada
6.
7. Italy
7.
8. USA
8.
9. Australia
9.
Japan Canada Norway Sweden Korea Poland Italy
10. Norway
10. Australia
11. Poland
11.
12. England
12. England
13. Singapore
13. Singapore
14. Hong Kong
14. Thailand
15. Philippines
15. USA
- 10 -
EDUCATION
ILLITERACY IS ON RISE AMONG U.S. WORKERS,
REPORT SAYS
By a Wall Street Journal Staff Reporter
October 9, 1990
NEW YORK U.S. companies will confront a big influx of
illiterate or marginally literate workers in the 1990's, a new
Conference Board report suggests.
As part of a continuing examination of work force trends,
the Conference Board surveyed 163 large companies in a variety of
industries. Nearly 20% of surveyed firms say they are having
problems finding workers who read well enough for entry-level
jobs. Almost 50% say that between 15% and 35% of their current
employees aren't capable of handling more complex tasks, and 10%
say that up to half of their current workers do not have the
skills needed for promotion.
There appears little optimism for the near future. The
report said nearly a quarter of students currently entering high
school will not graduate, and those who do will be less literate
than their counterparts a decade ago.
Despite these problems, few companies are preparing for the
influx. More than 70% of the companies surveyed do not have
formal procedures to test job candidates for reading and writing.
And with a few notable exceptions, the report indicated wide-
spread reluctance by firms to test their workers' literacy.
The report makes a series of recommendations, including the
establishment of a universally accepted definition of literacy, a
universal system of auditing workplace illiteracy and an increase
in literacy programs sponsored by employer coalitions.
- 11 -
TECHNOLOGY
INTERNATIONAL PRODUCTIVITY
Perspectives '91; American Productivity & Quality Center
By Carl G. Thor
The issue of Japanese competitiveness is particularly urgent
in the high-tech products that used to be the major strength of
the U.S. The figure below presents the trends in market share of
selected high-tech product categories. In aerospace, the U.S.
remains dominant, but in computers and precisions equipment,
where the U.S. was also strong, the Japanese strides are
dramatic. The U.S. has also lost significant ground to the
Japanese in machine tools, telecommunications equipment, and
microelectronics.
MARKET SHARE OF SELECTED HIGH-TECH EXPORTS
U.S.
Japan
1980
1987
1980
1987
Microelectronics
18.3%
13.6%
13.2%
22.7%
Computers
38.6
24.6
4.3
17.4
Telecommunications Equipment
10.9
8.3
10.3
29.5
Aerospace
47.6
45.2
0.6
0.8
Machine Tools/Robots
14.1
11.7
11.3
20.9
Scientific/Precision Equipment
28.3
21.8
7.1
11.3
Medical/Biological
11.4
10.6
2.2
2.6
Organic Chemicals
13.9
11.7
6.3
7.3
Source: Central Intelligence Agency
*
*
*
*
*
*
*
*
*
*
DECLINING MARKET SHARE
OF U.S. HIGH-TECH INDUSTRIES
The following chart from the Council on Competitiveness illus-
trates the declining market share of U.S. high-tech industries.
1980
1988
Fiber optics
73%
42%
Semiconductors
60%
36%
Supercomputers
100%
76%
DRAMS*
56%
20%
Machine Tools
18%
7%
*Dynamic Random Access Memory
- 12 -
TECHNOLOGY
JAPAN COULD SURPASS THE U.S. IN OUTPUT
OF ELECTRONICS SOON, NEW REPORT SAYS
By Eduardo Lachica, The Wall Street Journal
June 11, 1990
WASHINGTON - In its bleakest report yet on the competitive-
ness of the U.S. electronics industry, the Commerce Department
said Japan could surpass the U.S. in production of electronic
goods by the early 1990's.
"Except for software and medical equipment, the U.S. has
been losing market share in all products since 1984," said John
McPhee, director of the department's office of computers and
business equipment and a co-author of the report. Although the
U.S. still leads the world with more than $180 billion in annual
output of electronic goods, Japan could spurt ahead by 1994 if
the current trend continues, the report said.
Moreover, Japan outspends the U.S. in X-ray lithography, the
most promising method for printing the multibillion-transistor
memories of the future, the report says.
In 1987, the latest year for which reliable global-trade
figures are available, Japan already led the world in electronic
exports with shipments valued at $38 billion. The U.S. trailed
with $35 billion in exports, followed by the European Community
with shipments of $26 billion.
- 13 -
INVESTMENT
ARE WE EATING OUR SEED CORN?
Critics claim that G.E. and others miss opportunities by
buying back their stock. Would developing new products be wiser?
By John Holusha, May 13, 1990
Many economists, scholars, executives and other experts on
American industrial policy say that financial engineering of this
sort is often indicative of short-term thinking and a lack of
confidence. They say it is sapping the nation's global
competitiveness.
Rather than buying stock, they say, chief executives like
Mr. Welch should be investing in new products and processes to
keep home-grown inventions from being wrested away by more
efficient producers abroad. They should be plowing money into
leading-edge technologies and into basic research to develop
products not even imagined today.
Otherwise, companies in Europe and Asia will surpass the
United States, as they have done in consumer electronics, machine
tools and semiconductors. And that could endanger America's
wealth. "If we are not willing to get to a long-term orienta-
tion, we are going to lose one strategic industry after another,
and that has implications for our standard of living," said
Representative Mel Levine, a Democrat from California.
Corporate America's preoccupation with quarterly results
emerged as a serious irritation in the 1980's. But some experts
believe the 90's may provide an opportunity for change. Hostile
takeovers and "junk bond" financing, which drove companies to
keep their stock prices aloft to avoid being a target of
predators, have fallen out of flavor. And institutional
investors, politicians, economists and the industries themselves
are stepping forward with their pet incentives for change.
But the remedies will need to be potent. Industrial
America, some experts believe, has lost its vision and nerve.
"Deep down, there is a defeatist attitude in this country about
manufacturing," said Andrew Grove, the president of Intel Inc., a
world leader in computer chip manufacturing. "Part of the
justification process for investments includes figuring out how
to compete with the Japanese. There have been few success
stories."
Perhaps nothing is more symptomatic of this malaise than the
growing popularity of stock repurchases. "The attitude is to
throw up their hands,' said Michael Borrus, a professor at the
University of California at Berkeley. "They figure, 'If I cannot
compete, at least I can boost my stock price'.'
- 14 -
INVESTMENT
INTERNATIONAL PRODUCTIVITY
Perspectives '91; American Productivity & Quality Center
By Carl G. Thor
Private industry investment in plant and equipment is
showing amazing strides in the past few years in Japan (see chart
below). With Japan's current stock market and land value
declines, this number may be peaking for Japan in 1989. But it
is still very far above Europe and the U.S. The absolute value
of Japan's investments now exceeds that of the U.S. even though
the U.S. has twice the GNP!
Private Industry Expenditure on Plant and Equipment
% GDP
25
Japan
20
Other Summit 7
15
(except U.S.)
U.S.
10
'82
'83
'84
'85
'86
'87
'88
'89
Source: Council on Competitiveness and OECD
- 15 -
INVESTMENT
The graph below taken from Fortune; A New American Century,
Spring/Summer 1991, illustrates the gap in capital investment
between America, Japan and West Germany.
CAPITAL INVESTMENT
25%
Investment in nonresidential fixed
capital as a percent of GDP
JAPAN
20%
WEST GERMANY
15%
U.S.
10%
1960
'65
'70
'75
'80
'85
'88
FORTUNE CHART
- 16 -
RESEARCH & DEVELOPMENT
RESEARCH & DEVELOPMENT SPENDING GROWTH
IS DOWN TO A CRAWL
Business Week, August 21, 1989
Data Resources, a McGraw-Hill Inc. unit, attributes the
ongoing slump in R&D spending to business' continuing obsession
with short-term profits, a trend that has been fostered by the
merge and acquisition boom, rising debt burdens, and persistently
high real interest rates. Yet, note economists, research studies
suggest that after a few years, R&D investment produces annual
returns of about 20% for the initial investors -- plus another
25% that accrues to society as a whole as new technology and
other advances spill over the rest of the economy. Indeed, DRI's
economic model indicates that a permanent 1% reduction in the
growth rate of real R&D investment eventually leads to a 0.85%
cut in the economy's potential growth rate.
*
* * *
INTERPRETING U.S. PERFORMANCE
Perspectives '91; American Productivity & Quality Center
By Carl G. Thor
R&D has recovered from the late 70's neglect, but it is
still not at a world-class level, especially in non-defense
industries (see chart below).
U.S. Research and Development, 1966-1988
2.9
2.7
Percent of Gross National Product
2.5
2.3
2.1
1.9
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
Source: National Science Foundation
- 17 -
U.S. DEFICIT
U.S. DEFICIT FOR 1990 SURGED TO NEAR-RECORD
$220.4 BILLION
By Louis Uchitelle, The Wall Street Journal
While the prospect of $200-billion-plus deficits is scaring
Congress and the White House into working out a record deficit-
reduction package, economists say the huge number suggests more
damage to the economy and to the well-being of Americans than has
actually occurred.
They argue, for example, that the deficit is temporarily
overstated because of the savings and loan bailout. What's more,
they say, the deficit is still manageable; in fact, not much more
of a burden than a $3,000 a month mortgage is to a family earning
$85,000 a year. The problem is that the deficit, the mortgage,
is rising, and the national income isn't.
That makes the deficit equal to 4 percent of the G.N.P,
roughly the annual average for the 1980's, but well below the 2
percent or less that prevailed from 1950 until 1975, when the
deficit suddenly shot up to 3.5 percent of G.N.P and became a
national issue.
* *
INTERNATIONAL MONETARY FUND FORECASTS
The following information compiled by the International Monetary
Fund compares real GNP increases, inflation and the trade balance
of the U.S., Japan and West Germany.
Real GNP, %
Current-
increase over
Inflation
balance,
previous year
oto
$bn
1988
89
90
88
89
90
88
89
90
U.S.
4.4
2.9
2.1
3.3
4.5
4.6
-126.5 -125.1 -138.7
Japan
5.7
4.9
4.7
0.4 1.8 1.3
79.6
72.0
89.7
West
Germany 3.6 4.0 3.0
1.5 2.5 2.5
48.6
53.4
56.8
- 18 -
U.S. DEFICIT
INTERPRETING U.S. PERFORMANCE
Perspectives '91; American Productivity & Quality Center
By Carl G. Thor
Everything is related to everything else, or so the
economists seem to say. But at least everything is related to
the dual deficits--federal budget and trade. The chart below
presents the federal deficit as a percent of GNP. The receipts
part is fairly flat for the last decade and is lower for 1989
than for the peak of 1981-82. But expenditures have not been
constrained to fit within or even near the receipts. A steady
climb to the mid 80's has been followed by three years of
comparative restraint, but the banking crisis and Mideast
military activity will now send expenditures up again.
U.S. citizens' personal savings have been insufficient to
make up the budget deficit; thus the U.S. has become dependent on
willing foreign investors to provide the shortfall. These
foreign investors are not being charitable. They need an accept-
able interest rate given their assessment of the risks involved.
We now find ourselves in the position of needing more foreigners
to fill the deficit with a higher risk premium needed due to our
questionable banks and political discipline. This dictates a
higher interest rate, which is emphatically not what is needed as
the nation slips into recession!
Federal Receipts and Expenditures as Percent of GNP
24%
23
22
Federal Expenditures
21
Percent of GNP
20
19
18
17
Federal Receipts
16
15%
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
Fiscal Years
Source: Department of Commerce
- 19 -
REFERENCES
Grayson, Jr., C. Jackson, Chairman, American Productivity and
Quality Center; O'Dell, Carla S., President, O'Dell and
Associates, Productivity Brief, America's Third Deficit:
Education, American Productivity Center; article
excerpted from Grayson and O'Dell's book, American Business:
The Two-Minute Warning.
Holusha, John, "Are We Eating Our Seed Corn?", May 13, 1990.
International Monetary Fund, International Monetary Fund
Forecasts.
Koretz, Gene, Business Week, "Research and Development Spending
Growth is Down to a Crawl", August 21, 1989.
Lachica, Eduardo, The Wall Street Journal, "Japan Could Surpass
the U.S. in Output of Electronics Soon", June 11, 1990.
Lareau, William, American Samurai, Warrior for the Coming Dark
Ages of American Business, New Win Publishing Inc.
Lawrence, Paul, and Dyer, David, Renewing American Industry:
Educational Warning Signals, New York, The Free Press.
National Science Foundation, The Decline of Education.
Olson, Ted, Vice President, Technology Transfer National Center
for Manufacturing Sciences; Giffi, Craig, Deloitte & Touche;
Roth, Aleda V., Duke University; Seal, Gregory M., Deloitte
& Touche, Competing in World Class Manufacturing - America's
21st Century Challenge, Business One Irwin, Homewood, IL.
Staff Reporter, The Wall Street Journal, "Illiteracy is on Rise
Among U.S. Workers", October 9, 1990.
Stewart, Thomas A., Fortune, "A New American Century - Where We
Stand", Spring/Summer 1991.
Thor, Carl G., President, American Productivity and Quality
Center, Perspectives '91, Houston, TX.
Uchitelle, Louis, The Wall Street Journal, "U.S. Deficit for 1990
Surged to Near-Record $220.4 Billion".
- 20 -
AMERICA'S PRIDE INFORMATION RECIPIENTS
Industry Leaders
Fortune 100 Companies
Labor Leaders
Mr. Morton Bahr, AFL-CIO
Mr. Angelo Fosco, AFL-CIO
Mr. Vernon Mustard, AFL-CIO
Mr. Owen Bieber, AFL-CIO
Ms. Mary Hatwood Futrell, AFL-CIO
Mr. James Nolan, AFL-CIO
Mr. William Bywater, AFL-CIO
Mr. John Houis, Jr., AFL-CIO
Mr. Michael Sacco, AFL-CIO
Mr. Earl Carroll, AFL-CIO
Mr. Lane Kirkland, AFL-CIO
Mr. Albert Shanker, AFL-CIO
Mr. Dominick 'Ambrosio, AFL-CIO
Mr. Daniel Lasky, AFL-CIO
Mr. Jack Sheinkman, AFL-CIO
Mr. Charles Dale, AFL-CIO
Mr. Don Leep, AFL-CIO
Mr. Lynn Williams, AFL-CIO
Media
Mr. Michael Aaron, Associated Press
Mr. Robert E. Peterson, Senate Press Gallery
Mr. Andrew Heyward, CBS 48 Hours
Mr. Charles Abbott, United Press International
Mr. Cory SerVaas, M.D., The Saturday Evening Post
Mr. Peter Jennings, ABC World News Tonight
Ms. Jill Abramson, Wall Street Journal
Mr. Stephen B. Shepard, Business Week
Mr. Richard Kaplan, ABC - Prime Time Live
Mr. Rudy Abramson, Los Angeles Times
Mr. Richard M. Smith, NEWSWEEK
Mr. Ted Koppel, ABC - Nightline
Mr. Robert E. Adams, St. Louis Post Dispatch
Mr. Reginald A. Stuart, Philadelphia Daily News
Ms. Shelley Lewis, NBC Real Life
Mr. J. W. Anderson, Washington Post
Mr. Mortimer B. Zuckerman, U.S. News/World Rept.
Mr. Victor Neufeld, ABC - 20/20
Mr. Raymond W. Apple, New York Times
Mr. Roone Arledge, ABC
Mr. Eric Ober, CBS News
Ms. Cheryl Arvidson, Dallas Times Herald
Mr. Tom Brokaw, NBC Nightly News
Ms. Jane Pauley, NBC - Real Life
Ms. Jean Becker, USA TODAY
Mr. Daniel B. Burke, ABC
Mr. Dan Rather, CBS Evening News
Mr. Reginald K. Brack, Time
Mr. Tom Capra, NBC Today Show
Mr. Jack Reilly, ABC - Good Morning America
Mr. Michael Briggs, Chicago Sun Times
Mr. Johnny Carson, NBC Tonight Show
Mr. Ted Savaglio, CBS CBS This Morning
Mr. Charles R. Day, Industry Week
Mr. Fred DeCordova, NBC - Tonight Show
Ms. Diane Sawyer, ABC - Prime Time Live
Mr. Frederick J. Farris, International Herald Tribune
Mr. Barry Diller, Fox Broadcasting Company
Ms. Maria Shriver, NBC First Person
Mr. Thayer V. Illsley, House Press Gallery
Mr. Sam Donaldson, ABC Prime Time Live
Mr. Dorrance Smith, ABC - Nightline
Mr. Landon Jonwa, PEOPLE
Mr. Hugh Downs, ABC 20/20
Mr. Lawrence Tisch, CBS
Mr. Marshall Loeb, FORTUNE
Mr. Sid Feders, NBC First Person
Mr. Ted Turner, CNN - Cable News Network
Mr. Jason McManus, FORTUNE
Mr. Michael Gartner, NBC News
Ms. Barbara Walters, ABC - 20/20
Mr. James W. Michaels, FORBES
Mr. Don Hewitt, CBS - 60 Minutes
Mr. Robert C. Wright, NBC
Private Citizens
Mr. Mike Armbruster
Mr. Steven G. Daniel
Dr. Norman Vincent Peale
Ms. Gwen Bouma
Mr. & Mrs. Bud Doss
Mr. Ross Perot, Sr.
Mr. & Mrs. Peter Bouma
Mr. & Mrs. Terry Dunaway
Mr. & Mrs. Dennis Osbourne
Dr. John B. Buettner
Mr. & Mrs. Steve Fucoloro
Ms. Cheryl Reeve
Ms. Robin Callahan
Mr. David Glass
Mr. & Mrs. George Reeve
Mr. & Mrs. Dave Callahan
Mr. Chris Halbach
Mr & Mrs. Gary Reeve
Mr. & Mrs. Tom Callahan
Mr. & Mrs. Robert Harmon
Mr. & Mrs. Clinton Schattgen
Mr. Bob Callahan
Mr. & Mrs. Harry Harrington
Dr. Robert Schuller
Mr. John Callahan
Mr. & Mrs. Mark Korsmeyer
Mrs. Gail Shelley
Ms. Elaine Callahan
Mr. & Mrs. Howard Kuehner
Mr. & Mrs. John Shepherd
Mr. & Mrs. Dick Callaway
Professor Richard Lester
Mrs. John Stupp
Mr. & Mrs. Kevin Carlie
Mr. & Mrs. Ron Lohr
Mr. & Mrs. Jim Tumbull
Mr. & Mrs. Mark Carlie
Mr. & Mrs. Steve Loyd
Dr. & Mrs. Christopher Varnas
Mr. & Mrs. Dennis Chasteen
Ms. Anne F. Marsden
Mr. & Mrs. Gregory Vatterott
Mr. & Mrs. Robert Crutsinger
Mrs. Thomas E. McCary
Mr. & Mrs. George Wilson
Mr. & Mrs. Don Dahlin
Mr. Bud Nollman
AMERICA'S PRIDE INFORMATION RECIPIENTS
Government Leaders
President & Mrs. George H.W. Bush
Senator John H. Chafee
Senator Paul S. Sarbanes
Vice President J. Danforth Quayle
Senator Dan Coats
Senator Jim Sasser
Mr. James A. Baker, III, Secretary of State
Senator Thad Cochran
Senator Richard C. Shelby
Mr. Nicholas F. Brady, Secretary of the Treasury
Senator William S. Cohen
Senator Paul Simon
Mr. Jack Kemp, Secretary of Housing & Urban Dev.
Senator Kent Conrad
Senator Alan K. Simpson
Mr. Michael Boskin, Council of Economic Advisers
Senator Alan Cranston
Senator Arlen Spector
Mr. Berton Braley, Department of Labor
Senator Alfonse M. D'Amato
Senator Ted Stevens
Mr. D. Allan Bromley, The White House Office
Senator John C. Danforth
Senator Steve Symms
Mr. Lauro Cavazos, Department of Education
Senator Thomas A. Daschle
Senator Strom Thurmond
Mr. Chino Chapa, Department of Education
Senator Dennis DeConcini
Senator Malcolm Wallop
Mr. Carl Cox, Department of Commerce
Senator Alan J. Dixon
Senator John Wamer
Mr. John E. Cremeans, Department of Commerce
Senator Christopher Dodd
Senator Pete Wilson
Mr. Christopher Cross, Department of Education
Senator Bob Dole
Senator Timothy E. Wirth
Mr. Michael Darby, Department of Commerce
Senator Pete V. Domenici
Senator Harris Wofford
Mr. John Darby, Department of Commerce
Senator Dave Durenberger
Governor Cecil D. Andrus
Mr. Jeffrey Darby, Department of Commerce
Senator J. James Exon
Governor John D. Ashcroft
Mr. Richard Darman, Office of Management/Budget
Senator Wendell H. Ford
Governor Norman H. Bangerter
Mr. David Demarest, The White House Office
Senator Wyche Fowler
Governor Evan Bayh
Mr. Gary Edson, Office of the U.S. Trade Rep.
Senator Jake Gam
Governor Terry E. Branstad
Mr. Stephen Farrar, The White House Office
Senator John Glenn
Governor Carroll A. Campbell
Ms. Hazel Fiers, Department of Education
Senator Albert Gore
Governor W. Gaston Caperton
Mr. Max Marlin Fitzwater, The White House Office
Senator Slade Gorton
Governor Arne Carlson
Mr. Alan Ginsburg, Department of Education
Senator Bob Graham
Governor Robert P. Casey
Ms. Theresa Gorman, The White House Office
Senator Phil Gramm
Governor Michael N. Castle
Mr. Joseph Hagin, The White House Office
Senator Charles E. Grassley
Governor Lawton Chiles
Ms. Janet Hale, Office of Management/Budget
Senator Tom Harkin
Governor Bill Clinton
Ms. Carla Hills, Office of the U.S. Trade Rep.
Senator Orrin G. Hatch
Governor Mario M. Cuomo
Mr. Charles Kolb, Department of Education
Senator Mark O. Hatfield
Governor Jim Edgar
Mr. J. Steven Landefeld, Cncl. of Economic Advisers
Senator Howell T. Heflin
Governor John Engler
Mr. Lawrence Lindsey, The White House Office
Senator Jesse Helms
Governor Joan Finney
Ms. Lynn Martin, Department of Labor
Senator Emest F. Hollings
Governor James J. Florio
Mr. Jeffrey L. Mayer, Department of Commerce
Senator Gordon Humphrey
Governor Booth Gardner
Mr. Robert Mosbacher, Secretary of Commerce
Senator Daniel K. Inouye
Governor Judd Gregg
Mr. Thomas Murrin, Department of Commerce
Senator James M. Jeffords
Governor Walter J. Hickel
Mr. Rae Nelson, Office of Policy Development
Senator J. Bennett Johnston
Governor H. Guy Hunt
Mr. James Pinkerton, The White House Office
Senator Robert W. Kasten
Governor Bruce King
Mr. Roger Porter, The White House Office
Senator Edward M. Kennedy
Governor Ray E. Mabus
Ms. Susan Porter Rose, The White House Office
Senator J. Robert Kerrey
Governor James G. Martin
Mr. Sigmund Rogich, The White House Office
Senator John F. Kerry
Governor John McKernan
Mr. Richard Schmalensee, Cncl. of Economic Adv.
Senator Herb Kohl
Governor Ned McWherter
Mr. Michael Skarzynski, Department of Commerce
Senator Nancy Landon Kassenbaum
Governor George S. Mickelson
Mr. John H. Sununu, The White House Office
Senator Frank R. Lautenberg
Governor Zell Miller
Mr. John Taylor, Council of Economic Advisers
Senator Patrick J. Leahy
Governor Bob Miller
Mr. Jerry Thom, Department of Labor
Senator Carl Levin
Governor Ben Nelson
Mr. Antonio Villamil, Department of Commerce
Senator Joseph I. Lieberman
Governor Ann W. Richards
Mr. R. Douglas Wead, The White House Office
Senator Trent Lott
Governor Barbara Roberts
Mr. Olin Lewis Wethington, The White House Office
Senator Richard G. Lugar
Governor Charles 'Buddy' Roemer
Mr. S. Bruce Wilson, Office of the U.S. Trade Rep.
Senator Connie Mack
Governor Roy R. Romer
Chairman John Dingell, Energy & Commerce Cmte.
Senator John McClain
Governor William Schaefer
Chairman William Ford, Education & Labor Cmte.
Senator James A. McClure
Governor George A. Sinner
Chairman Lee Hamilton, Joint Economic Cmte.
Senator Mitch McConnell
Governor Richard A. Snelling
Chairman Leon Panetta, House Budget Cmte.
Senator Howard M. Metzenbaum
Governor Stan Stephens
Senator Brock Adams
Senator Barbara A. Mikulski
Governor Michael J. Sullivan
Senator Daniel K. Alaska
Senator George J. Mitchell
Governor Bruce Sundlun
Senator William Armstrong
Senator Daniel P. Moynihan
Governor J. Fife Symington
Senator Max Baucus
Senator Frank Murkowski
Governor Tommy G. Thompson
Senator Lloyd Bentsen
Senator Don Nickles
Governor George V. Voinovich
Senator Joseph R. Biden
Senator Sam Nunn
Governor John Waihee
Senator Jeff Bingaman
Senator Bob Packwood
Governor David Walters
Senator Christopher 'Kit' Bond
Senator Claibome Pell
Governor Lowell P. Weicker
Senator David L. Boren
Senator Larry Pressler
Governor William F. Weld
Senator Rudy Boschwitz
Senator David Pryor
Governor L. Douglas Wilder
Senator Bill Bradley
Senator Harry Reid
Governor Wallace G. Wilkinson
Senator John B. Breaux
Senator Donald W. Riegle
Governor Pete Wilson
Senator Richard H. Bryan
Senator Charles S. Robb
Congressman Thomas Foley
Senator Dale Bumpers
Senator John D. Rockefeller
Congressman Richard A. Gephardt
Senator Quentin N. Burdick
Senator William V. Roth
Congressman Newt Gingrich
Senator Conrad Burns
Senator Warren B. Rudman
Congressman William H. Gray
Senator Robert C. Byrd
Senator Terry Sanford
Congressman Robert H. Michel
"CORRESPONDENCE TRACKING"
TYPE:
INFORMATION
DOCUMENT NUMBER: 9122651
ORIGINATOR: 02
STATUS C
DIRECTORATE STATUS
FROM:
WHEELER, Daniel S.: THE AMERICAN LEGION MAGAZINE
TO:
DR. D.A. BROMLEY
DATE OF
CORRESPONDENCE: 07/19/91
SUBJECT: A THANK YOU FOR GRANTING THE MAGAZINE AN INTERVIEW,
"HI-TECH: CAN AMERICA MAINTAIN ITS EDGE?" AND COPIES
OF THE ISSUE.
DIRECTORATE
STAFF
ASSIGNED:
ASSIGNED:
ACTION
STAFF
REQUIRED:
ACTION:
SENDER'S DUE DATE:
OSTP DUE DATE:
STAFF DUE DATE
DATE COMPLETED:
DATE COMPLETED/DEPT:
COPIES TO: D. Allan Bromley
Sarah Keegan
INDUSTRIAL
WHITE HOUSE TRACKING #:
CONTACT PERSON:
PHONE:
EXT:
REMARKS: Enclosures to all.
CLOSED
OSTP RECEIVED: 07/23/91
FILE: P-DAB-EDITORIAL*P-IND-ECON COM
DEPT RECEIVED:
4651
THE AMERICAN
EGION
P.O. BOX 1055 INDIANAPOLIS, INDIANA 46206-1055 (317)635-8411
MAGAZINE
OFFICE OF THE PUBLISHER/EDITOR IN CHIEF
July 19, 1991
97-7
The Honorable D. Allan Bromley
Assistant to the President
Office of Science & Technology Policy
Old Executive Office Building
17th & Pennsylvania Streets, N.W.
Washington, D.C. 20506
Dear Mr. Bromley:
Enclosed are three copies of our most recent issue containing your
interview, "Hi-Tech: Can America Maintain Its Edge?," which was conducted by
James N. Sites. We're sure our readers will find it most informative.
Thank you for taking time from your busy schedule to grant us the
interview, and please extend our appreciate to your staff for their
cooperation in getting all the material finalized.
Sincerely yours,
Daniel Sewheiler
DANIEL S. WHEELER
Editor in Chief
Enclosures (3)
DIRECTOR
st 20 23 766 16
THE A-MERICAN
VA Page 18 page BUDGET DGET 1992
EGION
FOR GOD A
Pop Culture
Challenges
Traditional
Values
BACH
"CORRESPONDENCE TRACKING"
TYPE:
ACTION
DOCUMENT NUMBER: 9122056
ORIGINATOR: 02
STATUS I
DIRECTORATE STATUS
FROM:
BALESTRERO, Gregory: INSTITUTE OF INDUSTRIAL ENGINEERS
JUL 11 1991
TO:
DR. D.A. BROMLEY
DATE OF
CORRESPONDENCE: 07/03/91
SUBJECT: AN OFFER OF COOPERATION AND ASSISTANCE OF THE
INSTITUTE OF INDUSTRIAL ENGINEERS IN DR. BROMLEY'S
ROLE AS SCIENCE ADVISOR.
DIRECTORATE
STAFF
ASSIGNED: INDUSTRIAL
ASSIGNED:
ACTION
STAFF
REQUIRED: AS NECESSARY
ACTION:
SENDER'S DUE DATE:
OSTP DUE DATE:
07/25/91
STAFF DUE DATE
DATE COMPLETED:
DATE COMPLETED/DEPT:
COPIES TO: D. Allan Bromley
WHITE HOUSE TRACKING #:
CONTACT PERSON:
PHONE:
EXT:
REMARKS:
all. P. wrote lutiofor DAB'S signature 7/22
CLOSED
OSTP RECEIVED: 07/11/91
FILE: INDUSTRIAL-CRITICAL TECH.
DEPT RECEIVED:
THE WHITE HOUSE
WASHINGTON
July 23, 1991
Dear Dr. Balestrero:
Many thanks for the kind comments on our meeting of June 25. My Associate
Directors and I considered it a privilege to meet with you and your colleagues and to
exchange views on issues that we both consider important.
I am very aware of the key role played by industrial engineers in the product delivery
cycle. I fully expect to call on IIE as appropriate issues arise.
Sincerely,
DAnan D. Allan Bromley Royely
The Assistant to the President
for
Science and Technology
Dr. Gregory Balestrero
Executive Director
Institute of Industrial Engineers
P.O. Box 6150
Norcross, GA 30091-6150
2052
RECEIVED
INSTITUTE OF INDUSTRIAL ENGINEERS
HEADQUARTERS: 25 TECHNOLOGY PARK/ATLANTA, NORCROSS, GEORGIA 30092 (404) 449-0460
MAILING ADDRESS: P.O. BOX 6150, NORCROSS, GEORGIA 30091-6150, USA FAX #404-263-8532
All : 27
OFFICE OF THE
GREGORY BALESTRERO
EXECUTIVE DIRECTOR
DIRECTOR
July 3, 1991
D. Allan Bromley, Director
Office of Science and Technology Policy
358 Old Executive Office Building
17th & Pennsylvania Avenue, NW
Washington, DC 20506
Dear Dr. Bromley:
Many thanks for your contribution to the 1991 Convocation of Professional Engineering Societies held at the
National Academy of Engineering on Tuesday, June 25. Your candid remarks and evident clear vision were not
only refreshing but encouraging. Never before have I felt that the President had an advisor who understood the
critical scientific and technical issues challenging the future of the United States.
I am writing to you to offer the cooperation and assistance of the Institute of Industrial Engineers in your difficult
role as Presidential advisor. As you are aware, industrial engineers are key players in organizational change to
make companies more responsive to technological change and consumer demand, in short, reducing the time
to go from theory to practice, giving the company the edge over their competitor.
The contributions made by IE's in TQM, concurrent engineering, system simulation, and design for
manufacturing and assembly are documented and well known. In particular, IE's are best noted for their keen
and unique skill to best utilize and motivate employees at all levels within an organization. It is in these critical
areas where we would like to offer our help. More than half of the critical technologies addressed by the National
Critical Technologies Panel are mainstream to Industrial Engineers. Yet, we were not called upon as a Private
Sector Organization to help.
Give us the opportunity to help assess the critical technology issues facing the U.S. in the future.
Syny Best regards,
Gregory Balestrero
Executive Director
GB:jw
CC: Myron Wilson
D. Scott Sink
James Tompkins
Leland Blank
"CORRESPONDENCE TRACKING"
TYPE:
INFORMATION
DOCUMENT NUMBER: 9121964
ORIGINATOR: 02
STATUS C
DIRECTORATE STATUS
FROM:
KUHN, Thomas R.: EDISON ELECTRIC INSTITUTE
TO:
DR. D.A. BROMLEY
DATE OF
CORRESPONDENCE: 06/28/91
SUBJECT: THE LETTER EXPRESSES THE APPRECIATION OF THE
ELECTRIC UTILITY INDUSTRY AND THOMAS KUHN STATES
THAT HE LOOKS FORWARD TO SEEING DR. BROMLEY.
DIRECTORATE
STAFF
ASSIGNED:
ASSIGNED:
ACTION
STAFF
REQUIRED:
ACTION:
SENDER'S DUE DATE:
OSTP DUE DATE:
STAFF DUE DATE
DATE COMPLETED:
DATE COMPLETED/DEPT:
COPIES TO: D. Allan Bromley
INDUSTRIAL
Steve Olson
WHITE HOUSE TRACKING #:
CONTACT PERSON:
PHONE:
EXT:
REMARKS:
OSTP RECEIVED: 07/02/91
FILE:0. INDUSTRIAL-ECONOMIC COMP.
DEPT RECEIVED:
701 Pennsylvania Avenue, N.W.
Washington D.C. 20004-2696
Telephone 202-508-5555
EEI
EDISON ELECTRIC
THOMAS R. KUHN
INSTITUTE
President
June 28, 1991
The Honorable Allan Bromley
Assistant to the President for
Science and Technology
The White House
Washington, D.C. 20500
Dear Allan:
I recently had the pleasure of reading a short
piece about you in Fortune magazine's special
edition, "The New American Century."
Most impressive, and I am sure an honor to be
featured with individuals who have contributed
greatly to keeping America competitive. The
electric utility industry certainly appreciates
and values the emphasis this Administration has
placed on science and technology, not to mention
your personal contributions.
I look forward to the opportunity of seeing you
soon.
Sincerely,
Con
Thomas R. Kuhn
TRK:sfk
THE WHITE HOUSE
WASHINGTON
July 9, 1991
Dear Dr. Kuhn:
Many thanks for your warm note of June 28. I would certainly look forward to the
possibility of chatting with you, because as an old utility director of many years
standing, and as a former member of the Scientific Advisory Board of the Electric
Power Research Institute in Palo Alto, I am sure that we have a number of mutual
friends and are concerned about a number of the same problems. I will be out of the
country for the week of the 15th of July and will be fairly well tied up for the last
week in July. Perhaps if you were to call my office we might be able to arrange a
mutually convenient time during the first two weeks of August. During the last two
weeks I will again be out of the country. My telephone number here is 202/456-7116
and my appointment secretary if Ms. Marian Nida.
I shall look forward to hearing from you and to getting together. With all best
wishes,
Sincerely yours,
D. Allan Bromley
The Assistant to the President
for
Science and Technology
Dr. Thomas R. Kuhn
Edison Electric Institute
701 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2696
701 Pennsylvania Avenue, N.W.
Washington D.C. 20004-2696
Telephone 202-508-5555
ЭН
EDISON ELECTRIC
THOMAS R. KUHN
INSTITUTE
President
June 28, 1991
The Honorable Allan Bromley
Assistant to the President for
Science and Technology
The White House
Washington, D.C. 20500
Dear Allan:
I recently had the pleasure of reading a short
piece about you in Fortune magazine's special
edition, "The New American Century."
Most impressive, and I am sure an honor to be
featured with individuals who have contributed
greatly to keeping America competitive. The
electric utility industry certainly appreciates
and values the emphasis this Administration has
placed on science and technology, not to mention
your personal contributions.
I look forward to the opportunity of seeing you
soon.
Sincerely,
Com
Thomas R. Kuhn
TRK:sfk
"CORRESPONDENCE TRACKING"
TYPE:
ACTION
DOCUMENT NUMBER: 9121433
FROM:
COUNCIL ON COMPETITIVENESS
TO:
DR. BROMLEY
DATE OF
CORRESPONDENCE: 05/13/91
SUBJECT: REQUEST TO SERIOUSLY CONSIDER THE RECOMMENDATIONS
CONTAINED IN THE COUNCIL'S NEW REPORT, " GAINING NEW
GROUND: TECHNOLOGY PRIORITIES FOR AMERICA'S FUTURE".
ASSIGNED TO: INDUSTRIAL
ACTION REQUIRED: FOR DAB SIGNATURE
SENDER'S DUE DATE:
OSTP DUE DATE:
05/29/91
DATE COMPLETED:
6/5/91
COPIES TO: D. Allan Bromley
WHITE HOUSE TRACKING #:
CONTACT PERSON:
REMARKS:
P-
DATE RECEIVED: 05/15/91
FILE: INDUSTRIAL TECHNOLOGY-
ECONOMIC COMPETETIVENESS
9121433
Council on Competitiveness
May 13, 1991
RECEIVED
91 MAY 15 All 58
The Honorable D. Allan Bromley
Assistant to the President for
Science and Technology Policy
OFFICE OF
The White House
DIRECTOR
Washington, DC 20500
To the Honorable D. Allan Bromley:
We are writing you in our role as National Affiliates of the Council on
Competitiveness to urge that you consider seriously the recommendations contained
in the Council's new report, Gaining New Ground: Technology Priorities for
America's Future.
This report is the result of a two-year effort by top technology experts
around the country to identify the critical generic technologies driving America's
economic performance. It asks one basic question: Do our current national policies
and priorities adequately address the commercial technology challenge facing the
United States? It concludes that they do not and warns that unless America shores
up its technological strength in the decade ahead, U.S. jobs, standard of living and,
ultimately, national security will be at risk.
Gaining New Ground spells out where we are ahead, where we are behind
and, more importantly, what we as a nation must do to strengthen our technological
leadership. It represents the first time that the U.S. private sector has reached a
consensus on these issues. In addition to proposals for industry and universities, the
report spells out four recommendations for government action:
Make research on generic industrial technology a national R&D priority;
Create a U.S. economic climate more conducive to manufacturing,
innovation and investment in technology;
Communicate the priority of technology and competitiveness to the
American public and involve key policymaking bodies more closely in the
issue; and
o Develop policies and programs to ensure that America has a world-class
technology infrastructure.
Each of these recommendations is backed up with discussion of specific
government programs and policies that can make a difference. We urge you to
consider them carefully in your deliberations of U.S. science and technology policies.
Sincerely,
900 17TH Street NW
Suite 1050
Washington, DC 20006
(202) 785-3990
FAX (202) 785-3998
William Laidlaw, Jr.
Albert W. Moore
Executive Vice President
President
American Assembly of Collegiate
The Association for
Schools of Business
Manufacturing Technology
Richard S. Nicholson
Bruce K. MacLaury
Executive Officer
President
American Association for the
The Brookings Institution
Advancement of Science
Don Blandin
Richard Iverson
Director
President
Business-Higher Education Forum
American Electronics
Association
David M. Abshire
President
Thomas R. Horton
Center for Strategic and
President and Chief
International Studies
Executive Officer
American Management
Association
Malcolm Lovell, Jr.
Director
Collective Bargaining Forum
C. Jackson Grayson, Jr.
Chairman
American Productivity and
Preston Townley
Quality Center
President
The Conference Board
Curtis E. Plott
Executive Vice President
Ken R. Kay
American Society for
Executive Director
Training and Development
CORETECH
David T. McLaughlin
Alan H. Magazine
Chairman
President
The Aspen Institute
Health Industry
Manufacturers Association
Robert M. Rosenzweig
President
Association of American
Universities
George Kozmetsky
Director
IC 2 Institute
Charles Larson
Executive Director
Industrial Research Institute, Inc.
Leo C. Fanning
Staff Director
Institute of Electrical and
Electronics Engineers,
U.S. Activities
Alan Wolff
Counsel
Labor-Industry Coalition
for International Trade
William H. Kolberg
President
National Alliance of Business
Jerry Jasinowski
President
National Association of
Manufacturers
Robert Clodius
President
National Association of State
Universities and Land-Grant Colleges
Edward A. Miller
Executive Director
National Center for
Manufacturing Sciences
ABOUT THE COUNCIL
Founded in 1986, the Council on Competi-
course; and assist in the development of specific
tiveness is a nonprofit, nonpartisan organization
public policies and private-sector initiatives. To
of chief executives from business, higher educa-
that end, the Council focuses on issues in the
tion and organized labor who have joined to-
areas of fiscal policy, science and technology,
gether to pursue a single overriding goal: to
international economics and trade, and human
improve the ability of American companies and
resources.
workers to compete more effectively in world
The Council is governed by an executive
markets.
committee and draws on the resources of its
To build consensus within the public- and
national affiliates - - more than two dozen trade
private-sectors on the actions needed to help
associations, professional societies and research
Americans compete, the Council pursues a three-
organizations - to help analyze issues and
part agenda: increase public awareness of the
develop consensus. The Council is privately
breadth and severity of America's economic
supported through contributions from its mem-
problems; mobilize the political will required to
bers, foundations and other granting institutions.
set the United States on a positive economic
EXECUTIVE COMMITTEE
CHAIRMAN
Earl Graves
Black Enterprise Magazine
George M.C. Fisher
Motorola, Inc.
Paul Gray
Massachusetts Institute of Technology
VICE CHAIRMEN
B. R. Inman
Thomas E. Everhart
U.S. Navy (retired)
California Institute of Technology
Jerry Jasinowski
Donald E. Petersen
National Association of Manufacturers
Ford Motor Company
Gerald Laubach
Howard D. Samuel
Pfizer, Inc.
Industrial Union Department, AFL-CIO
Peter Likins
EXECUTIVE COMMITTEE
Lehigh University
John F. Akers
Thomas J. Murrin
International Business Machines Corporation
Duquesne University
John L. Clendenin
John D. Ong
BellSouth Corporation
B.F. Goodrich Company
Joseph Duffey
Michael Porter
University of Massachusetts
School of Business Administration
Harvard University
David Gardner
University of California
Carl E. Reichardt
Ray Stata
Wells Fargo & Co.
Analog Devices, Inc.
Arnold Weber
Ian Ross
AT&T Bell Laboratories
Northwestern University
Henry B. Schacht
Lynn R Williams
United Steel Workers of America
Cummins Engine Company, Inc.
Steve P. Yokich
Roland W. Schmitt
United Auto Workers
Rensselaer Polytechnic Institute
Albert Shanker
John A. Young
American Federation of Teachers, AFL-CIO
Hewlett-Packard Company
Jack Sheinkman
Amalgamated Clothing and Textile Workers Union,
AFL-CIO CLC
GENERAL MEMBERSHIP
Paul Allaire
James N. Corbridge, Jr.
University of Colorado at Boulder
Xerox Corporation
William H. Danforth
Edwin L. Artzt
The Procter & Gamble Company
Washington University
Kenneth T. Derr
Norman R. Augustine
Martin Marietta Corporation
Chevron Corporation
Philip E. Austin
John DiBiaggio
The University of Alabama System
Michigan State University
Grant Dove
Tom H. Barrett
Microelectronics and Computer Technology
The Goodyear Tire & Rubber Company
Corporation
J.J. Barry
International Brotherhood of Electrical Workers
Gordon P. Eaton
Iowa State University
William H. Baughn
Richard J. Elkus, Jr.
University of Colorado
Prometrix Corporation
Donald R. Beall
Charles E. Exley, Jr.
Rockwell International
NCR Corporation
Riley Bechtel
Saul K. Fenster
Bechtel Group, Inc.
New Jersey Institute of Technology
Steven C. Beering
Purdue University
John B. Fery
Boise Cascade Corporation
Samuel E. Bodman
Abraham S. Fischler
Cabot Corporation
Nova University
John V. Byrne
Edward T. Foote II
Oregon State University
University of Miami
R. E. Cartledge
Union Camp Corporation
James O. Freedman
Dartmouth College
Robert Cizik
E. Gordon Gee
Cooper Industries
Ohio State University
Ronald E. Compton
Aetna Life & Casualty Company
Raymond V. Gilmartin
James D. McComas
Becton Dickinson and Company
Virginia Polytechnic Institute and State University
Richard D. McCormick
Sam Ginn
US West, Inc.
Pacific Telesis Group
R. Michael McCullough
Joseph T. Gorman
Booz-Allen & Hamilton Inc.
TRW, Inc.
Harold A. McInnes
Katharine Graham
Washington Post Company
AMP Incorporated
Patrick W. Gross
Quentin C. McKenna
American Management Systems, Incorporated
Kennametal, Inc.
Brian McLaughlin
Sheldon Hackney
University of Pennsylvania
Hurco Companies, Inc.
R. S. Miller, Jr.
Sidney Harman
Harman International Industries, Inc.
Chrysler Motors Corporation
William R. Miller
John B. Henry
Crop Genetics International
Bristol-Myers Squibb Company
Gordon E. Moore
Theodore L. Hullar
University of California, Davis
Intel Corporation
I
Southwood J. Morcott
Howard Jenkins
Publix Super Markets, Inc.
Dana Corporation
Patrick J. O'Rourke
James Jones
American Stock Exchange, Inc.
University of Alaska, Fairbanks
Peter Peterson
Jerry Junkins
Texas Instruments Incorporated
The Blackstone Group
Donald Kennedy
John J. Phelan, Jr.
New York Stock Exchange
Stanford University
Henry Koffler
Charles M. Pigott
The University of Arizona
PACCAR Incorporated
John H. Krehbiel, Jr.
Frank Popoff
The Dow Chemical Company
Molex Incorporated
Ralph S. Larsen
Wesley W. Posvar
Johnson and Johnson
University of Pittsburgh
Leonard Lauder
Agnar Pytte
Case Western Reserve University
Estee Lauder, Inc.
Frank W. Luerssen
Harold J. Raveché
Inland Steel Industries, Inc.
Stevens Institute of Technology
Lawrence G. Rawl
C. Peter Magrath
University of Missouri
Exxon Corporation
(Rev.) Edward A. Malloy, CSC
Hunter R. Rawlings
University of Notre Dame
University of Iowa
Robert H. Malott
James J. Renier
FMC Corporation
Honeywell, Incorporated
A. William Reynolds
Jim Manzi
Lotus Development Corporation
GenCorp
James E. Martin
Ralph E. Richardson
Auburn University
Thomas Publishing Company
William Richardson
Jerre L. Stead
The Johns Hopkins University
Square D Company
Terry P. Roark
Richard J. Stegemeir
The University of Wyoming
Unocal Corporation
Walter L. Robb
Donald C. Swain
General Electric Company
University of Louisville
James D. Robinson III
Robert A. Swanson
American Express Company
Genentech, Incorporated
M. Richard Rose
Chang-Lin Tien
Rochester Institute of Technology
University of California, Berkeley
Allen B. Rosenstein
W. R. Timken, Jr.
Pioneer Magnetics, Inc.
The Timken Company
George Rupp
Stephen Joel Trachtenberg
Rice University
George Washington University
Steven B. Sample
Richard P. Traina
State University of New York at Buffalo
Clark University
Rosemary S. J. Schraer
R. Gerald Turner,
University of California, Riverside
The University of Mississippi
John Sculley
P. Roy Vagelos
Apple Computer, Inc.
Merck & Company, Inc.
Kenneth A. Shaw
Josh S. Weston
The University of Wisconsin System
Automatic Data Processing, Inc.
Andrew C. Sigler
Kay R. Whitmore
Champion International Corporation
Eastman Kodak Company
John Silber
Joseph D. Williams
Boston University
Warner-Lambert Co.
Bernard F. Sliger
Edgar Woolard
Florida State University
DuPont Company
Samuel H. Smith
Joe B. Wyatt
Washington State University
Vanderbilt University
Paul R. Staley
Charles E. Young
The PQ Corporation
University of California at Los Angeles
Malcolm Stamper
James H. Zumberge
The Boeing Company
University of Southern California, University Park
Thomas M. Stauffer
University of Houston, Clear Lake
THE WHITE HOUSE
WASHINGTON
June 6, 1991
Dear Affiliates:
Thank you for your letter of May 13th regarding the Council on Competitiveness
report Gaining New Ground: Technology Priorities for America's Future.
It is important and significant that individuals of the private sector, and of the
caliber of those involved in the Council's study, invest the time and effort to address
the national competitiveness issues that, as citizens, concern all of us. I consider the
Council's analysis and recommendations to be a significant contribution to reaching a
national consensus on appropriate industry, university and government roles in
achieving our national goals.
Sincerely,
Danan Bornlay
D. Allan Bromley
The Assistant to the President
for
Science and Technology
National Affiliates of the
Council on Competitiveness
900 17th Street, N.W.
Suite 1050
Washington, D.C. 20006
"CORRESPONDENCE TRACKING"
TYPE:
INFORMATION
DOCUMENT NUMBER: 9121358
FROM:
WATKINS, James D.: THE SECRETARY OF ENERGY
TO:
DR. BROMLEY
DATE OF
CORRESPONDENCE: 05/07/91
SUBJECT: MEMORANDUM FOR THE HONORABLE NICHOLAS F. BRADY, RE:
THE ECONOMIC POLICY COUNCIL WORKING GROUP ON SCIENCE
AND TECHNOLOGY
ASSIGNED TO:
ACTION REQUIRED:
SENDER'S DUE DATE:
OSTP DUE DATE:
DATE COMPLETED:
COPIES TO: D. Allan Bromley
INDUSTRIAL
WHITE HOUSE TRACKING #:
CONTACT PERSON:
REMARKS:
DATE RECEIVED:
FILE: INDUSTRIAL-ECONOMIC COMPETITINESS
9121358
RIMENT OF
PINERGY VOIDEINE STATES OF
The Secretary of Energy
Washington, DC 20585
RECEIVED
May 7, 1991
91 MAY 7 P5: 14
OFFICE OF THE
DIRECTOR
MEMORANDUM FOR THE HONORABLE NICHOLAS F. BRADY
SECRETARY OF THE TREASURY
SUBJECT:
Economic Policy Council Working Group on
Science and Technology
Thank you for inviting representation from the Department of
Energy on the Economic Policy Council Working Group on Science and
Technology. Linda G. Stuntz, Deputy Under Secretary for Policy,
Planning, and Analysis, will serve as the Department's
representative to the Working Group, with support from the
Department's technical organizations as appropriate.
Jian James D. wath Watkins
Admiral, U.S. Navy (Retired)
CC: The Honorable D. Allan Bromley
"CORRESPONDENCE TRACKING"
TYPE:
ACTION
DOCUMENT NUMBER: 9121289
FROM:
LEES, Francis A,: ST. JOHN'S UNIVERSITY
TO:
DR. BROMLEY
DATE OF
CORRESPONDENCE: 04/28/91
SUBJECT: FOUR REQUESTS REGARDING TECHNOLOGY AND INDUSTRIAL
COMPETITVENESS.
ASSIGNED TO: INDUSTRIAL
ACTION REQUIRED: COMPLETE REQUESTS
#3 AND #4.
SENDER'S DUE DATE:
OSTP DUE DATE:
05/15/91
DATE COMPLETED:
4/5/91 Sent capies, of
COPIES TO: ADMINISTRATION
WHITE HOUSE TRACKING #:
CONTACT PERSON:
REMARKS: Requests #1 and #2 will be completed and sent under seperate
cover.
DATE RECEIVED: 05/01/91
FILE: INDUSTRIAL- Economic
Competitiveness
St. John's University
GRAND CENTRAL AND UTOPIA PARKWAYS
JAMAICA, NEW YORK 11439
RECEIVED
COLLEGES OF BUSINESS ADMINISTRATION
91
MAY
/
TELEPHONE:
99043
April 28, 1991
Dr. Allan Bromley
OFFICE
Director, Office of Science i Technology
The White House
DIRECTOR
1600 Pennsylvania Ave NW
Washington, D.C. 20500
Dear Dr. Bromley,
I am updating myself on the Administration policy position
with regard to technology and industrial competitiveness. I would
appreciate it if you could send me the following.
1) A copy of the 13 page paper on administration policy on
technology. This is referred to in the April issue of
Challenge, published by the Council on Competitiveeness.
I believe this was issued late last year.
2) Name of the contact person, address, phone number for the
Federal Coordinating Council for Science and Engineering
Technology (FCCSET).
3) The legislative background and authority for creating the
Critical Technologies Institute.
4) Copy of recent listing of 22 areas of technology development
considered critical to national prosperity and security.
I appreciate your assistance.
Very truly yours,
Framis a been
Francis A. Lees
Department of Economics
and Finance
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF SCIENCE AND TECHNOLOGY POLIC
WASHINGTON, D.C. 20506
DATE: 5/3/91
TO:
Maryanne Bach
ADDRESS:
730 Jackson Place
Telephone Number:
395-5101
Fax Number:
395 - -
FROM:
Mary Suit
Telephone Number:
395-3897
Fax Number: (202) 395-3719
Number of Pages (including cover sheet):
2
SPECIAL INSTRUCTIONS:
Maryanne-
The following piece of correspondence requests the name of $
contact person, for the Federal Coordinating Council for Science
and Engineering Technology (FCCSET), and the address & phone number.
I will send out the information with your approval. Ann thought
it would be wise to run this by you first so that you were aware
of the person requesting the information. Thanks.
TRANSMISSION REPORT
THIS DOCUMENT (REDUCED SAMPLE ABOVE)
WAS SENT
** COUNT **
# 2
*** SEND ***
NO
REMOTE STATION I.D.
START TIME
DURATION
#PAGES
COMMENT
1
2023951575
5- 3-91
9:57AM
0'53"
2
ERROR CORRECT MODE
TOTAL
0:00'53"
2
XEROX TELECOPIER 7021
"CORRESPONDENCE TRACKING"
TYPE:
INFORMATION
DOCUMENT NUMBER: 9121239
FROM:
DIXON, JOHN
TO:
DR. BROMLEY
DATE OF
CORRESPONDENCE: 04/19/91
SUBJECT: A REPORT FROM NATIONAL RESEARCH COUNCIL ENTITLED
"IMPROVING ENGINEERING DESIGN: DESIGNING FOR
COMPETITIVE ADVANTAGE"
ASSIGNED TO: D. Allan Bromley
ACTION REQUIRED:
SENDER'S DUE DATE:
OSTP DUE DATE:
DATE COMPLETED:
COPIES TO:
WHITE HOUSE TRACKING #:
CONTACT PERSON:
REMARKS:
Report was sent to Dr. Bromley
DATE RECEIVED:
FILE: Industrial economic
competitiveness
9/2/239
UNIVERSITY OF MASSACHUSETTS
Department of
AT AMHERST
Mechanical Engineering
RECEIVED
Engineering Laboratory Building
Amherst, MA 01003
1863
(413) 545-2505
91 APR 25 Alo : 44
April 19, 1991
OFFICE UF THE
Dr. Allen Bromley
DIRECTOR
Office of Science and Technology Policy
11 New Executive Office Building
Washington, D.C. 20506
Dear Dr. Bromley:
I would like to call your attention to the enclosed report from the
National Research Council entitled "Improving Engineering Design: Designing
for Competitive Advantage."
Many causes have been advanced for the decline of many U.S.
industries in international competition - - and the associated loss of jobs and tax
revenues. However, this is the first that gets to the heart of the matter.
Design is a driver in fixing the competitiveness of manufacturing
industries. That is, it is the one thing you would fix if you could fix only one
thing. Yet the U.S. engineering design infrastructure — - education, research, and
industrial practice — - remains broken.
This NRC report explains not only what is wrong, but also how to
fix it. I hope you and your staff will take time to consider its arguments and
recommendations.
Sincerely,
John John R. Dixon Date
Professor
JRD/dk
The University of Massachusetts is an Affirmative Action/Equal Opportunity Institution
file
Document Originally
Attached to
Following Page
"CORRESPONDENCE TRACKING"
TYPE:
INFORMATION
DOCUMENT NUMBER: 9121404
FROM:
MCCORMACK, Richard T.: DEPARTMENT OF STATE
TO:
DR. BROMLEY
DATE OF
CORRESPONDENCE: 04/05/91
SUBJECT: MEMORANDUM FOR LARRY EAGLEBURGER, RE: THE COUNCIL ON
COMPETIVITENESS REPORT
ASSIGNED TO:
ACTION REQUIRED:
SENDER'S DUE DATE:
OSTP DUE DATE:
DATE COMPLETED:
COPIES TO: D. Allan Bromley
Ken Yale
Dr. Phillips
WHITE HOUSE TRACKING #:
CONTACT PERSON:
REMARKS:
P-
DATE RECEIVED: 05/14/91
FILE: INDUSTRIAL - Economic
Competitiveness
UNDER SECRETARY OF STATE
FOR ECONOMIC AFFAIRS
BEASELVE91
91 MAY 14 P12 : 26
TO:
Dr. Allan Bromley
The White House
OFFICE
FROM:
Richard T.
For your information
United States Department of State
Under Secretary of State
for Economic Affairs
Washington, D.C. 20520
April 5, 1991
MEMORANDUM FOR LARRY EAGLEBURGER
FROM:
Richard T. McCormack buil
SUBJECT:
The Council on Competitiveness Report
Gene McAllister has forwarded to you a summary of the
report of the Council on Competitiveness that outlines some
serious technological challenges facing us as a country. He
recommends that you receive these people, and do a little more
PR on behalf of the Department of State with the U.S. business
community.
There is nothing wrong with his proposals. I would
recommend that you go beyond this, and see what can be done to
advance the cause outlined by the report itself.
You'll discover a lot of garment rending on the part of
some people about "industrial policy" implications of the
Council's report.
The fact is that we won World War II with "industrial
policy". We launched our space program with "industrial
policy". We are today living off the intellectual legacy of
the post sputnik efforts launched by the Eisenhower/Kennedy
administrations. And in my view. we need to disengage
ourselves from the knee-jerk, cliche-ridden debate about
"industrial policy", and consider what we can do about the
problems identified by Inman and his people. This will
involve budgetary considerations, but in my view, they need to
be undertaken.
The first step I recommend would be a long, private
conversation between you and Allan Bromley, the President's
Science Advisor. Bromley is one of the ablest people of the
entire administration, and you would profit from interacting
with him in this matter.
bcc: Dr. Bromley (White House)
Deputy Secretary Schnabel (Commerce)
THE WHITE HOUSE
WASHINGTON
July 9, 1991
PLEASE FORWARD
Dear Richard:
I have not had the time to really wade through the piles for correspondence on my
desk for several months because of extended travel to the Soviet Union and elsewhere.
I want in particular to thank you for your very generous comments in your
memorandum for Larry Eagleburger, dated April 5. Your support in this whole
matter of getting technology policy airborne without having it shot down in the guise
of a dreaded industrial policy has been very much appreciated and I have enjoyed
our interactions since my arrival here in Washington.
Larry has been so tied up with the aftermath of Desert Storm that it has simply not
been possible to get together with him, but I shall certainly make every effort to do
so.
Let me take this opportunity to wish you every success, both personal and
professional, in your new endeavors. Whenever they bring you back here to
Washington I would welcome the opportunity to invite you to join me for lunch at the
White House Mess. Please do let us keep in touch.
With warmest best wishes,
Sincerely yours,
Ana
D. Allan Bromley
The Assistant to the President
for
Science and Technology
Dr. Richard T. McCormack
Under Secretary of State for
Economic Affairs
U.S. Department of State
Washington, D. C. 20520
"CORRESPONDENCE TRACKING"
TYPE:
INFORMATION
DOCUMENT NUMBER: 9120990
FROM:
MITTELSTADT, Eric: GMFanuc Robotics Corporation
TO:
DR. BROMLEY
DATE OF
CORRESPONDENCE: 03/29/91
SUBJECT: LETTER TO THE VICE PRESIDENT CONCERNING ELEMENTS
THAT SHOULD BE INCLUDED IN OUR INDUSTRIAL
COMPETITIVENESS PROGRAM.
ASSIGNED TO:
ACTION REQUIRED:
SENDER'S DUE DATE:
OSTP DUE DATE:
DATE COMPLETED:
COPIES TO: D. Allan Bromley
Dr. Phillips
WHITE HOUSE TRACKING #:
CONTACT PERSON:
REMARKS:
DATE RECEIVED: 04/03/91
FILE: INDUTRIAL - Economic
Competitiveness
9120990
GMFanuc
GMFanuc Robotics Corporation
2000 South Adams Road
Telephone: (313) 377-7000
Robotics
Auburn Hills, Michigan 48326-2800
Fax: (313) 377-7362
Eric Mittelstadt
President and
91 OFFICE APR RECEIVED 3 P3:16
Chief Executive Officer
DIRECTOR
OF
THE
March 29, 1991
The Honorable J. Danforth Quayle
Vice President of the United States
The White House
Washington, D.C. 20500
Dear Vice President:
The Roundtable you held in the Detroit area last year focused
much needed attention on the industrial competitiveness of
the United States. I continue to be deeply concerned about
our country's competitive position, but I believe you and the
President have an unprecedented opportunity to move this
critically important issue forward, especially now in light
of our recent success in the Persian Gulf.
At no other time in modern history has a President enjoyed
support as broad and deep as President Bush does today. This
support results not only from the triumph of Operation Desert
Storm, but, equally important, from the President's success
in assembling a coalition of varied interests to accomplish a
single unified objective. That same unity of purpose could
put the country well on the road to reaching our goals of
industrial competitiveness.
Leadership from the top -- from President Bush and yoursêlf
-- is essential, and it must come now while our national
pride and confidence can be marshaled to solve problems and
achieve results. It can be the key to seizing the initiative
on a full agenda of domestic issues.
In the attached white paper I have elaborated on elements I
believe should be included in our industrial competitiveness
program. I am at your disposal or that of anyone else in the
Administration to explore these ideas further, and to do
whatever I can to help our country be successful in the
"theater of economic competition," just as it was in the
"theater of the Gulf."
Respectfully,
Ein mittebitt
Eric Mittelstadt
attachments
CC: (see attached list)
Detroit
Düsseldorf
Toronto
Paris
Coventry
Los Angeles
Milan
A COALITION FOR COMPETITIVENESS
A key to the brilliant success of Operation Desert Storm was
President Bush's ability to build a coalition among 28 nations with
divergent interests, historical relationships and political
ambitions. That same kind of collective effort is now needed
within our country to improve the ability of U.S. companies to
compete effectively in global markets.
In my view there are four major themes that pertain to the
competitiveness issue -- themes that can be related to the recent
success in the Persian Gulf.
Theme #1
Competitiveness requires the highest level of quality from all
Americans whether they are production workers or educators,
managers or clerics, sales people or government employees.
Quality, in turn, begins with pride in what we do.
As Americans, we are currently experiencing the greatest wave of
national pride since the end of World War II. While that pride is
directed at our troops, their leaders and the technology that made
them successful, we have an opportunity to capitalize on it
domestically. Let's spread the focus on our patriotic pride and
energy to include the accomplishments of citizens in all
professions and walks of life, as well as how we interact with one
another.
President Bush is in a unique position to assemble a coalition to
support this approach and to provide its leadership.
Theme #2
Our quest for quality must also embody a spirit of concern for one
another, an extension, if you will, of the "thousand points of
lights" to every citizen.
We must be concerned not only with competitiveness from an
international economic point of view, but also in terms of how we
handle the pressing problems of the environment, the poor, the
elderly, the under-educated, the homeless and many others in need
in our country and throughtout the world.
Theme #3
The benefits of global competitiveness extend far beyond the
business and labor communities to every individual citizen.
Because each of us is a consumer, we all have a vested interest in
making and keeping the country competitive. It assures us of the
kind of quality, price and selection we must have in order to
maintain and improve our standard of living. Simply stated,
improved competitiveness means more goods, higher quality, better
prices, greater job security and higher wages, as well as a
stronger economy, higher tax collections at all levels of
A COALITION FOR COMPETITIVENESS
Page 2.
government, and the resulting improvement in our ability to afford
the many pressing problems mentioned in Theme #2.
Once the public understands that everyone has a stake in this
issue, I am convinced there will be a ground swell of demand for
appropriate action in such areas as research and development,
regulatory rationalization, and tax policies. I am also convinced
that demand will come as strongly from non-industrial states such
as Wyoming as it does from more industrialized states, like
Michigan. Again, the President's ability to build and lead a
broad-based constituency can be of enormous influence here.
Theme #4
This initiative costs nothing. No new taxes are required, no new
agencies or legislation are needed. All that is required is the
President's leadership in harnessing pride and patriotism to move
the country forward. It is an opportunity to articulate a vision
for this country, to issue a "call to arms" to the pride that lies
in every American.
In addition to costing nothing, this approach builds on our
American tradition of individual pride, creativity and work ethic.
It can make everyone in this country feel more like part of the
solution, instead of the problem. It focuses on the overall
positives of what we can do as individuals, instead of the
negatives of our differences.
The euphoria generated by Operation Desert Storm can be a
tremendously positive force in the domestic arena, or it can be a
perishable force of which we fail to take advantage. If the pride
that currently energizes this country can be channeled into a
national competitiveness policy, we can have every confidence that
the United States will prevail in the global economic competiton
that faces the next generation.
To that end, I propose a "Pride USA" campaign to focus patriotism
and national pride on economic competition. It will call upon the
vast majority of Americans who are ready to contibute and do their
part, no matter what their calling. By starting in this way, we
can mobilize the support of the American public for the necessary
difficult decisions and everyday actions that need to be made by
all of us to assure economic success.
Finally, this need not be limited to the federal level -- state and
local leaders can and should make the same points, to lead their
constituency toward being part of the solution.
A STAR IN THE GM HEAVENS /PAGE 50
NDUSTRYWEEK
THE INDI TRY MANAGEMENT MAGAZINE / A PENTON PUBLICATION / MARCH 18, 1991
A
NATIONAL
INDUSTRIAL
POLICY
NOW
DO WE NEED ONE?
Page 56
WE ALREADY HAVE ONE.
WHAT WE NEED
IS A BETTER ONE.
Page 5
IW SPECIAL FOCUS- -
NOW
Do
WE
NEED
A
There's good reason to be concerned about
critical to preserving national eco-
nomic security is loose at best.
Indeed, two benchmark mea-
sures of U.S. competitiveness in a
global context offer managers pre-
cious little basis for cheer:
U.S. labor productivity growth
(in manufacturing) lags well behind
rates being posted in other econom-
ically advanced countries. Ameri-
ca's 2.6% increase in 1989, the
most recent year for which com-
parative data are available, was ane-
mic compared with Japan's 5.8%
growth, the U. K.'s 5.1%, Ger-
many's 4.5%, and France's 4.7%.
What's more, though U. S. manufac-
"
turing workers posted a 3% produc-
tivity gain in 1990, overall nonfarm
To say the
business productivity fell 0.8% last
year, its worst showing in eight
matter is
years.
complicated
The U.S. merchandise trade defi-
cit with the rest of the world nearly
is to grossly
septupled between 1981 and 1987,
reaching a record $152.1 billion in
JEAN-FRANCOIS ALLAUX
understate
1987. Now around the $100 billion
the reality.
mark, it's still four times the level
of a decade ago. Alarmingly, the
"
U. S. has not posted a merchandise
trade surplus since 1975-in sharp
BY JOHN S. MCCLENAHEN
contrast to the solid decade of sur-
pluses recorded during the 1960s.
There's good reason to be con-
E
ven after spending much of the last decade sculpting
cerned about U. S. competitiveness.
leaner and meaner companies, the managers of Amer-
That's clear. However, it's far from
certain that a national industrial
ican industry have good reason to remain worried
policy would be the right rescue.
Two hundred years after Alex-
about U.S. competitiveness. Relative to charges in other
ander Hamilton first proposed the
notion, when, and how, and to what
"rich" nations, the U.S. cost of capital is high. Tens of thou-
degree the federal government
should interfere with "free" mar-
sands of people annually enter the U. S. workforce unskilled
kets through persuasion, capital-
and stay underskilled. American quality too often is still less
ization, and legislation remains a
matter of heated debate.
than world-class. The country's commitment to mi-
As was the case back in 1791, the
idea of the Feds doing anything like
croelectronics, telecommunications, and other technologies
picking America's industrial win-
56 INDUSTRY WEEK, MARCH 18, 1991
COMPETITIVENESS
NATIONAL INDUSTRIAL POLICY?
U. S. competitiveness. But disagreement about the best rescue method runs deep.
ners and losers today is variously
do anything right, and to the extent
Hora. "We've got some really fine
regarded as folly, wisdom, or
we can avoid trusting government
companies in this country that rou-
largely irrelevant.
with any of our economics
tinely demonstrate innovation with-
Incidentally, Congress, which to-
we're a lot better off."
out anything other than what [pol-
day counts such market inter-
Indeed, believes Mr. Hora, the
icy] currently exists."
ventionists as Sen. Jeff Bingaman
strongest case against allowing
What's more, the Kearney man-
(D, N. Mex) among its numbers,
Washington to pick industrial win-
agement consultant discounts the
two centuries-ago rejected Treasury
ners and losers is the "patchwork
notion that much high-tech re-
Secretary Hamilton's industrial-pol-
mess" it has made of existing tax
search and development is beyond
icy proposal.
"
policy, antitrust regulation, and all
the financial capability of any single
To say the matter is complicated
the other elements of what is a kind
firm-even a "rich" one. "I'm hard-
is to grossly understate the reality.
got
of de facto industrial policy, he
pressed to think of a technology
Passion is another word that can
says.
that U.S. companies haven't been
apply. INDUSTRY WEEK invites you to
some really
For instance, Mr. Hora sees no
able to step up to and invest in," he
take your own measure of the
fine
need for heavy-handed antitrust
says. "Maybe the space program [of
strongly held views of Michael
regulation. "I'm less concerned
the 1960s] is an example of a tech-
Hora, Robert Reich, William Best,
companies in
about trusts and collusion than I
nology that no U.S. company chose
and Eric Mittelstadt-and to exam-
ever was," he says. "Consumers are
to step up to. On the other hand,
ine the Bush Administration's con-
this country
pretty smart. And companies have
the U.S. government didn't put it
tradictory record on industrial pol-
that
decided it's in their own best inter-
out in the marketplace. They didn't
icy.
est to serve the needs of their cus-
say: 'We want a company to put us
routinely
tomers."
on the moon.' They said: 'We're
demonstrate
Still, couldn't government be a
going to put us on the moon."
valued partner with U.S. industry
Testing his own analysis, Mr.
ABSOLUTELY
innovation
in exploiting promising tech-
Hora suggests taking a look at medi-
nologies-as it has been in Europe
cal technology-"terribly ex-
without
Nот!
and Japan? "You don't have to look
pensive stuff," he terms it. "And yet
anything
very far to find companies that do
in the face of what the medical in-
pretty good on their own: IBM,
dustry will call severe government
aybe it's because of his
other than
Boeing, AT&T, 3M," responds Mr.
restrictions on properly pricing
M
geographical proximity
what
to the University of Chi-
cago, a bastion of conser-
[policy]
vative economic principles. Or per-
haps it's just a philosophical
currently
coincidence. Whatever the reason,
exists.
Michael Hora, a vice president of
A. T. Kearney, Chicago, is about as
"
free a free-marketer as you're ever
going to meet.
Therefore, it should be no big
surprise that Mr. Hora is vehe-
mently opposed to Washington's
picking industrial winners and los-
ers. "Absolutely not," he says suc-
cinctly. "We ought to compete in
the global marketplace on our wits.
Our government has demonstrated
over and over again its inability to
Hora: "We ought to compete in the global marketplace on our wits."
MARCH 18, 1991, INDUSTRY WEEK 57
COMPETITIVENESS
their services, [companies] con-
tinue to come up with better and
better ways to make us all last
longer."
He pauses. He's trying to find
fault with his reasoning.
"I guess no matter how I look at
it, I come back negative" on the
idea of the federal government one
way or another picking winners and
losers, he finally says. "I know this
is pretty corny, but American grit
and determination, when we choose
to accomplish something, usually
win. And I trust that a hell of a lot
more than I trust any government
policy."
"
Agriculture,
aerospace,
AGENT OF
and
THE WORKFORCE
pharmaceuti-
cals are
Reich: "Government can have an enormously constructive role.
three areas
alf an hour before he's off
aerospace's to government-directed
America in terms of jobs and skills."
H
to a faculty seminar, Rob-
in which this
production during World War II.
Indeed, stresses the one-time
ert Reich sits in his book-
"Pharmaceuticals is a product, in
policy chief for the Federal Trade
lined office at Harvard
nation
part, of the National Institutes of
Commission, it's time for Washing-
University's Kennedy School of
continues to
Health [NIH] and the enormous,
ton to start looking after the inter-
Government and, in effect, asks
constructive role that NIH has
ests of American workers-and
Kearney's Mr. Hora: "What are you
do extremely
played in developing not only new
stop acting as a promoter or protec-
talking about?"
pharmaceuticals, but also a cadre of
tor of U.S. industry.
Then, in a significant shift of per-
well-and
researchers, technicians, and spe-
Eventually, believes Prof. Reich,
sonal direction, the man who in the
each has an
cialists," he relates.
Americans will come to realize that
late-1970s began worrying in public
Prof. Reich endorses the concept
there is no "American corporation"
about America's declining industrial
elaborate
of U. S. industry and the federal
and no "American economy"-that
base asserts that Washington ought
government joining forces in so-
the U. S. is only a region of a global
now to be less concerned about sav-
industrial
called industry-led initiatives to
economy and that "the only factors
ing U. S. industry and more focused
policy
boost competitiveness-so long as
of production that are rooted within
on boosting the productive abilities
"the government's role is to accel-
our borders are our people and the
of American workers.
behind it.
erate economic development in the
infrastructure they have.
"Government can have an enor-
direction the market already seems
"But here, the irony," he states.
mously constructive role in stimu-
"
to be moving." Indeed, Prof. Reich
"If we can no longer rely on the
lating economic and technological
contends that's the kind of appar-
American corporation to make in-
development," insists Prof. Reich,
ently successful industrial policy
vestments in the economy, then al-
who teaches political economics at
which Japan, Germany, and South
most by default we have to rely on
the Kennedy School. "You have
Korea have been pursuing.
government. And yet we don't trust
only to look at three of this nation's
Significantly, Prof. Reich empha-
government."
major export industries to see in-
sizes he brooks no case for an in-
To ensure that American workers
dustrial policy in action. Agricul-
dustry-led industrial policy that
learn to do such "complicated
ture, aerospace, and pharmaceuti-
finds the federal government bow-
things" as advanced fabrication, de-
cals are three areas in which this
ing to the demands of a U. S. indus-
sign engineering, and manufactur-
nation continues to do extremely
try. "The problem is self-evident:
ing engineering, new leadership
well-and each has an elaborate in-
The industry's goals may not match
will be critical, Prof. Reich states.
dustrial policy behind it."
the public's goals," he stresses.
Specifically, the country needs a
Conducting a quick historical
"Moreover, as American industry
new generation of political leaders
tour, Prof. Reich traces agricul-
becomes ever more global, there is
who won't point the finger of blame
ture's "industrial" policy back to
less and less guarantee that what is
"at the Japanese, or welfare cheats,
the early 19th century and ties
good for General Motors is good for
or the super rich, or government
58 INDUSTRY WEEK, MARCH 18, 1991
COMPETITIVENESS
bureaucrats," he states. Rather, the
country requires leaders who share
his own world economic view and
who "are going to help Americans
roll up their sleeves and get on with
the business of rebuilding the capac-
ities of Americans."
For example, America's new
leaders should move to improve the
competitive capacity of U. S. work-
ers by shifting public-policy gears
and extending federal research-and-
development subsidies to any
"global corporation which agrees to
utilize those subsidies in the United
States [for] training Americans," he
says. Present practice is just the re-
verse of what it needs to be, he ar-
gues: U.S. companies get the sub-
sidies without any training strings
"
attached; foreign firms can't even
qualify for the largesse.
To just copy
Recognizing that many people
might consider his vision of re-
MITI-to
building America an impossible
create a
dream, Prof. Reich recalls that the
U. S. accomplished something of
U. S. Dept.
Best: "The President must recognize and involve himself in the issues."
the same sort after each world war.
"Indeed, after [World War II] we re-
of
built Western Europe and Japan.
International
Trade & Industry (MITI), Japan is,
tics that MITI used in the past to ac-
And if we rebuilt Western Europe
for example, assembling a future-
celerate Japan's development are
and Japan with an economy that
Trade &
oriented aerospace industry. Work
really no longer acceptable in the
was a quarter of what it is right
on a hypersonic-transport engine is
increasingly globalized market-
now, we can certainly rebuild Amer-
Industry and
underway. Weather-observation sat-
place," says Mr. Best. Obtrusive pro-
ica," Prof. Reich says optimistically.
adopt those
ellites are being readied for launch
tection of domestic producers, sys-
later in this decade. And a space
tematic support for infant
policies-is
shuttle is being developed.
industries, and extensive subsidies
At the same time, also under
won't cut it. "Japan is causing tre-
something
MITI's auspices, the Japanese are
mendous distortions in world trade
we can't do.
phasing out or forcing mergers in
because of the hangover from 40
BACKWARD
declining industries such as coal,
years of those trade policies," notes
"
shipbuilding, and shipping, Mr. Best
Mr. Best. "So to just copy MITI-to
points out.
create a U.S. Dept. of International
ourteen hours and 6,791
"MITI is clearly at the top [in
Trade & Industry and adopt those
F
miles from Washington, To-
terms of influential government
policies-is something we can't do.
kyo-based William Best, an
agencies], and it attracts the abso-
"You've got to somehow balance
A. T. Kearney vice president,
lute best and brightest brains in Ja-
the industrial policy [of picking win-
believes the U. S. has its industrial
pan," he says. "Those are the peo-
ners and losers] with increasing the
policy backward. U. S. trade quotas
ple who work on picking the
competitiveness of U. S.-based com-
protecting steel, textiles, and autos
[winning and losing] industries."
panies through such things as re-
already constitute an industrial pol-
But the U.S. would be making a
search-and-development tax credits,
icy-albeit one that props up indus-
serious mistake to conclude that the
capital-gains taxes that promote
tries that have lost world-class com-
answer to its competitiveness prob-
long-term investments, tax incen-
petitiveness rather than promotes
lems lies in simply creating an
tives for savings (which will reduce
industries of the future, he asserts.
American MITI, he warns. For one
the cost of capital) and other
"As a result, we [Americans] are
thing, Japan's MITI has made its
growth incentives, and greater sup-
driving the competitive spiral down,
share of mistakes-including the
port for education-particularly to
rather than accelerating up as Japan
classic blunder in the 1950s of ad-
provide the kinds of skills that busi-
does with its industrial policy," says
vising its infant auto industry to
ness needs to grow."
Mr. Best.
concentrate on the Japanese market
The Kearney consultant suggests
Indeed, with the guidance of its
and forget about exports.
a coalition of business and govern-
famed Ministry of International
What's more, "some of the tac-
ment to move the U.S. forward. "It
60 INDUSTRY WEEK, MARCH 18, 1991
COMPETITIVENESS
will take the commitment of top
ability of all companies in the
primatur on such items as tax
businessmen and respected govern-
country-not just industrial, but
incentives and cooperative re-
ment officials to form such a coali-
service firms as well-to compete
search-and-development efforts. Or
tion," says Mr. Best. "This coalition
effectively in global markets. And
by business running to Washington
must be given high visibility, and
that, he's convinced, will require
with a list of legislative demands.
the agenda it develops for America
the building of a broad-based con-
These things-and others-to im-
must be given serious consideration
stituency in this country for com-
prove the business environment
petitiveness.
need to be done, but Mr. Mittelstadt
by the Congress."
He's not advocating another
"To me, the first step is for this
believes they won't be done without
Grace Commission (the Reagan-ap-
country's leadership to get the en-
prompting from the public-people
pointed advisory panel headed by
tire country-every citizen-to re-
who believe they have a stake in the
W. R. Grace & Co. Chairman and
alize that U.S. competitiveness is
outcome.
CEOJ. Peter Grace that was charged
important to them," says Mr. Mit-
"And here's where the country's
with ferreting out waste in the fed-
telstadt. "It's not just a 'help busi-
leaders come in-from President
eral government). That group docu-
ness' kind of thing. Not even 'help
Bush on down to local leaders,"
mented a lot of waste and "got a
business and help labor.' We need
stresses Mr. Mittelstadt. "They need
few things going, but missed cap-
to get everybody to understand that
to lead every citizen to understand
turing the bulk of the op-
everyone is a consumer and if we
their personal stake in com-
portunities," says Mr. Best.
are not competitive, we as con-
petitiveness-along with other key
"The President must recognize
"
sumers suffer." If the U.S. is not
things like the environment."
and involve himself in the issues-I
competitive, all Americans lose on
A major obstacle to achieving
don't believe he has done this and
To me, the
quality, price, and service, he ar-
success, both in industry and gov-
may not until there is a crisis-and
first step is
gues.
ernment, is the mindset of the tradi-
perhaps appoint some recently re-
Competitiveness needs to be as
tional approach, emphasizes Mr.
tired top business executive to im-
for this
important to the constituents of the
Mittelstadt. "Everyone wants a big
plement [the agenda]. And I mean a
Congressional delegation from a
hit. They want one system to be in-
real executive-not some execu-
country's
nonindustrial state such as Wyo-
stalled now to solve everything,
tive-turned-TV-personality." In
leadership to
ming as it is to the constituents of
and/or they want legislation passed
short, we need substance, not form.
the senators and House members
now," he says, adding that it's just
get the
from a more industrialized state like
not that simple.
Michigan, Mr. Mittelstadt believes.
For his part, Mr. Mittelstadt has
entire
"Without that, we don't have the
taken part in a round table with Vice
country-
slightest chance of getting a com-
President Dan Quayle, who chairs
petitiveness policy or actions that
the White House Council on Com-
CHANGE
every
will help it," he contends.
petitiveness, and the GMFanuc Ro-
citizen-to
How to proceed? He suggests suc-
botics chief followed up on that
THE MINDSET
cess won't come just with a Presi-
meeting with a letter to Mr. Quayle
realize that
dential commission putting its im-
outlining his argument for building
ric Mittelstadt is a man with
U. S.
E
a mission, a very ambitious
competitive-
PROVICE
mission. The president and
S-420F
CEO of GMFanuc Robotics,
ness is
Auburn Hills, Mich., is out to change
America's mindset on com-
important to
petitiveness.
them.
He'd trash the term national in-
dustrial policy altogether. "Let's
"
call it a national competitiveness
policy and stop fooling around with
what unfortunately has gotten a
reputation of picking winners and
losers," says the chief of a nine-
year-old joint venture between Gen-
eral Motors Corp. and Japan's Fanuc
Ltd. "I think we have to change the
definition so that people under-
stand that [picking winners and los-
ers] is not the problem. In fact, that
is one of the least of the problems."
The central issue, in Mr. Mit-
tlestadt's mind, is improving the
Mittlestadt: "Everyone wants one system to be installed to solve everything."
MARCH 18, 1991, INDUSTRY WEEK 61
COMPETITIVENESS
ADVERTISER INDEX
AT&T International 800
a competitiveness constituency.
Service
Back Cover
Mr. Mittelstadt is advancing his
U.S. INDUSTRY
Atchison, Topeka and Santa Fe
argument also in a group called the
STUCK IN DISTRESS
Railway Company, The
4
National Coalition for Advanced
(U.S. trade deficit, billions of dollars)
Bingswanger Commercial &
Manufacturing. He's urging Michi-
Industrial Real Estate
77
gan Gov. John Engler and state leg-
-25
Bodine Corporation,
islators to repeat the message that
The
18b,c
improved U.S. competitiveness
-50
Brown & Sharpe
26b,c
means more goods, higher quality,
Carolina Freight Carriers
better prices, greater job security,
-75
Corporation
7
and higher wages.
Carpenter Technology, Carpenter
Steel Division
26a
But perhaps as important, Mr.
-100
CitiSteel USA Inc
60d
Mittelstadt is trying to communicate
Computer Associates International
the competitiveness message to
-125
GMFanuc Robotics' employees. It's
Source: U.S. Commerce Dept.
Inc.
Inside Front Cover
DuPont Maintenance Finishes 73
as formal as a profit-sharing pro-
-150
Eaton Corporation
20,21
gram-and as personal as saying:
J.D. Edwards & Company
67
"We don't want our customers feel-
-175
ENSR
13
ing the way we do when we go into
a retail store and a clerk treats us as
'82 '84 '86 '88 '90
GERP
75
GE FANUC
8
if we're interrupting their day."
Herr-Voss Corporation
26d
ment-aided initiative as a way to
Hitachi America, Ltd.
2,3
boost America's sagging high-tech
Indiana Department Of Commerce,
fortunes. He believed that if Wash-
The
§71
ington joined with industry to de-
Intergraph Corporation
63
THE
velop the technology for flat-screen
KONE Cranes
*60a
displays-so-called high-definition
Lukens Steel
$52b,c
INCONSISTENT
television (HDTV)-a number of
Miller Electric Mfg. Co.
...
$52a
industrial crises might be solved, in-
Norfolk Southern Corp. 14,15
cluding the loss of U.S. competi-
North Carolina Department of
ADMINISTRATION
tiveness in semiconductors. But by
Economic & Community
the late summer of 1989 a prom-
Development Business/Industry
nd where does this con-
59
ised Commerce Dept. report on
Development Division
A
Penton Video Library
54
tinuing debate fit into the
HDTV wasn't forthcoming, and Sec-
political realities of Wash-
retary Mosbacher announced there
Roadway Express, Inc.
Inside Back Cover
ington, D. C., 1991? Quite
would be no initiative with industry.
Ryerson, Joseph T., & Son, Inc.
simply, the Bush White House, even
It seems that John Sununu, White
$52d
more so than Ronald Reagan's, is
House chief of staff, along with Mi-
Sammi AI Tech, Inc.
18d
biased against intervening in the
chael Boskin, the President's chief
Siemens Energy & Automation
workings of the market.
economic advisor, and Richard Dar-
24,25
Take industrial technology, for
man, the budget director, told the
Southern New England Telephone
example. "While the government
secretary to back off. "Mosbacher's
§71
plays a critical role in establishing
plan, according to the men from the
South Carolina State Development
an economic environment to en-
White House, smacked too much of
Board
§16
courage innovation, the private sec-
industrial policy," explains the Har-
Timken Co., The
60b,c
tor has the principal role in identi-
vard outline.
Xerox Computer Services
*18a
fying and utilizing technology for
On the other hand, while saying
Yellow Freight System, Inc.
...
55
commercial products and pro-
it is opposed to picking winners and
cesses," stresses the White House
losers, the Bush Administration has
NEMA SPECIAL SECTION
Office of Science & Technology Pol-
also been laying down some heavy
Pages 31-48
icy. It's a lesson that U. S. Com-
bets:
merce Secretary Robert A. Mos-
In its budget proposal for fiscal
Allen Bradley
38,39
bacher learned the hard way about
1991, the Administration wagered
Baldor Electric Co.
37
18 months ago.
nearly $9 billion in research-and-
EDS
48
Mr. Mosbacher is not speaking
development funds for just six cate-
Eaton Corporation
32
publicly about the episode these
gories: $3.6 billion for bio-
Executive Resource File
42
days, but a case study prepared for
technology; $2.45 billion for
IBM Computer Integrated
class discussion at Harvard Business
energy; $1.53 billion for transpor-
Manufacturing
46,47
School outlines the situation:
tation; $469 million for high-per-
Lincoln Electric Co., The
41
Relatively early in 1989, the
formance computing; $215 million
Bush Administration's first year,
for superconductivity; and $537
Mr. Mosbacher seized on a govern-
million for semiconductors.
IW
Demographic Edition
§ Regional Edition
62 INDUSTRY WEEK, MARCH 18, 1991
ATTACHMENT
Mr. Spencer Abraham
Co-Chairman
National Congressional Committee
320 1st Street SE,
Washington, DC 20003
Dr. Michael J. Boskin
Chairman
The President's Council of Economic Advisors
Old Executive Office Building, Room 314
17th and Pennsylvania Avenue NW
Washington, DC 20500
Dr. D. Allan Bromley
Director
Office of Science and Technology Policy
Old Executive Office Building, Room 360
17th and Pennsylvania Avenue NW
Washington, DC 20506
Representative William Broomfield
2306 Rayburn House Office Building
Washington, DC 20510
Dr. Richard Darman
Director
Office of Management and Budget
Old Executive Office Building, Room 252
17th and Pennsylvania Avenue NW
Washington, DC 20503
Mr. Al Hubbard
Executive Director
The Council on Competitiveness
Old Executive Office Building, Room 286
17th and Pennsylvania Avenue NW
Washington, DC 20501
Mr. Robert S. Mosbacher
Secretary of Commerce
United States Department of Commerce
14th and Constitution
Washington, DC 20230
Ms. Jean Nowak
Director
Small Business Administration
409 South Third Street NW
Washington, DC 20416
Mr. John H. Sununu
Chief of Staff
The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500
2.
The Honorable
Governor John M. Engler
P.O. Box 30013
Lansing, MI 48909
Mr. Arthur Ellis
Secretary of Commerce
Michigan Department of Commerce
525 West Ottawa
Lansing, MI 48909
Mr. Dan T. Murphy
County Executive
1200 North Telegraph Road
Pontiac, MI 48341
Mr. L. Brooks Patterson
2701 University Drive, Suite 2701
Auburn Hills, MI 48326
Mr. Leo Reddy
President
National Coalition for Advanced Manufacturing
1331 Pennsylvania Avenue SW, Suite 1500 North
Washington, DC 20004
"CORRESPONDENCE TRACKING"
TYPE:
INFORMATION
DOCUMENT NUMBER: 9120556
FROM:
WINCE-SMITH, Deborah L.: DEPARTMENT OF COMMERCE
TO:
DR. BROMLEY
DATE OF
CORRESPONDENCE: 02/26/91
SUBJECT: INDUSTRIAL DESIGN: A STRATEGIC ELEMENT IN US
COMPETITIVENESS.
ASSIGNED TO:
ACTION REQUIRED:
SENDER'S DUE DATE:
OSTP DUE DATE:
DATE COMPLETED:
COPIES TO: D. Allan Bromley
Dr. Phillips
WHITE HOUSE TRACKING #:
CONTACT PERSON:
REMARKS:
DATE RECEIVED: 02/27/91
FILE: INDUSTRIA Economic Competitiveness
9120556
DEPARTMENT OF COMMERCE
Assistant Secretary
UNITED STATES of AMERICA
for Technology Policy
DATE: 2/26/91
FROM THE DESK OF:
Deborah L. Wince-Smith
TO:
Dr. Allan Bromley
Per our conversation.
For your information.
For appropriate action.
For draft of an appropriate reply for
my signature.
Please answer directly.
Let's discuss.
Please return with your comments.
Industrial Design:
RECEIVED
A Strategic Element in US Competitiveness
91 FEB 27 P4: 02
OFFICE OF THE
DIRECTOR
Never before has industrial design
ness; incorporating design teach-
been more important to the US
Never before has
ing principles in our engineering
economy. The accelerated pace of
and business schools; and mea-
technological change and the
industrial design been more
sures to enhance business and the
growing strength of foreign com-
important to the US economy.
general public's awareness of the
petition have put a premium on
important and growing role that
speed to market, high quality,
No US manufacturer
industrial design plays in this
competitive prices, production
or user of manufactured
country's economy.
flexibility and customer satisfac-
products can afford to have
Industrial designers' potential to
tion. Industrial design contributes
By Deborah L. Wince-Smith
second-rate design.
improve product quality, lower
substantially to all of these com-
Assistant Secretary for Technology Policy,
product costs and improve mar-
petitiveness goals. It can make the
US Department of Commerce
ketability makes this a cutting-
difference between product suc-
edge profession in meeting the
Deborah L. Wince-Smith is the principal
cess and product failure. No US
cally. They can help eliminate ar-
manufacturer or user of manufac-
nation's competitiveness chal-
officer in the Department of Commerce for
tificial communication barriers
lenge. Business, academia and
tured products can afford to have
developing, coordinating and advocating
within a firm, and thereby reduce
second-rate design.
government need to take greater
policies that increase the role of technology
the time from product conception
advantage of their skills. It is en-
in contributing to the nation's competitive-
Hundreds of thousands of high-
to market entry. Only CEOs can
couraging to see the leadership
ness and economic well-being. She works
quality jobs are on the line, not
provide the company-wide com-
role taken by the NEA toward
closely with other federal agencies, the pri-
only in manufacturing but also in
mitment necessary to take full
these ends as it is the only federal
the growing service economy. The
advantage of industrial design's
vate sector, state and local governments and
agency that supports strengthen-
design integrity of a product af-
integrating characteristics. Com-
ing this profession.
educational institutions on a wide range of
fects the integrity of all other
panies that have made that com-
technology initiatives. Prior to assuming her
products with which it interacts.
mitment have reaped the rewards.
current duties, Ms. Wince-Smith served in
the White House Office of Science and
Design and quality are merging.
In September, my office and the
Standards of quality, which have
National Endowment for the Arts
Technology Policy as assistant director for
been set quantitatively in the past,
(NEA) sponsored an industrial
international affairs and global competi-
are undergoing big changes. As
design seminar to highlight and
tiveness. Trained as a classical archaeolo-
pacesetters in manufacturing, the
examine the contribution of in-
gist, she received her Master's from Cam-
Japanese are pioneering a new
dustrial design to US competitive-
bridge University and graduated from
dimension to quality and design,
ness. This event focused on: in-
Vassar as a member of Phi Beta Kappa.
with a focus on the senses-touch,
dustrial design in other countries;
hearing, seeing and even smell.
examples of US designs that have
Industrial designers have advo-
achieved success in the market-
cated this advance for years.
place-the final arbiter of design
The industrial designer is a sys-
excellence; how industrial design-
tems integrator, drawing together
ers work: and the multiple roles
engineering. manufacturing, pur-
they play in companies.
chasing/supply and customer
At the end of the seminar, the
needs. The way designers think is
leading industrial design experts
an advantage in this regard. Most
advocated: stronger links between
of us who have been trained as
designers and the laboratory com-
deductive analysts simplify a
munity in technology transfer ar-
problem and break it down into its
rangements; new awards for in-
component parts. In contrast, in-
dustrial designers, especially for
dustrial designers think holisti-
increasing product competitive-
6INNOVATION WINTER 1991
"CORRESPONDENCE TRACKING"
TYPE:
ACTION
DOCUMENT NUMBER: 9120590
FROM:
BAYBAK, Michael: MICHAEL BAYBACH AND COMPANY, INC.
TO:
DR. BROMLEY
DATE OF
CORRESPONDENCE: 02/18/91
SUBJECT: A PROFILE ON A SMALL U.S. COMPANY THAT IS BUSILY
REVERSING THE TREND OF JAPANESE DOMINANCE IN
LEADING-EDGE TECHNOLOGIES.
ASSIGNED TO: Dr. Phillips
ACTION REQUIRED:
SENDER'S DUE DATE:
OSTP DUE DATE:
03/20/91
DATE COMPLETED:
COPIES TO: D. Allan Bromley
Thomas Ratchford
Dr. Wong
WHITE HOUSE TRACKING #:
CONTACT PERSON:
REMARKS:
DATE RECEIVED: 03/01/91
Industrial Fechnology - Economic
FILE: TECHNOLOGY
Competitiveness
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF SCIENCE AND TECHNOLOGY POLICY
WASHINGTON, D.C. 20506
May 7, 1991
Dear Mr. Baybak:
Thank you for your recent letter to Dr. Bromley with information about
Aura Systems, Inc. He has asked me to reply.
Our office has recently participated in a panel of government and
private sector members to determine which technologies are most critical
to U.S. national security and economic prosperity. One of the panel's
conclusions was that technology can make an important contribution to
the future of U.S. national interests, but only if we learn to utilize it
more effectively. Thus, U.S. industry needs to improve the commercial
exploitation of leading-edge technologies which the U.S. has in
abundance.
We appreciate your support of U.S. technology and your interest in the
activities of our office.
Sincerely,
nophils
William D. Phillips
Associate Director for Industrial Technology
Mr. Michael Baybak
President
MICHAEL BAYBAK AND COMPANY, INC.
Penthouse
9033 Wilshire Boulevard
Beverly Hills, CA 90211
"CORRESPONDENCE TRACKING"
TYPE:
ACTION
DOCUMENT NUMBER: 9120590
FROM:
BAYBAK, Michael: MICHAEL BAYBACH AND COMPANY, INC.
TO:
DR. BROMLEY
DATE OF
CORRESPONDENCE: 02/18/91
SUBJECT: A PROFILE ON A SMALL U.S. COMPANY THAT IS BUSILY
REVERSING THE TREND OF JAPANESE DOMINANCE IN
LEADING-EDGE TECHNOLOGIES.
ASSIGNED TO: Dr. Phillips
ACTION REQUIRED:
SENDER'S DUE DATE:
OSTP DUE DATE:
03/20/91
DATE COMPLETED: 5/7/91
COPIES TO: D. Allan Bromley
Thomas Ratchford
Dr. Wong
WHITE HOUSE TRACKING #:
CONTACT PERSON:
REMARKS:
DATE RECEIVED: 03/01/91
FILE: TECHNOLOGY
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF SCIENCE AND TECHNOLOGY POLICY
WASHINGTON, D.C. 20506
May 7, 1991
Dear Mr. Baybak:
Thank you for your recent letter to Dr. Bromley with information about
Aura Systems, Inc. He has asked me to reply.
Our office has recently participated in a panel of government and
private sector members to determine which technologies are most critical
to U.S. national security and economic prosperity. One of the panel's
conclusions was that technology can make an important contribution to
the future of U.S. national interests, but only if we learn to utilize it
more effectively. Thus, U.S. industry needs to improve the commercial
exploitation of leading-edge technologies which the U.S. has in
abundance.
We appreciate your support of U.S. technology and your interest in the
activities of our office.
Sincerely,
noPhills
William D. Phillips
Associate Director for Industrial Technology
Mr. Michael Baybak
President
MICHAEL BAYBAK AND COMPANY, INC.
Penthouse
9033 Wilshire Boulevard
Beverly Hills, CA 90211
9120590
Michael Baybak and Company, Inc.
Corporate Public Affairs
Financial Relations
Market Planning
Counsel
RECEIVED
MAR - 1991 : AS:41
OFFICE OF THE
February 18, 1991
DIRECTOR
D. Allan Bromley
Office of Science and Technology
The White House
1600 Pennsylvania Avenue NW
Washington, DC
Dear Dr. Bromley,
I read with interest the L.A. Times piece on you and your
work.
With all the concern about the dominance of Japan in
leading-edge technologies, I thought you might take some
satisfaction from learning of one small U.S. company that is
busily reversing the trend by having major Japanese firms
steadily knocking at its door for certain seminal
technologies in HDTV and electromagnetics.
The company is AURA SYSTEMS INC. I'm enclosing a profile of
it. They deserve to be a factor of some type, I am sure, on
your agenda.
Yours truly,
number Bony las
Michael Baybak
President
MICHAEL BAYBAK AND COMPANY, INC.
MB:et
enclosure
9033 Wilshire Boulevard
Penthouse
Beverly Hills, California 90211
Telephone (213) 276-4660
FAX (213) 276-5426
Los Angeles/NewYork/Washington,D.C.
Michael Baybak and Company, Inc.
Corporate Public Affairs
Financial Relations
Market Planning
CONTACT: George Duggan
Counsel
Michael Baybak & Co., Inc.
(213) 276-4660
FAX (213) 276-5426
AURA SYSTEMS, INC.
CORPORATE PROFILE
January 1991:
Aura Systems, Inc. (NASDAQ: AURA), a Los Angeles-based company, is
bringing new and universally-applicable electromagnetic technologies
to the world. Like earlier breakthroughs - the electric motor, radio
and television - Aura's technologies are far-reaching, will benefit
all people and all industries worldwide and are being assimilated
rapidly. Based on contracts with the largest corporations, major
commercial uses are commencing in 1991. Most citizens of indus-
trialized countries will know about and benefit from Aura's
technologies by 1993.
Aura has discovered new ways to control the movement and productivity
of mechanical devices by manipulating magnetic fields. This includes
breakthroughs in linear force, rotary force and combinations of the
two, including very precise control of objects within magnetic fields
from a distance. These advances are expected to increase the effi-
ciency and effectiveness of a high percentage of functioning parts in
the whole broad world of mechanics. While Aura is clearly involved
with high tech, it is a basic tech story -- with basic industrial and
medical applications that provide immediate advances in manufacturing
efficiencies, and improvements in quality of life, unmatched since
perhaps the advent of the computer itself.
Company Overview
Aura Systems, Inc. is a public company which was formed in February
1987 by Zvi Kurtzman and Arthur Schwartz, Ph.D. The Company has three
facilities in California comprising 63,000 square feet and employs 120
staff, including several Ph.D.'s and M.S.'s in physics and the other
sciences. In research or development at Aura are 26 magnetics, 3
optics, 3 advanced computing and 12 microelectronics projects. 19
contracts have been signed and initiated with major corporations, and
another 100 contracts are in negotiation.
The Company is listed on NASDAQ, trading symbol AURA, and has 22.5
million shares outstanding. Management projects $0.25 per share
earnings for fiscal year-ending February 1992, based on projected
revenues of $30 million. Revenues are expected to move up rapidly
from there with present development contracts expanding into
production orders.
9033 Wilshire Boulevard
Penthouse
Beverly Hills, California 90211
Telephone (213) 276-4660
FAX (213) 276-5426
LosAngeles/NewYork/Washington,D.C
AURA'S TECHNOLOGIES
Early uses of electromagnetic advances by Aura will transform the
world in three ways.
1. Aura dramatically improves the planet's energy equation by
generating mechanical productivity without friction. This is done by
rotating machinery shafts in frictionless magnetic fields, called
magnetic bearings, instead of within bearing casings. A simple
retrofit can be done to most gas and electric motors, alternators,
pumps, turbines and compressors. This advance produces an immediate
10%+ gain in energy efficiency, reduces maintenance significantly,
extends machinery life, replaces lubrication and its systems and
allows long-distance monitoring of mechanical performance. Present
development contracts include the U.S. Navy, General Motors, utility
and oil companies and others.
The same technology in new equipment extends earlier bounds to
mechanical productivity by permitting higher speed rotation, less heat
and less noise -- without lubrication. Because of the greater speed,
more work is performed by lighter, smaller, less complex and less
expensive equipment.
2. Mechanical parts that "think" will re-define mechanical
applications at all levels of transportation, industry and the home.
Aura's computerized, electromagnetic actuator is a mechanical device.
It replaces basic things -- switches, pulleys, shocks, speaker
drivers, locks, latches, hydraulic systems, and far more. Aura's
actuator provides an unprecedented amount of force at an
unprecedented speed in one direction, with a far lower energy
requirement than present systems. Importantly, since Aura's
actuator is computerized, these very basic functions can now be
performed "intelligently" with an active desired response to external
forces. The same device is not fixed in its motion but can function
in several different ways automatically, adjusting to environmental
changes or user needs. The extent of the economic uses of Aura's
actuator has not been fathomed, though it is clearly in the thousands
of applications across all industries.
Several applications of Aura's actuators in automobiles will be the
first uses that will affect most of us. Aura's production contracts
include General Motors (several operating divisions), Toyota,
Caterpillar, Itek (a division of Litton), Texaco, Ball, T & N (a major
British conglomerate), the U.S. Air Force, the U.S. Navy, Boeing and
others. First applications include active suspension systems,
vibration-isolating engine mounts, plus improvements to power
steering, alternators, windshield wipers, engine timing devices,
transmissions, locks, power windows, power brakes and more.
2
One application, Aura's actuated automobile engine valve, allows
infinitely variable timing of fuel and air intake and exhaust valves.
This use alone has been shown to increase fuel efficiencies by 15%,
while reducing emissions by 15%. Laboratory tests have also shown
that a combination of Aura's actuator technologies and the Company's
magnetic bearings applied to state-of-the-art electric cars can double
the efficiency of these cars. This is being pursued by electric car
developers.
3. Surgery without pain or incisions, with a quantum gain in
effectiveness.
When Aura engineers and scientists learned to control the movement of
a tiny, spinning metal bit, called a Magnabit, within a magnetic field
from a distance, with a precision several hundred times as accurate as
a surgeon's hand, it became the basis for potentially the greatest
advance in health care yet to come. Today, with cataract surgeries on
animals being perfected to a routine using Aura's magnetically-
assisted surgical techniques, the company's 60%-owned subsidiary, Aura
Medical Systems Inc., has contracted with Alcon Surgical Inc. (the
world's largest eye care company) to bring Magnabit cataract surgery
to the public.
Longer-term, many surgeons believe that Aura's magnetically-assisted
surgical techniques will enable most operations to be done by in-
jecting a Magnabit into the patient's blood stream and directing it to
perform the exact work needed, without pain or incisions.
Of course, precise control of objects from a distance using magnetics
also has far-reaching industrial applications, several of which are in
development now.
4. Aura Other Technologies
a. Aura's Electro-Optics Division has developed the digital TV and
movie projector technology which management believes will help to
expand two large new industries in the 1990's. The first to gener-
ate revenues will be film-less, electronic distribution of movies to
theaters. While there are any number of procedures for distributing a
movie without film (by satellite or telephone, for example), the
industry has not had a movie projector which could use these
transmissions to provide a high standard of resolution and light
intensity when projected to theater-screen size. Aura's digital movie
projector technology -- developed by Aura to make scene generators for
the U.S. Air Force for testing of aircraft sensors -- will provide
exceptional definition and color and light intensity far beyond pres-
ent movie-goers' standards. Movie distribution in the U.S. is an
approximate $300 million to $500 million per year industry. The
AuraScope projector and distribution system have received high
3
interest from the Movie-Producing Artists Association and the National
Association of Theater Operators, with first viewings scheduled for
late-1991.
b. The same technology solves a substantive problem facing high-
definition television (HDTV). HDTV - with approximately 1100
horizontal and 1900 vertical lines of information per screen, instead
of the present 330 horizontal and 470 vertical lines of information -
is widely expected to provide the next generation in quality for
television. Other technologies for projecting the television picture
onto the screen lack adequate light and color intensity. Aura's
technology, using light itself instead of cathode rays, solves both
problems. First viewings are scheduled for late-1991; Aura management
believes it will become a major picture-tube manufacturer for HDTV.
C. Aura is also a leader in computerized telemetry systems with its
Linkage software and hardware. Linkage is a new way of connecting
standard and complex external processes to human operators via
computer in order to monitor, diagnose and control the system.
Applications of Linkage, thus far, have been principally in the
aerospace industry, monitoring and interpreting data from satellites,
spacecraft and missiles for NASA, the U.S. Air Force and commercial
satellite builders. With Linkage's low-cost hardware, users can
extend the power of the human operator to grasp and understand what is
occurring in an environment that shoots far more data at him than he
could otherwise possibly assimilate.
Linkage is not a special-purpose system, like its competitors'
systems. Rather, it is applicable to practically all high-volume
telemetry applications. As an example of its advances compared with
its aerospace competitors, the Linkage operator is monitoring
schematics of the external systems, with data already evaluated and
color-keyed to each area; competitor systems provide "waterfalls" of
unevaluated numbers and symbols which need human translation to
determine even if systems are okay or whether an emergency exists.
The numbers of people needed to monitor Linkage data are dramatically
reduced. With continuing revisions to systems, intensive interfacing,
repairs, tighter budgeting and increasingly greater power require-
ments, the aerospace industry is gradually recognizing Aura's software
and hardware solutions, which are modular, open architected for ease
in using commercial boards and can be customized by the user to suit
his needs.
Aura's Linkage telemetry systems are also now being developed for
commercial applications starting with the monitoring, analysis and
control of underground tunneling machinery in Japan. By establishing
itself at the high-end in terms of precision and standards, management
believes it can gain success with commercial applications in oil
fields, utilities, banking, factory automation, flood control, fault
monitoring and other industries in the years to come.
4
THE ECONOMICS OF AURA'S TECHNOLOGIES
As the developer and international patent-holder of widely applicable
electromagnetic technologies, with numerous additional patents
pending, Aura Systems' financial future may have a growth potential
that is second-to-none The company is in the process of shifting its
revenue base from government research and development, much of which
was completed in 1990, to commercial development and production. In
the fourth quarter of 1990 the Company realized its first sales of
equipment for commercial uses and further development. It projects a
steep growth curve into the Nineties.
AURA MAGNETIC
STATUS/ JAN. 7, 1991
Aura Systems, Inc
EXISTING CONTRACTS
CURRENT
ACTIVE NEGOTIATIONS
TECHNOLOGY
DEVELOPMENT
BOAT HORNS
HYDRAULIC CONTROL
STORZ
MICROSCOPE ISOL
VALVES
G.D.
MISSILE SENS. ISOL
PROOF OF
CONTROL SURFACE
CONCEPT
JACK HAMMER
BALL
CAN MAKING
GM
ALTERNATORS
ECHLIN/
NAPA
DIGITIAL FUEL INJECTION
FUEL INJECTION
TOYOTA
FUEL INJECTORS
AUTO ACTIVE SUSPENSION
AUTO BIG 3
POWER STEERING
LAB
U.S. NAVY
MECH. VIB. CANCEL
PROTOTYPE
TMC
RECON CAMERA ISOL
OPTICAL TABLE CANCEL
& TESTING
USAF
LARGE STRUCTURE
ISOLATED TELESCOPE
LITTON
VIB CANCELLORS
CAMERA ISOLATION
ALCON
INDUSTRIAL COMPRESSOR
AURA MEDICAL
BEARINGS
PRINCE
TENNIS RACKET STRINGING
ACTIVE ISOLATION SEATS
ROCKWELL
ABS FOR TRUCKS
FOR HEAVY MACHINERY
NEWPORT NEWS
VIBRATION SOURCE
PRODUCTION
FIRST
WATERRA
GROUND WATER PUMP
UNIT
AUDIO SPEAKERS
BOEING/AEROSPATIALE
MISSILE TEST EQUIP.
TURSO MOLECULAR
PUMP
TEXACO
DOWNHOLE
WESTINGHOUSE
ACTIVE VIBRATION ISO
CATERPILLAR
VALVE CONTROL
PRODUCTION
VARIAN
TURBO MOLECULAR PUMP
Figure 1 is a table summarizing many of the business
activities in Aura's Magnetics Division. A milestone
in Aura's development is that many new contracts are
now entering the list at either the laboratory prototype
or first-production stage, reducing the lead time from
initial contract to full production.
5
Company revenues derive from four types of contracts: proof-of-
concept, laboratory prototype and testing, first-units-of-production
and production. From inception in 1987, contracts have progressed
toward the production type, with each new level providing an
exponential jump in terms of revenues. With a backlog of $50 million
in contracts, many of which are first production contracts with far
larger orders pending successful utilization, the Company is
experiencing strong growth.
For comparison, the Company is expected to generate $10 million in
revenues in fiscal year-ending February, 1991. This is up strongly
from the two prior years of research and development. Revenues for
the fiscal year that ends in February 1992 are projected to reach $30
million, with $0.25 per share earnings.
As the developer of these technologies, Aura has very substantial room
to grow. Management targets three major markets for their magnetics
technologies with sales potentials on a scale approaching those of the
computer hardware and software markets worldwide: machinery (magnetic
bearings), transportation (actuator technology) and medical (magnabit
technology). And an additional three major markets with cumulative
sales potentials in the hundreds of millions of dollars: industrial
and domestic markets for actuators, HDTV picture tube production and
movie distribution to theaters in conjunction with the Movie-Producing
Artists Association (MPAA) and the National Association of Theater
Operators (NATO).
AURA'S ELECTROMAGNETIC ACTUATOR
"Mechanical Parts That Think"
An actuator is a simple device that impels a force in a direction for
a certain distance. A car door latch, a power window, a washing-
machine's on-off switch, a stamping machine - these are examples of
actuators. Most hydraulic, pneumatic and ball-screw systems serve
actuator functions -- controlled linear force.
Aura's computerized, electromagnetic actuators provide several
advantages which are starting their sweep with transportation and
industrial applications. Light-weight, low-energy, low-cost, high-
speed and adaptable in terms of force delivered and distance covered,
Aura's actuators bring computerized electronics to the mechanical
realm.
Aura's active suspension system for automobiles is an example. Aura's
actuator counters vibrations not absorbed by shocks in micro-seconds,
SO the vibrations do not reach the passenger compartment. As the
driver turns off a paved road onto a gravel-and-dirt road, for
example, the mechanical resilience in the shocks remains the same,
however the actuator adjusts to provide the same smooth ride. The
6
force and distance of the actuator's counter-thrust, which isolates
vibrations to the suspension, are automatically adjusted by increased
electrical current to counter the force of greater bumps. So, rather
than performing the same, mechanical function, like a shock absorber,
the electromagnetic actuator is programmed to adjust to always serve
the driver with an adaptable mechanical service which responds
according to external changes to provide a smooth ride. Aura's first
contract for actuators of this use is with Toyota.
Magnet assembly
Coil
Bushing
Output shafts
Aura's Linear High Force Actuator
Radial
Shaft bushings,
120° apart
The Aura HFA is made up of two basic assemblies, the inner magnetic assembiy and the outer coil
permanent
Magnet assembly
assembly. When current is applied to the coil attached to the outer housing, a perpendicular force is
magnet
support shaft
generated on the magnet assembly that is transferred to the output shafts. This patented magnet
design yields the highest forces and longest stroke lengths of any linear actuator available today.
Another basic industrial use for Aura's actuator is the stamping
machine, used to make cans, boxes and other objects, and to label all
of these. In this case, it is the speed, low-cost and adaptability of
the actuator which replaces the mechanical or electrical stamping
machine yielding a doubling of productivity. Aura's first contract
is with Ball Manufacturing, the world's third-largest can manufac-
turer.
Aura's managment is now actively negotiating contracts with major
companies from several industries for numerous other large-scale
applications of their actuator technology.
AURA'S MAGNETIC BEARINGS
Rotary Motion Without Friction
Most mechanical work is performed by linear force or rotary force. The
Aura actuator makes breakthroughs using linear force, and the Company
is making major advances with rotary force as well. Aura extends the
frontier of mechanics with basic, new technologies in both areas,
providing whole new efficiencies and capabilities for devices that
function either linearly or by rotation.
Levitation using magnetic forces to balance an object within magnetic
fields has been a long-term postulate. However, the speed required of
sensors, processors and field current drivers to maintain balance when
the field is being thrown out of balance at every moment has not been
possible until the present era of digital electronics and micro-
computers. Aura's digital controls measure and adjust the position of
the rotor in the field 5,000 times per second. Since an electro-
7
magnet's field is proportional to the current, these adjustments
keep the rotor in the middle of the field. Because moving parts do
not touch anything, friction does not occur. Lubrication and
lubrication systems are not used. Moving parts wear very minimally.
Sensor
Proximity-sensor
feedback (digital)
Coil
Multiplexer
Rotor
ADC
0
Controller
(DSP algorithm)
DAC
Shaft
Magnetic
Magnetic
gap
flux path
Current amplifier
The first commercial application of Aura's magnetic bearing is
expected to be turbo-molecular pumps contracted by Varian for 1991
delivery. These high-speed pumps are used throughout industry to
produce high-purity vacuum conditions. Aura is retrofitting the
pumps, replacing bearing casings with magnetic bearings and adding
electronic control systems. The length of time between repairs is
projected to extend from the present 4 months to 3 to 4 years. Cost
and time of repairs will plummet because standard boards will be
replaced instead of entire bearing casings. Varian customers are
expected to realize an appreciable gain in factory productivity.
Automobile alternators are a second prime commercial application.
Without mechanical bearings, the alternator shaft can spin at a higher
speed, generating the same or more electrical power from a smaller,
lighter, less expensive alternator. Aura's development contract is
with General Motors, targetting 1992 or 1993 for first commercial
uses.
Utilities, oil companies and motor manufacturers are also recognizing
the power of this technology. Their acceptance level is further
indication of the magnitude and economics of magnetic bearings. Oil
companies, with massive machinery and bearings under constant assault
from sand and wind in remote desert conditions, provide exceptional
opportunities for early production units of all sizes. Performance of
all units can be monitored from great distance, a further advance.
Considering the pervasiveness of motors, pumps, compressors, engines
and turbines in the industrialized world, Aura's magnetic bearing
technology will impact the world's energy equation.
8
MAGNETICALLY-ASSISTED SURGICAL TECHNIQUES
Surgery Without Pain Or Incisions
Aura's magnetically-assisted surgical techniques realize another
broadly-postulated goal of mankind. They offer the prospect of
surgery without pain or heavy drugs, with accelerated recovery. They
make life-extending, new surgical procedures possible, without the
misery or unconsciousness. They make internal-specific medicines and
treatments possible without side-effects throughout the body. They
make out-patient clearing of arteries possible. Strokes, athero-
sclerosis, some types of heart attacks and cancers can become early
targets for prevention.
These radical advances are all made possible by precision control of
tiny magnetized particles within magnetic fields. The magnabit is
directed by a magnetic control device, consisting of a magnetic yoke,
a computer-controlled motion system, optical camera sensors and
position sensors. These are relatively low tech, low capitalization
and are not difficult to comprehend compared with most medical
advances.
Micromachined silicon surgical tool
Optical or magnetic pickup
Valve-actuated scraper
collects tissue samples.
Ultrasonic
C
drill bit
b
Silicon-etched
a
rotary cutting blade
Aura Medical System's Approach
Future magnabit, micromachined from silicon, might deploy rotary cutting
to Cataract Surgery: (a) Eye
blades, ultrasonic drill bits, and valve-actuated scrapers to collect tissue
(b) Magnabit (c) Magnetic Yoke.
samples. Optical or electromagnetic pickups would provide
communication channels between surgeon and tool.
Aura Medical Systems Inc. was organized specifically to develop the
potential of this technology for just one of these areas, cataract
surgery. Three million cataract surgeries are performed annually --
more than any other operation. Each of these operations involves a
minimum six millimeter incision to the front portion of the eye. It
is the size of the incision itself which prevents optimum healing.
The patient loses the ability to focus clearly. Healing is slow.
9
The size of the incision using Aura's magnetically-assisted surgical
techniques is one millimeter. Because of the small size of the
Magnabit, and the precise control of its position by magnetics, the
affected area is minimized and collateral damage is greatly reduced.
The natural focusing ability of the eye by the tensing of muscles
continues intact after the operation. This has been tested and proven
with laboratory surgeries.
Aura Medical Systems Inc. is a joint venture formed by Aura Systems
Inc. (60%), Charles D. Kelman, M.D. (30%) and investors (10%),
including Alcon Surgical, Inc., a division of Nestle. Dr. Kelman has
a worldwide reputation in ophthalmology. He pioneered phacoemulsifi-
cation, the technique most used presently for cataract surgeries
worldwide. He is also phacoemulsification's greatest critic, and the
developer of the exact procedures for cataract surgery using Aura
magnetic technologies, known as KELMAST.
Dr. Kelman, Aura Medical and Alcon will be performing cataract
surgeries on animals in late-1991. Within five years the company
hopes to gain a 27% market share of cataract surgeries worldwide, with
approximate revenues of $100 million annually. This includes the time
for the approval process in the U.S. and other countries.
Other medical procedures presently in development by Aura include a
local, internal, drug-delivery system and a local, heat-delivery
system for cancer and tumor cells.
AURA'S DIGITAL TV AND MOVIE PROJECTOR TECHNOLOGY
The Future of Television
The Future of Movie Distribution
High-definition television is still ten years in the future for most
of us, but it is already the subject of intense competition among
several large electronics companies. High-definition television
(HDTV) posits intense picture clarity and color from approximately
1100 horizontal and 1900 vertical lines of information on the screen
compared to today's 330 horizontal and 470 vertical lines.
HDTV is bogged at the international standards-setting level, with
relative equilibrium among several political and power factions on
several criteria. Standards in just the US are not scheduled to be
established by the FCC until 1993. When standards are set, HDTV
will still require new production equipment and transmission equipment
at all networks, television stations, advertising production companies
and satellite transmission facilities internationally. This is a
substantial recapitalization. All this, plus a gradual turnover to
new and more expensive television sets by consumers worldwide.
10
One US company does hold a powerful key in this gradually emerging
industry - Aura Systems. With no need to participate in the "issues,"
Aura may gain the lions share of picture-tube production for these
large electronic firms because of its internationally patent-
protected projection technology.
Aura's UMTV projection technology -- named after Dr. Gregory Um, the
inventor and Aura's vice president, Electro-Optics Division -- has a
very significant advantage over competing HDTV projection technolo-
gies: light and color intensity.
UMTV technology uses actual light as its source, not electrons, as are
used in cathode-ray tubes in today's television and most other HDTV
projection technologies. HDTV requires a far stronger light source
than conventional television because of the increased detail of
information on the screen at every moment. Also, for the human eye to
take advantage of the improved resolution, the size of the screen is
increased, thus adding to the intensity needed to keep the image
bright. If the source of this light is an electron gun or cathode ray
tube, the viewer may be exposed to a dangerous level of x-rays.
A further issue involves the weak intensity of light and color
obtained by other HDTV projection technologies. They can achieve an
intensity adequate for small screen clarity, but start to fade with
larger screens and can not approach the intensity necessary for big-
screen HDTV.
Aura management, along with several HDTV experts, believes that UMTV
technology, and Aura picture tubes, will be an integral and necessary
part of the HDTV revolution. Utilizing automated production
techniques, Aura believes that the cost of their displays will be in
the commercially affordable range, a key advantage. This may well
become Aura's largest, direct "name-recognition" relationship with the
greater consumer public.
In the meantime, Aura's UMTV projection technology has a more
immediate and similarly huge marketplace -- the distribution of
movies to theaters, first, nationally, then internationally. The
distribution of movies to theaters is a key concern to both producers
and exhibitors as represented by the Movie-Producing Artists' Asso-
ciation (MPAA) and the National Association of Theater Operators
(NATO). Both sides have searched for the past twenty years for a
better way to distribute movies. Despite today's satellite trans-
mission and telephone transmission capabilities, movies are still
actually distributed the old way: in cans of film by physical
transport, movie house to movie house, screen room to screen room.
11
It is an approximate $300 million to $500 million per year industry
- dominated by the cost of film base, which is dominated by Kodak, and
various kinds of labor, transportation and facilities. The process is
profligately wasteful. On the one hand, producers generally cannot
take advantage of audience demand in a timely manner. On the other
hand, many theater owners are frozen out of first run shows due to
print demand in more lucrative markets. To deliver product when and
where desired becomes possible with the distribution system developed
by Aura's subsidiary, Aura Distribution Systems, Inc.
One duplicate of today's average movie costs $1,500 to $2,000 to make.
It weighs 140 pounds, consisting of seven cans of film at 20 pounds
per can. 90% of the duplicates are not useable after six months
because of lack of demand and because they are damaged by use and
mishandling. The connections of film between each of the cans are
newly spliced together into one roll, called a platen, at each screen
they are used, and cut apart again before being moved.
The fact that illegal duplications might be made between 3AM and 7AM
each day throughout the country, for shipment outside the U.S., adds
insult to injury and millions of dollars in lost revenues for the
members of MPAA and their employees and performing artists. Keeping
track of the physical location of some 190,000 prints a year requires
much effort as well and is not always successfully achieved.
Two problems have remained unsolvable over the twenty years: light
intensity and resolution at the theater big-screen level, plus
capturing the demand when the demand is there. Both are solved by the
AuraScope projector and its companion distribution system. An
informal letter from MPAA to Aura after several meeting with both the
major, individual production studios and the major theater-chain
owners is testimony to the prospect of Aura's control of the movie
distribution system in the US over the coming four to five years.
Extensive studies show that the AuraScope projector and its companion
distribution system are expected to reduce annual movie distribution
costs by 21%, or between $80 million and $100 million per year.
The next step, and the most crucial, is the viewing of Aura's proof-
of-concept projectors by MPAA and NATO members, scheduled for late-
1991. It is the same step which is Aura's next move into the HDTV
industry. The same projector provides proof-of-concept for HDTV
picture tubes. Well into the development, Aura management is
confident of their schedule and quality of research.
# # #
12
AURA SYSTEMS, INC.
Key Personnel
Zvi (Harry) Kurtzman, President and Director
From 1982 to 1988, Mr. Kurtzman served as president and director of
IIS (Innovative Information Systems, Inc.) and CMI (Cypher Master,
Inc.), forerunners of Aura Systems. He also served as senior
scientist at Science Applications International Corporation from 1984
to 1985, and held a similar position at Hughes Aircraft Company from
1983 to 1984. Prior to then, he consulted for major defense
subcontractors in the fields of computers, automation and engineering.
He received a New Technology Utilization Award from Rockwell
International for his work on the space shuttle, and commendation
letters from TRW and Hughes for his consulting work at those
organizations. Mr. Kurtzman obtained his B.S. and M.S. degrees in
Physics from California State University, Northridge, and completed
course work towards a Ph.D. in theoretical Physics at the University
of California at Riverside.
Arthur J. Schwartz, Ph.D., Executive Vice President and Director
Dr. Schwartz served as Executive Vice President and a director of CMI
since 1984. In addition, Dr. Schwartz was appointed President of IIS
in 1988 after having served as its Executive Vice President since
1984, and has been a director of IIS since 1984. Dr. Schwartz
obtained his M.S. degree in physics from the University of Chicago in
1971 and a Ph.D. in physics from the University of Pittsburgh in 1987.
He was employed as Technical Director with Science Applications
International Corp. from 1983 to 1984 and was a senior physicist with
Hughes Aircraft Company from 1980 to 1984. While at Hughes, Dr.
Schwartz was responsible for advanced studies and development where he
headed a research and development effort for new technologies to
process optical signals detected by space sensors.
Neal B. Kaufman, Senior Vice President, Director
Mr. Kaufman, appointed as a director in 1989, is Senior Vice President
in charge of Software Development for Aura, where he has served since
1988. He earlier served as President and Vice President of CMI, since
1984 and 1988, respectively. He has also been a director of CMI since
1984. Mr. Kaufman graduated from the University of California, Los
Angeles, in 1967 where he obtained a B.S. in engineering. He was
13
employed as a software project manager with Abacus Programming Corp.
from 1975 to 1985 where he headed a team of software specialists on
the Gas Centrifuge Nuclear Fuel Enrichment Program for the United
States Department of Energy and developed software related to the
Viking and Mariner projects for the California Institute of Technology
Jet Propulsion Laboratory in Pasadena, California.
Cipora Kurtzman, Senior Vice President, Director
Ms. Kurtzman was appointed Vice President in charge of Marketing and
Contracts for the Company in 1988, was appointed a director of the
Company in 1989, and advanced to Senior Vice President in 1990. She
was the Director of Contracts and Marketing for CMI, where she served
from 1985 to 1988. Ms. Kurtzman received her B.S. degree in business
administration from California State University, Northridge in 1983.
Francis T. Phalen, Senior Vice President, Chief Financial Officer,
Director
Mr. Phalen has been the Company's Chief Financial Officer since
November 1988 and has been a director of the Company since 1989. From
August 1987 until Mr. Phalen joined the Company he was Associate
Director, Corporate Finance, for Bear Stearns & Co. in Los Angeles.
From October 1986 through November 1987 Mr. Phalen served as Vice
President and Treasurer of Carter Hawley Hale Stores, Inc. For the
three years prior, he was a partner in the public accounting firm of
Deloitte & Touche.
C. Rogers Saxon, Ph.D., Vice President
Dr. Saxon was appointed Vice President in charge of Advanced Computing
for Aura in 1988. Prior to this, he was a Program Manager for CMI
where he had served since 1986. Dr. Saxon received his B.S. degree in
mathematics from Harvey Mudd College in 1966, an M.A. degree in
operations research from Claremont Graduate School in 1977, and M.A.
and Ph.D. degrees in cognitive psychology from the University of
California, Irvine in 1982 and 1985, respectively. From 1984 to 1986,
Dr. Saxon worked for Abacus Programming Corp. on the Space Shuttle
Project. His services for Abacus were performed at Rockwell
International and included leading the team that developed an expert
system for Space Shuttle electrical cable configuration and routing.
14
Keith Stuart, Vice President and Manager of the Magnetics Division
In 1986, Mr. Stuart was the Program Manager of Aura's (then Innovative
Information System) first magnetic bearing contract, and was
instrumental in the development of the basic technology used in all of
Aura's magnetic bearing products. From 1987 to the present, Mr.
Stuart has been a Vice President for Aura, responsible for all of
Aura's work in magnetics. As inventor of the patented high force
actuator, Mr. Stuart extended Aura's product line to include
commercial applications such as automotive active suspension,
electronic valve lifting and highly efficient motors, among many
others. Before joining Aura, Stuart was a technical manager at Hughes
Aircraft Company. He received his Masters of Science degree in
Electrical Engineering from UCLA in 1980.
Gregory Um, Ph.D., Vice President
Gregory Um, Ph.D., was appointed Vice President in charge of the
Electro-Optic Systems Division for Aura in 1988. He earlier served as
Chief Scientist of IIS during 1987 and worked for CMI during 1986. He
was the principal inventor of Aura's scene projectors and holds
numerous patents. Dr. Um received his B.S. degree in physics from the
University of California, Berkeley in 1970 and his Ph.D. in physics
from the State University of New York in 1976. From 1983 to 1986, Dr.
Um worked for Hughes Aircraft Company as a senior scientist where he
was involved in sensor system engineering, signal processing
algorithms, wavefront sensors, thermal analysis and electro-optical
sensor modelling and simulation.
Michael Wilde, Director
Mr. Wilde has served as director since inception and President of
Delphi Inc., a wholly-owned subsidiary of Aura, since March 1987.
From 1971 to 1984, Mr. Wilde was employed with M/A COM Omni Spectra,
most recently as Business Center Manager, primarily responsible for
administrative, engineering and financial affairs. From 1984 to
March, 1986, Mr. Wilde was employed with E.W. Components as Vice
President. Mr. Wilde has a Bachelor of Science degree in Electronic
Technology.
15
AURA SYSTEMS INC.
Corporate Information
Aura Systems, Inc., was formed in February 1987 by a group of
scientists and engineers to develop magnetics and related
technologies.
Company financial performance:
Fiscal Year
Ending 2/28
Revenues
EPS
1989
$ 2.9M
($0.09)
1990
$ 9.1M
($0.16)
1991 (E)
$ 10.0M (E)
($0.15) (E)
1992 (E)
$ 30.0M (E)
$0.25 (E)
Shares Outstanding
Market Cap
Capitalization
22.7M
$35.0M
(in millions 8/31/90)
(based on 1 3/4
share price)
Short-term debt
$0.27
Long-term debt
0.27
Convertible debt
6.85
Shareholder Equity
5.91
$13.30
Directors
Zvi Kurtzman
Neal B. Kaufman
Arthur J. Schwartz, Ph.D.
Cipora Kurtzman
Francis T. Phalen
Norman Reitman
Peter C. Jaquith
Officers
Zvi Kurtzman
President
Arthur J. Schwartz, Ph.D.
Executive Vice President
Neal B. Kaufman
Senior Vice President-Software Development
Cipora Kurtzman
Senior Vice President-Marketing & Contracts
Francis T. Phalen
Senior Vice President, Chief Financial Off.
Joseph F. Bevacqua
Vice President-Chief Accounting Officer
Rogers Saxon, Ph.D.
Vice President-Advanced Computing
Keith 0. Stuart
Vice President-Hardware Development
Gregory Um, Ph.D.
Vice President-Electro-Optics Systems
16
Headquarters
Auditors
2335 Alaska Avenue
KPMG Peat Marwick
E1 Segundo, California 90245
725 South Figueroa Street
213-643-5300
Los Angeles, CA 90017
FAX 213-643-8719
Transfer Agent
Contact
Interwest Transfer
Cipora Kurtzman
Salt Lake City, UT
Senior Vice President
801-272-9294
213-643-5300
or
George Duggan
Michael Baybak & Co., Inc.
213-276-4660
17
"CORRESPONDENCE TRACKING"
TYPE:
ACTION
DOCUMENT NUMBER: 9120590
FROM:
BAYBAK, Michael: MICHAEL BAYBACH AND COMPANY, INC.
TO:
DR. BROMLEY
DATE OF
CORRESPONDENCE: 02/18/91
SUBJECT: A PROFILE ON A SMALL U.S. COMPANY THAT IS BUSILY
REVERSING THE TREND OF JAPANESE DOMINANCE IN
LEADING-EDGE TECHNOLOGIES.
ASSIGNED TO: Dr. Phillips
ACTION REQUIRED:
SENDER'S DUE DATE:
OSTP DUE DATE:
03/20/91
DATE COMPLETED:
COPIES TO: D. Allan Bromley
Thomas Ratchford
Dr. Wong
WHITE HOUSE TRACKING #:
CONTACT PERSON:
REMARKS:
DATE RECEIVED: 03/01/91
FILE: TECHNOLOGY
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF SCIENCE AND TECHNOLOGY POLICY
WASHINGTON, D.C. 20506
May 7, 1991
Dear Mr. Baybak:
Thank you for your recent letter to Dr. Bromley with information about
Aura Systems, Inc. He has asked me to reply.
Our office has recently participated in a panel of government and
private sector members to determine which technologies are most critical
to U.S. national security and economic prosperity. One of the panel's
conclusions was that technology can make an important contribution to
the future of U.S. national interests, but only if we learn to utilize it
more effectively. Thus, U.S. industry needs to improve the commercial
exploitation of leading-edge technologies which the U.S. has in
abundance.
We appreciate your support of U.S. technology and your interest in the
activities of our office.
Sincerely,
William D. Phillips
Associate Director for Industrial Technology
Mr. Michael Baybak
President
MICHAEL BAYBAK AND COMPANY, INC.
Penthouse
9033 Wilshire Boulevard
Beverly Hills, CA 90211
9/205 to
Michael Baybak and Company. Inc.
Corporate Public Affairs
Financial Relations
Market Planning
Counsel
February 18, 1991
DIRECTOR
D. Allan Bromley
Office of Science and Technology
The White House
1600 Pennsylvania Avenue NW
Washington, DC
Dear Dr. Bromley,
I read with interest the L.A. Times piece on you and your
work.
With all the concern about the dominance of Japan in
leading-edge technologies, I thought you might take some
satisfaction from learning of one small U.S. company that is
busily reversing the trend by having major Japanese firms
steadily knocking at its door for certain seminal
technologies in HDTV and electromagnetics.
The company is AURA SYSTEMS INC. I'm enclosing a profile of
it. They deserve to be a factor of some type, I am sure, on
your agenda.
Yours truly,
humber Bony low.
Michael Baybak
President
MICHAEL BAYBAK AND COMPANY, INC.
MB:et
enclosure
9033 Wilshire Boulevard
Penthouse
Beverly Hills, California 90211
Telephone (213) 276-4660
FAX (213) 276-5426
Los Angeles/NewYork/Washington.D.C.
Michael Baybak and Company, Inc.
Corporate Public Affairs
Financial Relations
Market Planning
CONTACT: George Duggan
Counsel
Michael Baybak & Co., Inc.
(213) 276-4660
FAX (213) 276-5426
AURA SYSTEMS, INC.
CORPORATE PROFILE
January 1991:
Aura Systems, Inc. (NASDAQ: AURA), a Los Angeles-based company, is
bringing new and universally-applicable electromagnetic technologies
to the world. Like earlier breakthroughs - the electric motor, radio
and television Aura's technologies are far-reaching, will benefit
all people and all industries worldwide and are being assimilated
rapidly. Based on contracts with the largest corporations, major
commercial uses are commencing in 1991. Most citizens of indus-
trialized countries will know about and benefit from Aura's
technologies by 1993.
Aura has discovered new ways to control the movement and productivity
of mechanical devices by manipulating magnetic fields. This includes
breakthroughs in linear force, rotary force and combinations of the
two, including very precise control of objects within magnetic fields
from a distance. These advances are expected to increase the effi-
ciency and effectiveness of a high percentage of functioning parts in
the whole broad world of mechanics. While Aura is clearly involved
with high tech, it is a basic tech story -- with basic industrial and
medical applications that provide immediate advances in manufacturing
efficiencies, and improvements in quality of life, unmatched since
perhaps the advent of the computer itself.
Company Overview
Aura Systems, Inc. is a public company which was formed in February
1987 by Zvi Kurtzman and Arthur Schwartz, Ph.D. The Company has three
facilities in California comprising 63,000 square feet and employs 120
staff, including several Ph.D.'s and M.S.'s in physics and the other
sciences. In research or development at Aura are 26 magnetics, 3
optics, 3 advanced computing and 12 microelectronics projects. 19
contracts have been signed and initiated with major corporations, and
another 100 contracts are in negotiation.
The Company is listed on NASDAQ, trading symbol AURA, and has 22.5
million shares outstanding. Management projects $0.25 per share
earnings for fiscal year-ending February 1992, based on projected
revenues of $30 million. Revenues are expected to move up rapidly
from there with present development contracts expanding into
production orders.
9033 Wilshire Boulevard
Penthouse
Beverly Hills, California 90211
Telephone (213) 276-4660
FAX (213) 276-5426
LosAngeles/NewYork/Washington,D.C
AURA'S TECHNOLOGIES
Early uses of electromagnetic advances by Aura will transform the
world in three ways.
1. Aura dramatically improves the planet's energy equation by
generating mechanical productivity without friction. This is done by
rotating machinery shafts in frictionless magnetic fields, called
magnetic bearings, instead of within bearing casings. A simple
retrofit can be done to most gas and electric motors, alternators,
pumps, turbines and compressors. This advance produces an immediate
10%+ gain in energy efficiency, reduces maintenance significantly,
extends machinery life, replaces lubrication and its systems and
allows long-distance monitoring of mechanical performance. Present
development contracts include the U.S. Navy, General Motors, utility
and oil companies and others.
The same technology in new equipment extends earlier bounds to
mechanical productivity by permitting higher speed rotation, less heat
and less noise -- without lubrication. Because of the greater speed,
more work is performed by lighter, smaller, less complex and less
expensive equipment.
2. Mechanical parts that "think" will re-define mechanical
applications at all levels of transportation, industry and the home.
Aura's computerized, electromagnetic actuator is a mechanical device.
It replaces basic things -- switches, pulleys, shocks, speaker
drivers, locks, latches, hydraulic systems, and far more. Aura's
actuator provides an unprecedented amount of force at an
unprecedented speed in one direction, with a far lower energy
requirement than present systems. Importantly, since Aura's
actuator is computerized, these very basic functions can now be
performed "intelligently" with an active desired response to external
forces. The same device is not fixed in its motion but can function
in several different ways automatically, adjusting to environmental
changes or user needs. The extent of the economic uses of Aura's
actuator has not been fathomed, though it is clearly in the thousands
of applications across all industries.
Several applications of Aura's actuators in automobiles will be the
first uses that will affect most of US. Aura's production contracts
include General Motors (several operating divisions), Toyota,
Caterpillar, Itek (a division of Litton), Texaco, Ball, T & N (a major
British conglomerate), the U.S. Air Force, the U.S. Navy, Boeing and
others. First applications include active suspension systems,
vibration-isolating engine mounts, plus improvements to power
steering, alternators, windshield wipers, engine timing devices,
transmissions, locks, power windows, power brakes and more.
2
One application, Aura's actuated automobile engine valve, allows
infinitely variable timing of fuel and air intake and exhaust valves.
This use alone has been shown to increase fuel efficiencies by 15%,
while reducing emissions by 15%. Laboratory tests have also shown
that a combination of Aura's actuator technologies and the Company's
magnetic bearings applied to state-of-the-art electric cars can double
the efficiency of these cars. This is being pursued by electric car
developers.
3. Surgery without pain or incisions, with a quantum gain in
effectiveness.
When Aura engineers and scientists learned to control the movement of
a tiny, spinning metal bit, called a Magnabit, within a magnetic field
from a distance, with a precision several hundred times as accurate as
a surgeon's hand, it became the basis for potentially the greatest
advance in health care yet to come. Today, with cataract surgeries on
animals being perfected to a routine using Aura's magnetically-
assisted surgical techniques, the company's 60%-owned subsidiary, Aura
Medical Systems Inc., has contracted with Alcon Surgical Inc. (the
world's largest eye care company) to bring Magnabit cataract surgery
to the public.
Longer-term, many surgeons believe that Aura's magnetically-assisted
surgical techniques will enable most operations to be done by in-
jecting a Magnabit into the patient's blood stream and directing it to
perform the exact work needed, without pain or incisions.
Of course, precise control of objects from a distance using magnetics
also has far-reaching industrial applications, several of which are in
development now.
4. Aura - Other Technologies
a. Aura's Electro-Optics Division has developed the digital TV and
movie projector technology which management believes will help to
expand two large new industries in the 1990's. The first to gener-
ate revenues will be film-less, electronic distribution of movies to
theaters. While there are any number of procedures for distributing a
movie without film (by satellite or telephone, for example), the
industry has not had a movie projector which could use these
transmissions to provide a high standard of resolution and light
intensity when projected to theater-screen size. Aura's digital movie
projector technology -- developed by Aura to make scene generators for
the U.S. Air Force for testing of aircraft sensors -- will provide
exceptional definition and color and light intensity far beyond pres-
ent movie-goers' standards. Movie distribution in the U.S. is an
approximate $300 million to $500 million per year industry. The
AuraScope projector and distribution system have received high
3
interest from the Movie-Producing Artists Association and the National
Association of Theater Operators, with first viewings scheduled for
late-1991.
b. The same technology solves a substantive problem facing high-
definition television (HDTV). HDTV - with approximately 1100
horizontal and 1900 vertical lines of information per screen, instead
of the present 330 horizontal and 470 vertical lines of information -
is widely expected to provide the next generation in quality for
television. Other technologies for projecting the television picture
onto the screen lack adequate light and color intensity. Aura's
technology, using light itself instead of cathode rays, solves both
problems. First viewings are scheduled for late-1991; Aura management
believes it will become a major picture-tube manufacturer for HDTV.
C. Aura is also a leader in computerized telemetry systems with its
Linkage software and hardware. Linkage is a new way of connecting
standard and complex external processes to human operators via
computer in order to monitor, diagnose and control the system.
Applications of Linkage, thus far, have been principally in the
aerospace industry, monitoring and interpreting data from satellites,
spacecraft and missiles for NASA, the U.S. Air Force and commercial
satellite builders. With Linkage's low-cost hardware, users can
extend the power of the human operator to grasp and understand what is
occurring in an environment that shoots far more data at him than he
could otherwise possibly assimilate.
Linkage is not a special-purpose system, like its competitors'
systems. Rather, it is applicable to practically all high-volume
telemetry applications. As an example of its advances compared with
its aerospace competitors, the Linkage operator is monitoring
schematics of the external systems, with data already evaluated and
color-keyed to each area; competitor systems provide "waterfalls" of
unevaluated numbers and symbols which need human translation to
determine even if systems are okay or whether an emergency exists.
The numbers of people needed to monitor Linkage data are dramatically
reduced. With continuing revisions to systems, intensive interfacing,
repairs, tighter budgeting and increasingly greater power require-
ments, the aerospace industry is gradually recognizing Aura's software
and hardware solutions, which are modular, open architected for ease
in using commercial boards and can be customized by the user to suit
his needs.
Aura's Linkage telemetry systems are also now being developed for
commercial applications starting with the monitoring, analysis and
control of underground tunneling machinery in Japan. By establishing
itself at the high-end in terms of precision and standards, management
believes it can gain success with commercial applications in oil
fields, utilities, banking, factory automation, flood control, fault
monitoring and other industries in the years to come.
4
THE ECONOMICS OF AURA'S TECHNOLOGIES
As the developer and international patent-holder of widely applicable
electromagnetic technologies, with numerous additional patents
pending, Aura Systems' financial future may have a growth potential
that is second-to-none. The company is in the process of shifting its
revenue base from government research and development, much of which
was completed in 1990, to commercial development and production. In
the fourth quarter of 1990 the Company realized its first sales of
equipment for commercial uses and further development. It projects a
steep growth curve into the Nineties.
AURA MAGNETIC
STATUS/ JAN. 7, 1991
Aura Systems, Inc
EXISTING CONTRACTS
CURRENT
ACTIVE NEGOTIATIONS
TECHNOLOGY
DEVELOPMENT
BOAT HORNS
HYDRAULIC CONTROL
STORZ
MICROSCOPE ISOL
VALVES
G.D.
MISSILE SENS. ISOL
PROOF OF
CONTROL SURFACE
CONCEPT
JACK HAMMER
BALL
CAN MAKING
GM
ALTERNATORS
ECHLINV
DIGITIAL FUEL INJECTION
NAPA
FUEL INJECTION
FUEL INJECTORS
TOYOTA
AUTO ACTIVE SUSPENSION
AUTO BIG 3
POWER STEERING
LAB
U.S. NAVY
MECH. VIB. CANCEL
PROTOTYPE
RECON CAMERA ISOL
TMC
OPTICAL TABLE CANCEL
& TESTING
LARGE STRUCTURE
USAF
ISOLATED TELESCOPE
VIB CANCELLORS
LITTON
CAMERA ISOLATION
INDUSTRIAL COMPRESSOR
ALCON
AURA MEDICAL
BEARINGS
PRINCE
TENNIS RACKET STRINGING
ACTIVE ISOLATION SEATS
ROCKWELL
ABS FOR TRUCKS
FOR HEAVY MACHINERY
NEWPORT NEWS
VIBRATION SOURCE
PRODUCTION
FIRST
AUDIO SPEAKERS
WATERRA
GROUND WATER PUMP
UNIT
TURBO MOLECULAR
BOEING/AEROSPATIALE
MISSILE TEST EQUIP.
PUMP
TEXACO
DOWNHOLE
WESTINGHOUSE
ACTIVE VIBRATION ISO
CATERPILLAR
VALVE CONTROL
PRODUCTION
VARIAN
TURBO MOLECULAR PUMP
Figure 1 is a table summarizing maay of the business
activities in Aura's Magnetics Division. A milestone
in Aura's development is that many new contracts are
now entering the list at either the laboratory prototype
or first-production stage, reducing the lead time from
initial contract to full production.
5
Company revenues derive from four types of contracts: proof-of-
concept, laboratory prototype and testing, first-units-of-production
and production. From inception in 1987, contracts have progressed
toward the production type, with each new level providing an
exponential jump in terms of revenues. With a backlog of $50 million
in contracts, many of which are first production contracts with far
larger orders pending successful utilization, the Company is
experiencing strong growth.
For comparison, the Company is expected to generate $10 million in
revenues in fiscal year-ending February, 1991. This is up strongly
from the two prior years of research and development. Revenues for
the fiscal year that ends in February 1992 are projected to reach $30
million, with $0.25 per share earnings.
As the developer of these technologies, Aura has very substantial room
to grow. Management targets three major markets for their magnetics
technologies with sales potentials on a scale approaching those of the
computer hardware and software markets worldwide: machinery (magnetic
bearings), transportation (actuator technology) and medical (magnabit
technology). And an additional three major markets with cumulative
sales potentials in the hundreds of millions of dollars: industrial
and domestic markets for actuators, HDTV picture tube production and
movie distribution to theaters in conjunction with the Movie-Producing
Artists Association (MPAA) and the National Association of Theater
Operators (NATO).
AURA'S ELECTROMAGNETIC ACTUATOR
"Mechanical Parts That Think"
An actuator is a simple device that impels a force in a direction for
a certain distance. A car door latch, a power window, a washing-
machine's on-off switch, a stamping machine - these are examples of
actuators. Most hydraulic, pneumatic and ball-screw systems serve
actuator functions -- controlled linear force.
Aura's computerized, electromagnetic actuators provide several
advantages which are starting their sweep with transportation and
industrial applications. Light-weight, low-energy, low-cost, high-
speed and adaptable in terms of force delivered and distance covered,
Aura's actuators bring computerized electronics to the mechanical
realm.
Aura's active suspension system for automobiles is an example. Aura's
actuator counters vibrations not absorbed by shocks in micro-seconds,
SO the vibrations do not reach the passenger compartment. As the
driver turns off a paved road onto a gravel-and-dirt road, for
example, the mechanical resilience in the shocks remains the same,
however the actuator adjusts to provide the same smooth ride. The
6
force and distance of the actuator's counter-thrust, which isolates
vibrations to the suspension, are automatically adjusted by increased
electrical current to counter the force of greater bumps. So, rather
than performing the same, mechanical function, like a shock absorber,
the electromagnetic actuator is programmed to adjust to always serve
the driver with an adaptable mechanical service which responds
according to external changes to provide a smooth ride. Aura's first
contract for actuators of this use is with Toyota.
Magnet assembly
Coil
Bushing
Output shafts
Aura's Linear High Force Actuator
Radial
Shaft bushings,
120° apart
The Aura HFA is made up of two basic assemblies, the inner magnetic assembly and the outer coil
permanent
Magnet assembly
assembly. When current is applied to the coil attached to the outer housing, a perpendicular force IS
magnet
support shaft
generated on the magnet assembly that is transferred to the output shafts. This patented magnet
design yields the highest forces and longest stroke lengths of any linear actuator available today.
Another basic industrial use for Aura's actuator is the stamping
machine, used to make cans, boxes and other objects, and to label all
of these. In this case, it is the speed, low-cost and adaptability of
the actuator which replaces the mechanical or electrical stamping
machine - yielding a doubling of productivity. Aura's first contract
is with Ball Manufacturing, the world's third-largest can manufac-
turer.
Aura's managment is now actively negotiating contracts with major
companies from several industries for numerous other large-scale
applications of their actuator technology.
AURA'S MAGNETIC BEARINGS
Rotary Motion Without Friction
Most mechanical work is performed by linear force or rotary force. The
Aura actuator makes breakthroughs using linear force, and the Company
is making major advances with rotary force as well. Aura extends the
frontier of mechanics with basic, new technologies in both areas,
providing whole new efficiencies and capabilities for devices that
function either linearly or by rotation.
Levitation using magnetic forces to balance an object within magnetic
fields has been a long-term postulate. However, the speed required of
sensors, processors and field current drivers to maintain balance when
the field is being thrown out of balance at every moment has not been
possible until the present era of digital electronics and micro-
computers. Aura's digital controls measure and adjust the position of
the rotor in the field 5,000 times per second. Since an electro-
7
magnet's field is proportional to the current, these adjustments
keep the rotor in the middle of the field. Because moving parts do
not touch anything, friction does not occur. Lubrication and
lubrication systems are not used. Moving parts wear very minimally.
Sensor
Proximity-sensor
feedback (digital)
Coll
Multiplexer
Rotor
ADC
0
Controller
(DSP sigorithm)
DAC
Shaft
Magnetic
Magnetic
gap
flux path
Current ampitter
The first commercial application of Aura's magnetic bearing is
expected to be turbo-molecular pumps contracted by Varian for 1991
delivery. These high-speed pumps are used throughout industry to
produce high-purity vacuum conditions. Aura is retrofitting the
pumps, replacing bearing casings with magnetic bearings and adding
electronic control systems. The length of time between repairs is
projected to extend from the present 4 months to 3 to 4 years. Cost
and time of repairs will plummet because standard boards will be
replaced instead of entire bearing casings. Varian customers are
expected to realize an appreciable gain in factory productivity.
Automobile alternators are a second prime commercial application.
Without mechanical bearings, the alternator shaft can spin at a higher
speed, generating the same or more electrical power from a smaller,
lighter, less expensive alternator. Aura's development contract is
with General Motors, targetting 1992 or 1993 for first commercial
uses.
Utilities, oil companies and motor manufacturers are also recognizing
the power of this technology. Their acceptance level is further
indication of the magnitude and economics of magnetic bearings. Oil
companies, with massive machinery and bearings under constant assault
from sand and wind in remote desert conditions, provide exceptional
opportunities for early production units of all sizes. Performance of
all units can be monitored from great distance, a further advance.
Considering the pervasiveness of motors, pumps, compressors, engines
and turbines in the industrialized world, Aura's magnetic bearing
technology will impact the world's energy equation.
8
MAGNETICALLY-ASSISTED SURGICAL TECHNIQUES
Surgery Without Pain Or Incisions
Aura's magnetically-assisted surgical techniques realize another
broadly-postulated goal of mankind. They offer the prospect of
surgery without pain or heavy drugs, with accelerated recovery. They
make life-extending, new surgical procedures possible, without the
misery or unconsciousness. They make internal-specific medicines and
treatments possible without side-effects throughout the body. They
make out-patient clearing of arteries possible. Strokes, athero-
sclerosis, some types of heart attacks and cancers can become early
targets for prevention.
These radical advances are all made possible by precision control of
tiny magnetized particles within magnetic fields. The magnabit is
directed by a magnetic control device, consisting of a magnetic yoke,
a computer-controlled motion system, optical camera sensors and
position sensors. These are relatively low tech, low capitalization
and are not difficult to comprehend compared with most medical
advances.
Micromachined silicon surgical tool
Optical or magnetic pickup
Valve-actuated scraper
collects tissue samples.
Ultrasonic
C
drill bit
b
Silicon-etched
a
rotary cutting blade
Aura Medical System's Approach
Future magnabit, micromachined from silicon, might deploy rotary cutting
to Cataract Surgery: (a) Eye
blades, ultrasonic drill bits, and valve-actuated scrapers to collect tissue
(b) Magnabit (c) Magnetic Yoke.
samples. Optical or electromagnetic pickups would provide
communication channels between surgeon and tool.
Aura Medical Systems Inc. was organized specifically to develop the
potential of this technology for just one of these areas, cataract
surgery. Three million cataract surgeries are performed annually --
more than any other operation. Each of these operations involves a
minimum six millimeter incision to the front portion of the eye. It
is the size of the incision itself which prevents optimum healing.
The patient loses the ability to focus clearly. Healing is slow.
9
The size of the incision using Aura's magnetically-assisted surgical
techniques is one millimeter. Because of the small size of the
Magnabit, and the precise control of its position by magnetics, the
affected area is minimized and collateral damage is greatly reduced.
The natural focusing ability of the eye by the tensing of muscles
continues intact after the operation. This has been tested and proven
with laboratory surgeries.
Aura Medical Systems Inc. is a joint venture formed by Aura Systems
Inc. (60%), Charles D. Kelman, M.D. (30%) and investors (10%),
including Alcon Surgical, Inc., a division of Nestle. Dr. Kelman has
a worldwide reputation in ophthalmology. He pioneered phacoemulsifi-
cation, the technique most used presently for cataract surgeries
worldwide. He is also phacoemulsification's greatest critic, and the
developer of the exact procedures for cataract surgery using Aura
magnetic technologies, known as KELMAST.
Dr. Kelman, Aura Medical and Alcon will be performing cataract
surgeries on animals in late-1991. Within five years the company
hopes to gain a 27% market share of cataract surgeries worldwide, with
approximate revenues of $100 million annually. This includes the time
for the approval process in the U.S. and other countries.
Other medical procedures presently in development by Aura include a
local, internal, drug-delivery system and a local, heat-delivery
system for cancer and tumor cells.
AURA'S DIGITAL TV AND MOVIE PROJECTOR TECHNOLOGY
The Future of Television
The Future of Movie Distribution
High-definition television is still ten years in the future for most
of us, but it is already the subject of intense competition among
several large electronics companies. High-definition television
(HDTV) posits intense picture clarity and color from approximately
1100 horizontal and 1900 vertical lines of information on the screen
compared to today's 330 horizontal and 470 vertical lines.
HDTV is bogged at the international standards-setting level, with
relative equilibrium among several political and power factions on
several criteria. Standards in just the US are not scheduled to be
established by the FCC until 1993. When standards are set, HDTV
will still require new production equipment and transmission equipment
at all networks, television stations, advertising production companies
and satellite transmission facilities internationally. This is a
substantial recapitalization. All this, plus a gradual turnover to
new and more expensive television sets by consumers worldwide.
10
One US company does hold a powerful key in this gradually emerging
industry - Aura Systems. With no need to participate in the "issues,"
Aura may gain the lions share of picture-tube production for these
large electronic firms because of its internationally patent-
protected projection technology.
Aura's UMTV projection technology -- named after Dr. Gregory Um, the
inventor and Aura's vice president, Electro-Optics Division -- has a
very significant advantage over competing HDTV projection technolo-
gies: light and color intensity.
UMTV technology uses actual light as its source, not electrons, as are
used in cathode-ray tubes in today's television and most other HDTV
projection technologies. HDTV requires a far stronger light source
than conventional television because of the increased detail of
information on the screen at every moment. Also, for the human eye to
take advantage of the improved resolution, the size of the screen is
increased, thus adding to the intensity needed to keep the image
bright. If the source of this light is an electron gun or cathode ray
tube, the viewer may be exposed to a dangerous level of x-rays.
A further issue involves the weak intensity of light and color
obtained by other HDTV projection technologies. They can achieve an
intensity adequate for small screen clarity, but start to fade with
larger screens and can not approach the intensity necessary for big-
screen HDTV.
Aura management, along with several HDTV experts, believes that UMTV
technology, and Aura picture tubes, will be an integral and necessary
part of the HDTV revolution. Utilizing automated production
techniques, Aura believes that the cost of their displays will be in
the commercially affordable range, a key advantage. This may well
become Aura's largest, direct "name-recognition" relationship with the
greater consumer public.
In the meantime, Aura's UMTV projection technology has a more
immediate and similarly huge marketplace -- the distribution of
movies to theaters, first, nationally, then internationally. The
distribution of movies to theaters is a key concern to both producers
and exhibitors as represented by the Movie-Producing Artists' Asso-
ciation (MPAA) and the National Association of Theater Operators
(NATO). Both sides have searched for the past twenty years for a
better way to distribute movies. Despite today's satellite trans-
mission and telephone transmission capabilities, movies are still
actually distributed the old way: in cans of film by physical
transport, movie house to movie house, screen room to screen room.
11
It is an approximate $300 million to $500 million per year industry
- dominated by the cost of film base, which is dominated by Kodak, and
various kinds of labor, transportation and facilities. The process is
profligately wasteful. On the one hand, producers generally cannot
take advantage of audience demand in a timely manner. On the other
hand, many theater owners are frozen out of first run shows due to
print demand in more lucrative markets. To deliver product when and
where desired becomes possible with the distribution system developed
by Aura's subsidiary, Aura Distribution Systems, Inc.
One duplicate of today's average movie costs $1,500 to $2,000 to make.
It weighs 140 pounds, consisting of seven cans of film at 20 pounds
per can. 90% of the duplicates are not useable after six months
because of lack of demand and because they are damaged by use and
mishandling. The connections of film between each of the cans are
newly spliced together into one roll, called a platen, at each screen
they are used, and cut apart again before being moved.
The fact that illegal duplications might be made between 3AM and 7AM
each day throughout the country, for shipment outside the U.S., adds
insult to injury and millions of dollars in lost revenues for the
members of MPAA and their employees and performing artists. Keeping
track of the physical location of some 190,000 prints a year requires
much effort as well and is not always successfully achieved.
Two problems have remained unsolvable over the twenty years: light
intensity and resolution at the theater big-screen level, plus
capturing the demand when the demand is there. Both are solved by the
AuraScope projector and its companion distribution system. An
informal letter from MPAA to Aura after several meeting with both the
major, individual production studios and the major theater-chain
owners is testimony to the prospect of Aura's control of the movie
distribution system in the US over the coming four to five years.
Extensive studies show that the AuraScope projector and its companion
distribution system are expected to reduce annual movie distribution
costs by 21%, or between $80 million and $100 million per year.
The next step, and the most crucial, is the viewing of Aura's proof-
of-concept projectors by MPAA and NATO members, scheduled for late-
1991. It is the same step which is Aura's next move into the HDTV
industry. The same projector provides proof-of-concept for HDTV
picture tubes. Well into the development, Aura management is
confident of their schedule and quality of research.
###
12
AURA SYSTEMS, INC.
Key Personnel
Zvi (Harry) Kurtzman, President and Director
From 1982 to 1988, Mr. Kurtzman served as president and director of
IIS (Innovative Information Systems, Inc.) and CMI (Cypher Master,
Inc.), forerunners of Aura Systems. He also served as senior
scientist at Science Applications International Corporation from 1984
to 1985, and held a similar position at Hughes Aircraft Company from
1983 to 1984. Prior to then, he consulted for major defense
subcontractors in the fields of computers, automation and engineering.
He received a New Technology Utilization Award from Rockwell
International for his work on the space shuttle, and commendation
letters from TRW and Hughes for his consulting work at those
organizations. Mr. Kurtzman obtained his B.S. and M.S. degrees in
Physics from California State University, Northridge, and completed
course work towards a Ph.D. in theoretical Physics at the University
of California at Riverside.
Arthur J. Schwartz, Ph.D., Executive Vice President and Director
Dr. Schwartz served as Executive Vice President and a director of CMI
since 1984. In addition, Dr. Schwartz was appointed President of IIS
in 1988 after having served as its Executive Vice President since
1984, and has been a director of IIS since 1984. Dr. Schwartz
obtained his M.S. degree in physics from the University of Chicago in
1971 and a Ph.D. in physics from the University of Pittsburgh in 1987.
He was employed as Technical Director with Science Applications
International Corp. from 1983 to 1984 and was a senior physicist with
Hughes Aircraft Company from 1980 to 1984. While at Hughes, Dr.
Schwartz was responsible for advanced studies and development where he
headed a research and development effort for new technologies to
process optical signals detected by space sensors.
Neal B. Kaufman, Senior Vice President, Director
Mr. Kaufman, appointed as a director in 1989, is Senior Vice President
in charge of Software Development for Aura, where he has served since
1988. He earlier served as President and Vice President of CMI, since
1984 and 1988, respectively. He has also been a director of CMI since
1984. Mr. Kaufman graduated from the University of California, Los
Angeles, in 1967 where he obtained a B.S. in engineering. He was
13
employed as a software project manager with Abacus Programming Corp.
from 1975 to 1985 where he headed a team of software specialists on
the Gas Centrifuge Nuclear Fuel Enrichment Program for the United
States Department of Energy and developed software related to the
Viking and Mariner projects for the California Institute of Technology
Jet Propulsion Laboratory in Pasadena, California.
Cipora Kurtzman, Senior Vice President, Director
Ms. Kurtzman was appointed Vice President in charge of Marketing and
Contracts for the Company in 1988, was appointed a director of the
Company in 1989, and advanced to Senior Vice President in 1990. She
was the Director of Contracts and Marketing for CMI, where she served
from 1985 to 1988. Ms. Kurtzman received her B.S. degree in business
administration from California State University, Northridge in 1983.
Francis T. Phalen, Senior Vice President, Chief Financial Officer,
Director
Mr. Phalen has been the Company's Chief Financial Officer since
November 1988 and has been a director of the Company since 1989. From
August 1987 until Mr. Phalen joined the Company he was Associate
Director, Corporate Finance, for Bear Stearns & Co. in Los Angeles.
From October 1986 through November 1987 Mr. Phalen served as Vice
President and Treasurer of Carter Hawley Hale Stores, Inc. For the
three years prior, he was a partner in the public accounting firm of
Deloitte & Touche.
C. Rogers Saxon, Ph.D., Vice President
Dr. Saxon was appointed Vice President in charge of Advanced Computing
for Aura in 1988. Prior to this, he was a Program Manager for CMI
where he had served since 1986. Dr. Saxon received his B.S. degree in
mathematics from Harvey Mudd College in 1966, an M.A. degree in
operations research from Claremont Graduate School in 1977, and M.A.
and Ph.D. degrees in cognitive psychology from the University of
California, Irvine in 1982 and 1985, respectively. From 1984 to 1986,
Dr. Saxon worked for Abacus Programming Corp. on the Space Shuttle
Project. His services for Abacus were performed at Rockwell
International and included leading the team that developed an expert
system for Space Shuttle electrical cable configuration and routing.
14
Keith Stuart, Vice President and Manager of the Magnetics Division
In 1986, Mr. Stuart was the Program Manager of Aura's (then Innovative
Information System) first magnetic bearing contract, and was
instrumental in the development of the basic technology used in all of
Aura's magnetic bearing products. From 1987 to the present, Mr.
Stuart has been a Vice President for Aura, responsible for all of
Aura's work in magnetics. As inventor of the patented high force
actuator, Mr. Stuart extended Aura's product line to include
commercial applications such as automotive active suspension,
electronic valve lifting and highly efficient motors, among many
others. Before joining Aura, Stuart was a technical manager at Hughes
Aircraft Company. He received his Masters of Science degree in
Electrical Engineering from UCLA in 1980.
Gregory Um, Ph.D., Vice President
Gregory Um, Ph.D., was appointed Vice President in charge of the
Electro-Optic Systems Division for Aura in 1988. He earlier served as
Chief Scientist of IIS during 1987 and worked for CMI during 1986. He
was the principal inventor of Aura's scene projectors and holds
numerous patents. Dr. Um received his B.S. degree in physics from the
University of California, Berkeley in 1970 and his Ph.D. in physics
from the State University of New York in 1976. From 1983 to 1986, Dr.
Um worked for Hughes Aircraft Company as a senior scientist where he
was involved in sensor system engineering, signal processing
algorithms, wavefront sensors, thermal analysis and electro-optical
sensor modelling and simulation.
Michael Wilde, Director
Mr. Wilde has served as director since inception and President of
Delphi Inc., a wholly-owned subsidiary of Aura, since March 1987.
From 1971 to 1984, Mr. Wilde was employed with M/A COM Omni Spectra,
most recently as Business Center Manager, primarily responsible for
administrative, engineering and financial affairs. From 1984 to
March, 1986, Mr. Wilde was employed with E.W. Components as Vice
President. Mr. Wilde has a Bachelor of Science degree in Electronic
Technology.
15
AURA SYSTEMS INC.
Corporate Information
Aura Systems, Inc., was formed in February 1987 by a group of
scientists and engineers to develop magnetics and related
technologies.
Company financial performance:
Fiscal Year
Ending 2/28
Revenues
EPS
1989
$ 2.9M
($0.09)
1990
$ 9.1M
($0.16)
1991 (E)
$ 10.0M (E)
($0.15) (E)
1992 (E)
$ 30.0M (E)
$0.25 (E)
Shares Outstanding
Market Cap
Capitalization
22.7M
$35.0M
(in millions 8/31/90)
(based on 1 3/4
share price)
Short-term debt
$0.27
Long-term debt
0.27
Convertible debt
6.85
Shareholder Equity 5.91
$13.30
Directors
Zvi Kurtzman
Neal B. Kaufman
Arthur J. Schwartz, Ph.D.
Cipora Kurtzman
Francis T. Phalen
Norman Reitman
Peter C. Jaquith
Officers
Zvi Kurtzman
President
Arthur J. Schwartz, Ph.D.
Executive Vice President
Neal B. Kaufman
Senior Vice President-Software Development
Cipora Kurtzman
Senior Vice President-Marketing & Contracts
Francis T. Phalen
Senior Vice President, Chief Financial Off.
Joseph F. Bevacqua
Vice President-Chief Accounting Officer
Rogers Saxon, Ph.D.
Keith 0. Stuart
Vice President-Advanced Computing
Vice President-Hardware Development
Gregory Um, Ph.D.
Vice President-Electro-Optics Systems
16
Headquarters
Auditors
2335 Alaska Avenue
KPMG Peat Marwick
E1 Segundo, California 90245
725 South Figueroa Street
213-643-5300
Los Angeles, CA 90017
FAX 213-643-8719
Transfer Agent
Contact
Interwest Transfer
Cipora Kurtzman
Salt Lake City, UT
Senior Vice President
801-272-9294
213-643-5300
or
George Duggan
Michael Baybak & Co., Inc.
213-276-4660
17