CONFERENCE OF EXECUTIVES FROM THE PRIVATE SECTOR UNDER THE SPONSORSHIP OF THE DEPARTMENT OF COMMERCE, 14 AUGUST 1985

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP92S00238R000200100005-3
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 15
• Document Creation Date: December 27, 2016
• Document Release Date: August 7, 2013
• Sequence Number: 5
• Publication Date: August 23, 1985
• Content Type: MEMO

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MEMORANDUM FOR THE RECORD
FROM:
Executive Secretary
Executive Steering Group for the Exploitation
of Overt S&T Information
HC 85-302
23 August 1985
SUBJECT: Conference of Executives from the Private Sector under the
Sponsorship of the Department of Commerce, 14 August 1985
SUMMARY: On 14 August 1985, a half-day conference of twelve executives from
the R&D and strategic levels of industry met under the auspices of Dr. D. Bruce
Merrifield, Assistant Secretary of Commerce for Productivity, Technology, and
Innovation at the Community Headquarters Building. The private sector repre-
sentatives gave insights into their concerns regarding foreign technologies
and permitted both the government and private sector pariipants to assess
future means for exchange of information on subjects of high interest.
1. Dr. Merrifield opened the intensely interactive session with an
assessment that the US portion of world technology is dropping relative to
that of other countries. This is occurring despite tremendous capabilities on
the part of US industry to gather and analyze information, increase its
knowledge base, transfer knowledge into applications, and take advantage of
its entrepreneurial culture. As competition gets tougher, the life cycle for
technological innovation is collapsing. US industry must develop a better
ability to appreciate and act on what it sees happening. Information is
available in the private sector which is of great value to government as well
as to industry itself.
2. Throughout the conference, Dr. Merrifield stimulated the thinking of
the private sector participants with his emphasis on the value of
collaboration through R&D limited partnerships, which generate money, share
risks, and reduce the developmental time frame. He has been able to encourage
the development of consortia within industrial sectors for action on mutual
problems. In addition to these vehicles for joint solutions, industry must be
encouraged to take advantage of new, innovative, efficient manufacturing
processes, search the world technological literature to stay abreast of new
developments, and take advantage synergistically of what is happening in
foreign countries. He cited the binational industrial R&D groups in existence
and being formed as prototypes of international collaboration. Dr. Merrifield
noted that carefully prepared and presented initiatives have changed the
attitudes in the legislative and executive branches, brought changes in
legislation and governmental regulations which had acted as barriers to
innovation, and supported cooperation between government and industry in
selected sectors. He sees the governmental role not as directive, or
managerial, but rather as non-interventionist, catalytic, proactive, and
supportive in making relevant information available
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SUBJECT: Conference of Executives from the Private Sector Under the
Sponsorship of the Department of Commerce, 14 August 1985
3. Industrial representatives spoke to their concerns about the decline
in the material data base, the disappearance of solid infrastructure and
laboratory facilities for research, and the loss of corporate technology and
culture. They assess much of US business as risk-averse, geared to slow
change and hierarchical management, when these approaches are outmoded. Their
contributions to the discussion brought out the financial pressures caused by
governmental requirements dealing with environment and safety factors, testing
and control regulations, disparate foreign laws and regulations, inequitable
international agreements, and legal procedures which impinge on R&D by
requiring capitalizing R&D costs and warranting R&D data. They noted that
time lags between initial R&D work and the ultimate commercialization are too
long for an individual firm to undertake the costly risks involved. At the
same time, foreign competition is increasing, often with foreign governmental
support, from Japan (innovative applications, robotics, and pricing
structures), Germany, and France.
4. At the same time, private sector participants have had experience
with the benefits of bringing virtually all the leading firms in a given
industrial sector together for sharing and the success of joint activities,
such as oil operating groups. They see a role for a partnership between all
the firms in an industrial sector and government, a benefit from mutual
education and motivation, and a role for government-academic collaboration and
industrial consortia with due regard for the principles of the American
private enterprise system. US technology has the lead in computer-integrated
manufacturing, integrated data bases, and manufacturing automation protocols,
and can still sell CAD, lasers, vision systems, and software to the Japanese.
Structured relationships with the Japanese in military-related industry
received support. Previous government leads and support as seen in the Apollo
and Viking programs, were viewed favorably and the SDI captures and stimulates
the vision. On the other side, the US has been able to react well if scared
enough. The participants thanked Dr. Merrifield for his insights and his
skill in presenting a forceful, cogent argument.
5. Other government discussants referred to concern over the loss of
technologies relating to national security. The depth of knowledge in various
technology sectors held by industry is of great value to the government. A
concern expressed regarding the flow of information outside the classified
defense sector brought a number of responses that the flow is critical for US
industry, which is also on the receiving end of information. Commerce
Department representatives pointed to the value of competitive assessments of
several industrial sectors including those involving serious threats in
individual sectors and across several areas.
6. The private sector participants agreed to give serious attention to
the matters raised in the questionnaire received and the issues identified in
the conference. Further discussions in a smaller or full-scale group were
welcomed.
* * * END OF SUMMARY * * *
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1. On 14 August 1985, Dr. D. Bruce Merrifield, Assistant Secretary of
Commerce for Productivity, Technology and Innovation, sponsored a half-day
conference to which he invited twelve executives as representatives from
private industry. (The private sector participants are identified fully in
Attachment A.) Representatives of the government, both Commerce Department
and the Intelligence Community, also participated as discussants. (Principal
government participants are listed in Attachment B.)
2. The purpose of the Conference of Executives was to give private
sector representatives an opportunity to provide the government insights into
their concerns regarding foreign technologies of high interest to them and to
the government. In addition, the discussion was to help both government and
private sector participants assess the utility of creating a forum or other
means for the appropriate exchange of information about foreign technologies
which will benefit American enterprise. The private sector participants hold
responsibilities for R&D, technology development, strategic planning, or
corporate management in firms engaged in technological applications. Their
positions permit them to address the international implications of foreign
technological progress and the impact on their firms, which represented a mix
of small, medium, and large companies.
3. Dr. Merrifield opened the Conference with a description of his
concerns in holding the Conference.
a. He noted that capabilities are in place to gather and analyze
information within the private sector and in government, but he has not
seen much evidence of them in effect in providing information in either
direction. He observed that the US, with 5% of the world population, has
seen its technology increasing in absolute terms, but dropping as a
percentage of the world total as other countries do more. This trend has
occurred despite the greater expenditure in the US to increase knowledge,
the greatest base for the translation of knowledge to applications, and an
established entrepreneurial culture. Barriers are in the way of
capitalizing on these advantages.
b. The Japanese are targeting on individual industries,
coordinating their approach within industries, leveraging the results, and
closing their domestic markets to imports with devices such as two-tier
pricing which favors exports. No individual US company can stand up to
this targeting practice, which can undercut not only US but also European
industries.
c. In addition, the life cycles of technological innovations are
collapsing from five to three to even one-and-one-half years. To compete
within these shortened periods, companies are encouraged to overbuild,
often with government subsidies, with a resultant overcapacity that
destroys the industry. This is seen in the development of steel plants in
Brazil.
d. US industry often foresees developments coming long in advance,
but does not appreciate what it sees. As much as three years ago, the US
Semi-conductor Research Center wanted to develop a four-megabyte chip, but
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did not. Industry needs to improve its intelligence functions. Commerce
Department has developed competitive assessments of sectors of industry
which point to impending problems. For example, in the petro-chemical
sector, feedstocks are the key economic factor; since gas is now flared at
the wellhead in many countries, it is essentially free to gas and oil
producing countries which are now entering the market with refined
products. Trends can already be seen which are driving labor-intensive
industry offshore.
e. Incredible information is available in the government but the
intelligence community needs to know what each industry knows about its
own field. This information is of tremendous help to the government. A
lot of open source information is available to the private sector which is
not used, for example, translations of Japanese information. The
government should not be interventionist, but can be proactive and
catalytic.
f. Dr. Merrifield reminded the participants that the Conference is
off the record. Statements made by government representatives are not for
attribution to them or their agencies. Observing this groundrule is
essential for a successful discussion.
2. Mr. Thomas Murrin (Westinghouse) complemented Dr. Merrifield on his
excellent overview. In commenting on the reference to the superchip, he noted
that the implication was that the previous period was opportune for action but
that we now cannot get our act together.
3. Dr. Merrifield noted that with the change in anti-trust legislation,
collaboration on R&D is now permitted. If any firm should have contrary
experiences, he will personally intervene with the Department of Justice.
This new development is significant for R&D, because no one firm can undertake
a 7-10 year risk alone. Together, they can collapse this time frame. He has
been working to improve tax incentives and to promote the use of R&D limited
partnerships (RDLP's), which have been legally possible since 1954. The RDLP
permits removing R&D from the profit-and-loss balance sheet of the firm. Even
with these arrangements, there are still risk factors and still the high cost
of capital, e.g., 15% vs. 5% in Japan. Moreover, this year is not favorable
for increasing tax benefits for industry. Nonetheless, RDLP's have generated
several billions of dollars and brokerage houses have pools of several
hundreds of billions. He is encouraging investment into broad portfolios to
spread the risk further. Base technology needs to be exploited without
competitiveness. Moreover, new developments must be used in imaginative ways;
e.g., the 4Mb chip should not be used in a dedicated plant but in a flexible
automated complex.
4. Dr. Stanley L. Abramson (Westinghouse) pointed to underlying problems
which he observes as an adjunct professor at Carnegie-Mellon. The US
management paradigm is built upon the premise of no change or only slow
change. Graduate students are currently being trained for hierarchical
management structures which no longer exist. Both government and academia are
also saturated with the hierarchical approach. Dr. Merrifield commented that
a hierarchy loses sight of the mission for which is was established. Industry
needs structures to manage change, such as matrix and task force approaches.
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5. Dr. M. A. Morrie Steinberg (Lockheed) referred to a wide" range of
open source material that he has used in DoD study teams, in working on
Japanese electronics and living in Japan, in using the Lockheed Dialog data
base, and through excellent unclassified studies by the Office of Naval
Research in London and Japan (particularly one on welding).
a. He noted in reference to the comment about declining
opportunities, that the US steel industry is no longer able to produce
oxygen-melt steel efficiently; only Japanese firms were willing to
manufacture to his specifications. Over 90% of the papers before the
American Institute for Mining and Metallurgy Engineering are from Japan.
b. His experience in governmental, including White House,
committees in electronics, cruisers, and trans-atmospheric vehicles
(particularly his involvement with reentry vehicles) confirm the lack of a
material data base. New requirements force the use of materials never
developed before which require testing. When the SR-71 was to be tested,
many locations had wind tunnels. Now the corporate technology and culture
are gone. We need to examine where we are coming from and assess the
technology base. If both were done, it may be possible to avoid
unnecessary competition; perhaps there should be one high-temperature
materials testing site rather than several as existed before. Now the
data-base is not available for testing and design and no one wants to
create it. Seventy percent of the information on materials properties is
not available in the US on-line, though it is on-line in Japan and
Germany. On the other hand, through his work with the National Academy of
Engineering he knows that the information available on computer-integrated
manufacturing (CIM), integrated data bases, and manufacturing automation
protocols (MAP) boggles the mind and is probably not available overseas.
c. He has chaired meetings on net shape technology, which entails
precision forging without further tooling. He brought in all the US
forgers to the meeting. Similarly, he has held a meeting on emerging
technologies, and will hold one on automation of composites technology.
All who work on these subjects in both classified and unclassified
projects can be brought together to talk with each other. Dr. Merrifield
noted that this points out a mechanism for communication processes in the
context of single initiatives; he hopes that consortia will develop from
conferences on advanced ceramics. Dr. Steinberg noted that consortia are
needed in manufacturing technology, when one realizes that the management
information system (MIS) for a single weapon system costs $80 million.
6. Dr. Robert W. Baeder (General Electric) agreed with the need for
integrated data bases, CIM, and MAP. He noted that it is often not a question
of base technology, but rather application and integration, both of which are
difficult even with money available. US industry is not used to working_
together in consortia. Because this has not been successful, we must find one
that can serve as a good demonstration. Other issues, such as currency and
trade, need attention, especially if this is economic warfare. Information
exchange is good, but it may just tell us what has happened after we get
killed.
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7. Dr. Merrifield noted that in testifying on anti-trust legislation
before the Rodino committee he used case histories which convinced the
chairman of the problem of foreign competitive practices. But Chairman Rodino
stated that Dr. Merrifield was the only one who had told him of these cases.
The Department of Justice was also astounded. There are now 25 consortia and
two or three are being formed each month. He brought together 94% of the pump
manufacturers. He can do this, kick people in the shins, and keep the process
open. The critical element is the data going into the process. Or. Steinberg
commented that consortia need either government as a partner or all firms of
the industry together because the results lie too far in the future. No one
is willing to consort on things that can be seen coming into manufacture in a
short period. Dr. Merrifield noted that DARPA and the DoD can also be brought
into the picture.
8. Mr. Richard E. Spatz (Koppers) expressed his pleasure with the tone
of the introductory remarks. From the viewpoint of the small ($2 billion)
company with little defense or even government business, the problem with
consortia is the potential problem of conflict with the private enterprise
system, which needs to be addressed philosophically. A consortium is good if
you are in it. Anti-trust exemptions are excellent as one goes down the
road. However, some in the private sector will scream if they sense a
conspiracy between government and big business. One must address: How to
distribute the information? What does government give? How? To what firms?
Only those working on weapons systems?
9. Dr. Robert B. Isaacson (Celanese) observed that the Japanese
targeting approach has its successes, but it stifles initiative within
Japanese industry. "The nail that stands up gets hammered down." Japanese
are now looking at the way little ideas can arise in the US and how
information is shared.
10. Dr. Merrifield referred to his earlier remarks that a
non-interventionist approach, preferably through tax measures, is best. The
RDLP is available to all firms because it is off the corporate balance sheet.
The global market is tough and "you either tweet or get off the perch."
"Integrate, automate, or evaporate" is another way of saying it. There is
incredible diversity in the US. Recent Treasury proposals for tax reform have
been improved for industry. Growth is taking place at the same rate as the
growth of the labor force. There is an explosion in new business. Lots of
interest centers on high-tech, but this sector accounts for only 10% of the
jobs. The support category provides 70% of GNP. This phenomenon has never
happened before. But life cycle problems are made even worse by foreign
reverse engineering of US products. Section 7 of the Clayton Act, which
permits stopping an action now if it appears to inhibit trade in the future,
must be changed. No company can survive without flexible, automated
manufacturing; with it, the US can reclaim industries, such as shoe
manufacture, lost to overseas competitors.
11. Dr. Gilbert V. Levin (Biospherics) asked for further elaboration on
the consequences of the inevitability of the loss of US leadership because
others are growing even as we expand in technology. Dr. Merrifield responded
that this loss is not inevitable unless the US does not get its act together
and take advantage of efficient processes such as continuous casting of
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steel. We must not fail to take advantage of the technology we have and are
developing. For example, because of work by DARPA an electrically powered
vehicle is more likely to emerge. The lack of real information is a barrier.
But often intelligence is available, e.g., we knew the Japanese were targeting
on semi-conductors, but we did not act on what we knew. Other examples are
the cheap petrochemical feedstocks and excess capacity in copper production in
light of substitute products.
12. (OGI) noted the government's concern with the loss of
of technologies related to national defense. While we cannot know how far
developments will go, one of the purposes in the Intelligence Community in
following the situation is the national security implication. Economically,
a small number of facilities in materials could supply the world needs. We
worry about jobs, but still more about national security implications, e.g.,
the oil issue in the 1970's. Some of the discussion here implies a loss of
know-how. There is a community of interest between government and industry:
government can piece together information from overseas better than industry,
but the Community is not as good as industry in technologies. Dr. Steinberg
injected tiiaLthis observation applies as well to common technologies such as
forging.
commented that the US does not know what lines of industry
we are dependent upon.
13. Dr. Steinberg raised his concern over the disappearance of previously
existing laboratories for research: the Bethlehem steel laboratory, the
national nickel laboratory, ARCO laboratories. He is disturbed by such
statements as "mining is dead in the US" and such phenomena as the
disappearing infrastructure.
14. Dr. Abramson noted that the graduate students he encounters are 80%
of foreign origin and are not of the traditional US quality. American
students say there is no opportunity in US laboratories in the face of these
closings.
1E. Dr. Baeder recognized the validity of the national security argument,
but noted that industry is saying that if we cannot beat Japan and Korea, we
should join them. This approach may give the DoD fits because of the flow of
information across national lines. However, the flow will really be in both
directions, with the US continuing to do some, possibly less, research while
obtaining research from other countries.
16. Dr. Ira Kohlberg (GTE) noted the cultural change taking place in the
US. American companies want to be the first and best, but profits do not
follow. The example of fiber optics shows that the issue is not dollars but
the absolute time needed to develop the field. Can the US catch up at 40
hours a week? Assuming the correctness of Dr. Steinberg's statement that the
US has the technology, how can we get going before being overtaken? He is
enthusiastic regarding the SDI, because he sees in the genius of this proposal
exciting technological possibilities in many fields.
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17. Dr. Levin commented on the data needs and problems confronting a
small ($7 million) firm.
a. In carbohydrates, such as the development of left-hand sugar,
the cost factors involved in assuring the safety of the product which is
made in only a few companies are heavy. The pressure on a small firm is
seen also in the use of chemical analysis systems, which cost $200,000 per
system, two of which are required for each EPA project to examine
infinitesimal traces of chemicals.
b. In competing with Japan and dealing with Japanese firms, one must be
aware that patenting a product in Japan, as Japanese firms want, makes the
patent public property; he asks the Japanese to give a non-disclosure
agreement before discussing products with them.
c. US industry targets its government. The Apollo program was
good. The Viking mission to Mars developed a team which cost a a billion
dollars to put together, but which was dissolved by TRW as soon as the
mission was over. He favors getting behind SDI initiatives and the
development of Viking mission-type efforts.
d. In the arena of legal constraints, R&D costs cannot be
capitalized. The Federal Standards Board has ruled that R&D must be
expended.
e. As to joint ventures, no one wants a five-year venture,
especially if something has to go before the FDA. Companies want a return
in two years, even if it is off the balance sheet.
f. Commerce Department doesn't always help. Oil spill monitoring
instruments are not approved under reciprocity with the United Kingdom,
while under tne terms of the Marpole agreement, British instruments are
accepted here.
18. Dr. Merrifield urged that automated searches of the world's S&T
literature be made routinely. If this is not done, other countries will get
ahead of the US. Some changes in previously harmful governmental regulations
have been beneficial: the government used to require non-exclusive licensing,
but under new legislation US laboratories may work with individual firms in
industry. We need to be alert to changes that should be made.
19. Dr. Kenneth L. Rose (Ford Aerospace and Communications), speaking for
a firm that is primarily a defense contractor except for telecommunications
satellites in the private sector, has observed how the Japanese gradually
transfer technology from the US. These transfers have not always been the
state of the US art, but have been ahead of current Japanese developments; as
a result of their efforts they have cut US profits by one-third. Partnerships
can now share technological contributions. Competition involves foreign,
governments as well, as seen in European, particularly French, support for its
industry competing in Brazil. Of course, European monopolies in PTT have no
counterpart in the US. Software is another area of competition. In many
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sectors, industry needs to put technology to use in more ways than in the
original application. Legislation based on concern for waste, fraud, and
abuse, which have existed, requires warranting of data, which is not possible
in R&D contracts; the pendulum has swung too far. Dr. Merrifield observed
that software is a stunning opportunity for the US. Dr. Rose commented that
his firm is able to give to the government useful information on satellite
technology.
20. Mr. Thomas Murrin (Westinghouse) alerted the conference that his
comments should be taken as personal observations which may be rather dogmatic
and assertive.
a. With regard to factory automation, he noted that in all areas in
which the Japanese have targeted US industry, they are ahead of us. The
US and Europe have know-how and are innovative. Without getting into the
issue of whether the Japanese are basically creative, they are doing
things which are being done nowhere else in the world. At Matsushita,
five humans and a factory of robots are turning out 10,000 VCR's per day,
the world's finest product, and the firm is thinking of cutting the number
of people. IBM is just starting in factory automation.
b. In nuclear power generating equipment, the US has taught others,
the French, Germans, and now Japanese, too well. French power is now 40%
nuclear and the intention is to become self-sufficient. The US has 12% of
its power from nuclear sources. The French are formidable competitors, as
seen in the three years of negotiating with the PRC, during a time when
the US had no opportunity. Germany is making export of nuclear equipment
a top priority; in competition with the US in Egypt the Germans are
likely to win with a new design. The new design would not be approved in
an NRC-type review, which costs $100 million to conduct. Probably the
German government helped in this competition. Even if a bilateral NPT is
approved, Germany will already be entrenched. Among the short list of US
high-tech incumbencies, the US may lose its lead in nuclear power with
implications for both the economy and security. When PRC Vice Premier Li
Peng, a Soviet trained electrical engineer, visited the US recently, he
commented that the Commonwealth Edison nuclear facility he saw was too
costly for the PRC because it was over-designed. It took great efforts,
including those of the Secretary of Energy, to explain to him why this
engineering is done in the US but not for overseas sales.
c. Mr. Murrin spoke on military electronics from his experience as
chairman of the Defense Policy Committee on Japan. In the first study
done on fiber optics by DoD, it was learned that only ten US scientists in
this field had ever been to Japan. Japanese commercial competence in
electronics is transferable to the military arena, in a reverse of the US
practice to transfer in the other direction. The Japanese have thought of
all the spinoffs with industries tied to defense companies. The issue is
how to structure relationships with the Japanese to be teamed with them
against the Soviets. Such a relationship could tip the balance against
the USSR. If this is not done, there will be a new group and dimension of
competitors.
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d. We have known these things for six years. He has recognized
that "a fool on a mountain top can see more than a wise man in a valley."
He feels that his testimony before Congress did not have any impact, but
education and motivation are necessary. If the US is scared enough, we
can beat anyone. It probably cannot be felt within Washington, but from
his vantage point it seems that top people in Washington are insightful
and that there is the possibility of doing great things in a hurry. There
should be dozens of initiatives like the VSIC effort which Dr. Ruth Davis
mothered into being. He commends Dr. Merrifield for what he is doing,
because the band of Indians is getting closer.
21. Dr. Baeder pointed out the two tiers of production in Japan: one
high level, including factory automation for export, one inferior level for
domestic consumption. The US still has the lead in several areas, in which
the US can sell in Japan: CAD, lasers, vision systems, but the Japanese are
coming on strong. Dr. Merrifield added software to the list. Dr. Steinberg
noted that in dealing with Fujitsu, IBM World is selling the Westinghouse CADM
system._________asked why the US is helping Japan. Dr. Steinberg replied
that thisisnohelping them, but is marketing. Dr. Baeder noted that the
Japanese see defense marketing as big business which they have been looking
into for five years.
22. Dr. Merrifield described a pattern of bilateral relationships which
are bearing fruit. The firet Binational Industrial Research and Development
(BIRD) group with Israel has been a successful model for replication in thirty
countries. Three professionals with assistants in Israel search out all
opportunities there for developing technologies. US opportunities are
searched out, e.g., by the Industrial Research Institute . The companies are
then matched. The key is a proactive office in both countries. The Israeli
effort, supported by a foundation, is a small office which has access to funds
which do not go through parliament. India is the first new effort he has been
working on. If successful, it will help India to pay back its debt and to
build a middle class. The French, British, and Swedes are also interested;
the Japanese have asked six times to join in such efforts. There are open
opportunities between US and foreign firms, formed around commercial efforts
with payouts. Commerce Department is proactive in the interface with industry;
the former adversarial relationship has to go. The government can serve as an
agent of change, but should not try to manage. The issue is focusing the
efforts.
23. Dr. Abramson noted that the flow of the cutting edge of technology is
rarely where it is expected. It has rarely occurred from the military to the
private sector, the exception being electronics. In artificial intelligence
and software, the basic work has been done in the universities and DoD has
been remiss. [Ed. note: much of the academic Al research is funded by the
government.] We often forget, in our concern about speeding up the move from
the laboratory to a commercial success, that the time lag of nineteen years,
identified in 1962 studies, still exists; the shift cannot take place in three
years. The question is how to manage fundamental change over twenty years on
the average. Biotechnology has been under development for thirteen years and
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there was no payoff for the first nine. Management's perspective is
short-term; as long as they are fat, dumb, and happy, they are not willing to
take risks. Individual graduate students in an recent poll showed that they
and their companies are overwhelmingly risk-averse. Companies are not able to
manage risk involving great amounts of resources. The front end costs are the
cheapest and what we are doing is the best in the world. But we are not
taking the necessary risks in the next pilot stage (where costs are 100 to
10,000 times the R&D costs), or in the application phase (where costs are 100
to 10,000 times the pilot stage).
24. Mr. Karl Kiefer (FMC) described his company as a big manufacturing
company. He agreed with the comments regarding risks, but noted that oil
companies regularly take great risks by sharing them through operating groups
which act as consortia. They are sensitive to anti-trust considerations, but
they are working. There needs to be the assurance that there is a
profit-making engine out there and there may need to be vision and
dedication. The government can perform a useful service by simplifying the
picture as Dr. Merrifield did in his opening presentation.
25. (DIA) expressed his concern regarding the flow of
US information out of the US, since there is no system to control this flow
outside of the defense sector. This was of little concern in the early
post-World War II period, but how can we absorb the effects now that other
countries are active in R&D? Dr. Merrifield commented that our information is
one part of the world pool of information. Legislation is now being developed
to license information exclusively fru.' US laboratories to private companies
and the RDLP's capture information for the general partner. The US should
build on the synergism of what is available elsewhere. There is a danger in
closing down information; classified information should be protected, but the
flow of other information is critical, noted that the issue is how
to restrict information which a company or the US is not ready to share. Mr.
Murrin noted that hitherto foreigners have gone to US laboratories.
26. Dr. Steinberg commented that the risk is not in research, but in
going into the next steps, the pilot and breadboard stages. In these,
Dr. Merrifield noted, Japan is ahead of us. Dr. Abramson, in commenting on
Dr. Rose's question whether it takes less time now to get into commercial
production, noted that it took Japan twenty years to bring out the Betamax
after the R&D had been done. Japan did, however, reduce the cost from $50,000
to $500. Dr. Baeder identified the different equations involved in dealing
with capital costs. Dr. Rose, referring to the earlier point about
information flow noted that the flow of technology cannot be stopped, even if
we want to. The US needs to get the lead and refresh its lead. The long-term
perspective being discussed here for R&D breaks down if the product can be
commercialized in three years. Dr. Abramson noted that R&D is not a product
on the shelf. Dr. Philip Berman (DIA) noted that the US scientist in dealing
with foreigners tends to give him the whole data dump and does not get much in
return. The Soviets are covering the whole industrial base in the US like
termites.
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27. Mr. Spatz welcomed this helpful dialog and hoped for a pragmatic
approach to what to do next. This is a gigantic problem which the conference
participants should think about for the next two weeks and then get together
in the next two months. Dr. Steinberg noted that the government-university
consortium needs to do more, because this interaction is worth a lot. He is
trying to encourage more work at the basic level, for example in dealing with
heat generated in returns from space. This question can turn the universities
on since it is new to them. Dr. Abramson expressed his view that the freedom
which permits the student to tell the professor he is full of b t is what
makes fundamental research possible (even though the students are
foreigners).
28. Dr. Kohlberg suggested that there should be realtime market
evaluations of key technologies, for example, the impact of the Japanese Fifth
Generation computers on IBM, Japanese machine intelligence, and high-speed
chips. The findings should not be classified, but should be kept under wraps
and there should be target programs to keep industry informed. Mr. Leslie
Smith (National Bureau of Standards) commented that Commerce Department has
published competitive assessments in an ongoing program; a current study deals
with microsystems; copies of the assessments are on display in the conference
room. In commenting on Dr. Kohlberg's question of how to disseminate these
studies, Dr. Merrifield noted that Commerce needs to be more proactive than
NTIS has been in the past, should hold conferences in various subject areas,
and should foment consortia. Dr. Baeder suggested that in addition to looking
at individual subject areas, the interrelationships should be shown to help
make the point that the sky is falling. Mr. William Sullivan (Commerce/ITA)
referred forcefully to the trade deficit as a diagnostic of the problem. The
fiber optic study taught the government that there was no trade association
for the industry; now there is one. We see evidence of the sky falling and
economic warfare in packet switching, cellular radios, and other products
which we developed first but have not pursued overseas because of lack of
access. NEC will sell over $1 billion in the US through a subsidiary; Fujitsu
will sell $700 million this year. Moreover, they join professional and trade
associations in the electronics fields. Mr. Frederick L. Haves
(Commerce/PTI) reported that the Industrial Research Institute has done a
series of studies on ceramics, composites, and flexible manufacturing. These
were then brought together to reveal a whole new scope of business, which will
be presented to industries in a seminar mode. Mr. Murrin stated that the
concern is appreciated and we should pick up on it, answer the questionnaire
provided to record observations on the Conference and leave to Dr. Merrifield
whether the participants should get together again.
29. Dr. Merrifield suggested that he might first get a small group
together and then the plenary group. In any case, views will be shared by
mail in the interim.
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ATTACHMENT A
PARTICIPANTS - CONFERENCE OF EXECUTIVES
NAMES/ADDRESSES
ABRAMSON, Dr. Stanley L.
Senior Consultant, Corporate Planning
Westinghouse Electric Corporation
6 Gateway Center, Room 1516
Pittsburgh, PA 15222
412-642-4950
BAEDER, Dr. Robert W.
Manager of Strategic Plans, GE Co.
3135 Easton Turnpike
Fairfield, CT 06431
203-373-2221
FLORA, Mr. Don William
Vice,President, Govt Systems COMSAT
950 L'Enfant Plaza, S.W.
Washington, D.C. 20024
202-863-7739
ISAACSON, Dr. Robert B.
Director of Scientific Affairs
Celanese Corporation
1211' Avenue of the Americas
New York, New York 10036
212-719-8535
KIEFER, Karl S.
Manager, Business Development
FMC Corporation
1803 Greens Road
Houston, TX 77067
71 3-591 -4110
KOHLBERG, Dr. Ira
Business Development Specialist
GTE Laboratories
40 Sylvan Road
Waltham, MA 02254
617-466-2690/89
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NAMES/ADDRESSES
LEVIN, Dr. Gilbert N.
President & Chairman of the Board
Biospherics, Incorporated
4928 Wyaconda Road
Rockville, MD 20852-2496
301-770-7700
MORRA, Mr. Robert G.
Vice-President, Technical Operations
Martin Marietta Corporation
6801 Rockledge Drive
Bethesda, MD 20817
301-897-6722
MURRIN, Mr. Thomas J.
Pres, Energy & Adv Technology Group
Westinghouse Electric Corporation
Gateway Center
Pittsburg, PA 15222
412-642-3110
ROSE, Dr. Kenneth L.
Vice President, Space Missions &
Communications Group
Ford Aerospace & Communications Group
3939 Pabian Way
Palo Alto, CA 94303
415-852-5550
SPATZ, Mr. Richard E.
Corporate Vice President
Office of the Chairman
Koppers Company,. Inc.
1500 Koppers Building
Pittsburgh, PA 15219
412-227-2429
STEINBERG, Dr. M. A. Morrie
Staff Vice President - Science
Lockheed Corporation
P. O. Box 551
Burbank, CA 91520
818-847-1944
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ATTACHMENT B
From Industry
Mr.
Dr.
Mr.
Dr.
Mr.
Dr.
Dr.
Mr.
Mr.
Dr.
Mr.
Dr.
LISTING FOR GOVERNMENT PARTICIPANTS
Final Listing
Participants Listing
Conference of ?Executives from the Private Sector
Stanley L. ABRAMSOM
Robert W. BAEDER
Don William FLORA
Robert B. ISAACSON
Karl S. KIEFER
Ira KOHLBERG
Gilbert V. LEVIN
Robert G. MORRA
Thomas J. MURRIN
Kenneth L. ROSE
Richard E. SPATZ
M. A. Morrie STEINBERG
From the Government:
Intelligence Community Staff
Miss Eloise PAGE
Ambassador Heyward ISHAM
Central Intelligence Agency
Westinghouse
General Electric
COMSAT
Celanese Corporation
FMC Corporation
GTE
Biospherics, Inc.
Martin Marietta
Westinghouse Electric
Ford Aerospace & Como Group
Koppers Co., Inc.
Lockheed Corporation
Director, Office of Global Issues
Dr. Julian C. NALL, National Intelligence Officer for S&T
Deputy Director, Office of Scientific & Weapons
Research
Defense Intelligence Agency
Directorate for S&T
Department of Commerce
Mr. Frederick L. HAYNES
Dr. D. Bruce MERRIFIELD
Open Source Action Group
Dr. Ruth M. DAVIS - The Pymatuning Group
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STAT
1
STAT
STAT
STAT