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U.S. NEEDS NEW POLICIES TO MATCH NEW PRODUCTS FROM BIG THREE, IACOCCA SAYS

 U.S. NEEDS NEW POLICIES TO MATCH
 NEW PRODUCTS FROM BIG THREE, IACOCCA SAYS
 TRAVERSE CITY, Mich., Aug. 5 /PRNewswire/ -- The Big Three auto makers have products that go head-to-head with foreign auto companies, but they are kept at a significant competitive disadvantage by U.S. public policies, Lee A. Iacocca, Chrysler Corporation chairman and chief executive officer, said today.
 "Products are only half the game," he said. "The other half is policy. And that's where the Big Three have really fallen behind the competition.
 "We need policies to match our products," Iacocca told auto industry executives at the University of Michigan Automotive Management Briefing in Traverse City.
 He pointed to trade, health care, taxation, education and product liability as examples of American policies that hinder Big Three competitiveness in the global auto market.
 "For the first 30 years or so that I was in this business," he said, "we in Detroit competed almost solely on the basis of product. But that changed drastically in the '70s when public policy became as big a competitive factor as the cars and trucks themselves.
 "When the Japanese jumped ahead of us in quality and productivity, we studied them and adopted some of their methods. Now we're catching up," he said.
 "It's time for Washington to go to school on Tokyo the way we did on Toyota City, and start writing policies that are as competitive as Japan's."
 Iacocca said the huge policy advantages that help Japanese companies compete include a closed home market, cartel-like keiretsu arrangements with suppliers and interlocking relationships with banks that would be illegal in this country, "company unions," and a powerful government agency -- the Ministry of International Trade and Industry -- to protect Japanese companies at home and abroad.
 Another big advantage, Iacocca said, is their ability to openly lobby American officials in Washington, and even to "hire away our trade representatives, one after another, to represent them."
 As an example, he cited the recent ruling by the U.S. International Trade Commission on minivan dumping in the U.S.
 The Commerce Department investigated Big Three complaints about Mazda and Toyota illegally selling minivans below the cost of production, and found them guilty. But the ITC, which is responsible for setting penalties, ruled that there wasn't sufficient damage to the Big Three to warrant any punishment for the two Japanese companies.
 "This was nuts," said Iacocca. "It's like a guy being convicted of assault and battery, but getting off scot free because the victim only has a few cuts and bruises but doesn't die."
 Iacocca said American practices and policies that work against competitiveness are:
 -- A tax policy that discourages savings and investment, thereby raising the cost of capital.
 -- Low gas taxes that contradict government fuel economy laws and discourage consumer demand for fuel-efficient cars.
 -- The penchant to "sue at the drop of a hat" that discourages risk- taking by entrepreneurs.
 -- Schools that haven't kept up with education overseas.
 -- The lack of a national health program that results in a $500 penalty on every car or truck produced in the United States.
 -0- 8/5/92
 /CONTACT: Tom Houston of Chrysler, 313-252-8790/
 (C) CO: Chrysler Corporation ST: Michigan IN: AUT SU:


ML -- DE006 -- 6967 08/05/92 09:34 EDT
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Date:Aug 5, 1992
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