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Statement of William G. Moore, Jr.
President and CEO of

Recognition Equipment, Inc.

for the American Electronics Association
Before the

UNITED STATES SENATE COMMITTEE ON FINANCE
Subcommittee on Taxation and Debt Management
May 27, 1983

Perkin-Elmer.

Mr. Chairman and Members of this Distinguished Committee: My name is Bill Moore. I am President and CEO of Recognition Equipment, Inc., a company which manufactures optical character recognition systems. The company, headquartered in Dallas, Texas, was founded in 1961 and currently employs some 1900 people. I was formerly Vice President for Computer Operations at I started my computer career fifteen years ago at

Bell Laboratories.

I am a member of the Board of Directors of the American Electronics Association (AEA) and appear before you today on behalf of that organization. AEA represents over 2,000 growing high technology companies throughout the country. The Association's membership includes all segments of the U.S. electronics industry, including computer, telecommunications, defense, instruments, semiconductors, software, research, and office systems. While AEA numbers among its members many of the largest electronics manufacturers, nearly three quarters of its companies are relatively young, fast growing businesses currently employing fewer than 250 people. In aggregate, AEA companies employ over 1,250,000 Americans.

ELECTRONICS--ONE KEY TO ECONOMIC VITALITY

The electronics and information technology companies are major contributors to the industrial development of the United States through the creation of jobs within the industry itself, through the "multiplier effect" at work in the service and other economic sectors, and through the improvement of the productivity of These same technology companies are

American basic industries.

also key resources in the national defense.

The electronics industry has had a phenomenal growth rate of 17 percent over the last decade. It currently ranks tenth among U.S. industry categories and is expected to rank second by the end of the century.1 Sales of the top 100 electronics companies increased 46 percent between 1979 and 1981. Export sales totalled over $25 billion in 1982. This growth is reflected in the creation of a substantial number of U.S. jobs within the Additionally, the electronics and information technology sector is a bright spot in the continuing creation of innovative and entrepreneurial new companies which have proven the major source of economic growth in the U.S. economy.

industry.

U.S. COMPETITIVENESS TIED TO R&D

I am pleased to be invited here today to comment specifically on the technical education issues addressed by Senator Danforth's S.1194 and Senator Bentsen's and Chafee's S.1195. I am aware

that others present will speak competently in support of S.738, a bill introduced by Senator Danforth to eliminate the sunset of the R&D tax credit. However, because AEA is one of the foremost proponents of the need for permanence of the R&D tax credit and because the long-term success of S.1195 and S.1194 is so intrinsically tied to such action, I would like to note AEA's strong support for S. 738 as well. Indeed, without a continuing R&D tax credit, the impact of S.1194 and S.1195 will be lost.

Technological leadership is this nation's single most important national resource. It is indispensable to the long term growth of our domestic economy, to U.S. competitiveness in world markets and to a strong national defense. This technological advantage, however, is being challenged today as never before.

Twenty-seven years ago when the Soviets sent the first satellite into space, the U.S. responded with a major new commitment to accelerate science and technology. Equally important was the enlightened support for science education that accompanied our There followed two golden decades of technological development based on a robust partnership between industry, education, and government.

space effort.

U.S.--A TECHNOLOGY BASED SOCIETY

Government sponsored basic research led to the development of key technological innovations--in semiconductors, computers, and

telecommunications, etc;--that have changed the way the world thinks and conducts business. America's economy has been

transformed over the last 20 years from a manufacturing to a nonmanufacturing base. Labor-intensive production is increasingly

replaced by processes that rely on new technologies--on brainpower rather than musclepower.

Just a generation ago, traditional industries such as agriculture, automobiles, and textiles accounted for more than half of our nation's exports and a quarter of our jobs. During this last generation, however, 9 out of every 10 new jobs created has been in the information and services areas. In 1981 a U.S. Commerce Department report showed that information technology accounts for 46 percent of 'the GNP and computer sales alone bring a $6 billion balance of trade surplus.

HIGH TECHNOLOGY CREATES JOBS

While high technology should not be expected to provide the single answer to America's economic vitality, it acts as a key engine of economic growth in three primary ways.

First, if they can secure enough engineers and other scientific and technical personnel, electronics manufacturers will continue to expand and create many new jobs directly within the industry itself. A recently completed AEA study, covering 815 member company respondents (about one-third the entire U.S. electronics

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industry), projects growth in both technical and non-technical electronics employment of 46 percent through 1987. The Bureau of Labor Statistics, historically conservative in predicting trends in high tech sectors, projects a similar pattern. By 1990 the fastest growing employment sectors in this industry will be: office equipment, computers, peripheral equipment and medical systems. Electrical engineering jobs are projected to increase

by 150,000.

Second, although the high technology producers alone account directly for only a moderate percentage of the total new jobs in the economy, they will indirectly account for a significantly larger proportion of new employment in service and related fields. In California, for example, state planners predict that because of this "multiplier effect", high tech employment will account for 40 percent of the total primary, secondary, and tertiary job growth in the state by the end of the decade.

Third, applied electronics will strengthen our traditional industries, helping maintain jobs, contributing to job growth and to absorption of displaced workers. The majority of jobs will come about through these "users" of high technology processes and products to increase productivity and innovation. Management expert Peter Drucker estimates that some 10 million manufacturing jobs today may be lost by 1990 due to outdated production processes and foreign competition. High tech will act as a partner with our traditional industries to help them remain competitive in historical markets, thereby preserving and expanding American jobs.

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