Those who bash NAFTA simply don't understand it

ON EXCELLENCE

September 27, 1993|By TOM PETERS

How does economic betterment work? It's pretty simple. aintaining our No. 1 standing in the world economy means improving our capital stock (factories, etc.), technology and, especially, human resources as fast or faster than other pacesetters, such as Japan and Germany.

How? By, over the long haul, getting more people than our principal competitors out of hog farming and broom making and into higher-value arenas such as computers, aerospace, financial services, media and biotech. I wish North American Free Trade Agreement basher Ross Perot understood that.

Which leads me to Argentina and Mexico. I gave my first-ever seminar in Buenos Aires on Sept. 3 -- the day after President

Carlos Menem announced zero inflation for the month of August. Three years ago, inflation in Argentina ran about 30 percent a month. New investment was zilch. Markets were protected from foreign competition. Business and labor regulation was numbing. And major corporations were owned by the government.

Those problems have been mostly fixed. Who wins? Argentines, of course. And you and I.

The streets of Buenos Aires are now peppered with shops touting American brands, therefore creating jobs for Americans as Argentines increase their wealth. And it's no accident that my Buenos Aires hotel mates included a huge Massachusetts trade delegation, headed by Gov. Bill Weld, which successfully closed several high-tech, job-creating deals on the spot.

This story has been foreshadowed in Mexico. President Carlos Salinas' government hastily privatized and dramatically lowered barriers to trade. The Mexicans, like the Argentines, are on a shopping spree -- and we're the closest big seller. As a result, our exports to (and positive trade balance with) Mexico have surged -- creating jobs at home.

Will some U.S. jobs drift to Mexico if NAFTA becomes reality? Of course! And Mexico will doubtless grow faster than we do. (Children grow faster than adults, etc.) To keep our edge and nTC add high-wage jobs, we'll have to hustle.

"The solution is not to build a wall around our borders, nor to stop technological progress," Secretary of Labor Robert Reich said on Labor Day. "It is to move from old work to new work by upgrading skills and empowering workers." Amen.

Textile baron Roger Milliken is a vociferous leader of opponents of NAFTA, which I guess he sees as a threat to the billion or so bucks his family has pocketed courtesy the substantially protected U.S. textile marketplace. How ironic, for Milliken is one of 20th-century America's most exceptional chief executives. The septuagenarian, who has headed his family firm for nearly half a century, is a fanatical modernizer.

Not so many years ago, the sucking sound heard in New England was Maine-born Milliken & Co. closing shop and heading south. New England suffered short-term pain. Who won in the end? Everyone.

New England shifted its focus from mittens and mufflers to super computers and biotech drugs. And the South quickly became the New South; as it did, wages soared, and the labor-cost advantage Milliken originally sought evaporated.

So Milliken (and other Southern immigrants) upgraded like crazy. With the help (though not exclusively) of advanced Japanese manufacturing equipment and the importation of Japanese management techniques (no one in the United States is better at knocking off Japanese ideas than Milliken), the firm shuttered factories, reduced its work force -- and became arguably the world's most productive textile maker.

Today, the New South is known not for cheap labor but for Atlanta's CNN, North Carolina's breathtaking Research Triangle and sophisticated manufacturers like Milliken. And, soon, for a hyper-modern BMW plant in Milliken's headquarters town of Spartanburg, S.C. BMW chose Spartanburg for its first factory outside Germany precisely because of a superior local work force, driven in large measure by Roger Milliken's passion for improvement.

Harry Quadracci, CEO of printing superstar Quad/Graphics, is, like Roger Milliken, an inveterate modernizer. When he's polished a new production technique, he immediately licenses the technology to his toughest competitors. As he sees it, it makes him a winner three times over. First, he pockets the license fees. Second, he helps improve his industry -- the healthier it is, the healthier he'll be, Quadracci says. Third (and most important), the quick transfer of ideas to top competitors forces Quad/Graphics to move forward, faster.

This simple logic of economic progress and good jobs through open doors and perpetual improvement seems to evade Perot, most Democratic members of Congress and numerous labor leaders. How tragic.

(Tom Peters' column is distributed by the Tribune Media Services Inc., 720 N. Orange Ave., Orlando, Fla. 32801; [407] 420-8200.)

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