Japan holds the key: Presidential trade delegation presses Japan for access to Japanese construction market

Business America, Nov 24, 1986 by H.P. Goldfield

Japan Holds the Key

The world's most expensive airport is now being built in Osaka Harbor. In the usual pattern for Japanese public works, American companies have been excluded from the planning stages of the $8 billion Kansai airport, and from the civil engineering work as well.

To address this problem and demonstrate the Administration's high-level commitment to opening the Japanese market, President Reagan requested that I lead of a Presidential Trade Delegation to Japan Oct. 6-9. Our delegation built on Secretary Baldrige's meeting with Japanese Prime Minister Nakasone in July. The Secretary won a promise that American companies would be given a chance to compete fairly for remaining work--including subcontracting work--on the landfill and bridge stage, and subsequent work on the terminal and airport facilities.

This has not been the case to date. U.S. and other foreign contractors are virtually excluded from competing for major Japanese engineering and construction contracts ... and that "just ain't fair."

This contrasts markedly with the nearly $2 billion in business which Japanese construction firms did in the United States in 1985. This figure is growing, and will likely double in 1986. Such a disparity in market access and business opportunity, especially in view of the bilateral trade deficit and years of negotiating effort on opening the Japanese market, is intolerable.

We are talking of a substantial market in Japan. The immediate focus of our current attention is the construction of the $8 billion Kansai International Airport. Future projects now planned will exceed $60 billion. The sales potential for U.S. firms in architectural, engineering, construction, and equipment sales is enormous ... if the market is open.

Team Effort

The delegation selected for this key Presidential mission was comprised of both high-level industry and government representatives. By choosing such a joint delegation, we signaled to the Japanese side the U.S. business is indeed serious about committing its resources and efforts to winning this business in Japan. The U.S. government--both the Reagan Administration and the Congress--stands firmly behind these efforts.

The Presidential Trade Delegation also made clear our position that the Japanese government has a pivotal role in the decision-making and management of entities such as the Kansai International Airport Corporation (KIAC). Consequently, the Japanese government itself must play a major role in resolving our difficulties and opening the market to U.S. participation.

Joining me from U.S. industry on the Presidential delegation were senior executives from some of our most prestigious and experienced design and engineering, architectural, and construction firms.

They were Franklin J. Agardy, President of URS Corporation; James E. Barry, President of Fluor-Daniel Engineers and Constructors; Ronald B. Brooks, Senior Vice President of Bechtel Inc.; Bates C. Burnell, Chairman and Managing Director of Morrison-Knudsen International; Viggo M. Butler, President of Lockheed Air Terminal; Joseph R. Perini, Senior Vice President of Perini Corporation; Willard C. Walker, Vice President and Manager of International Construction for Stone and Webster; Derish Wolff, President of Louis Berger International; and John S. Withers, Vice President of the International Division of H.B. Zachry Company. Withers also represented the International Construction Division of the Associated General Contractors of America.

We were also fortunate to have on the delegation William W. Beddow, Director of Government Relations for the National Constructors Association and Executive Secretary of the International Engineering and Construction Industries Council.

The interagency group which supported the delegation included Joseph A. Massey, Assistant U.S. Trade Representative; William Piez, Deputy Assistant Secretary of State; as well as James Phillips and Maureen Smith from the Commerce Department.

Activities in Japan

Efforts during our Oct. 6-9 visit were intense and focused on three areas.

We held initial meetings in Tokyo with senior Japanese government officials from the Prime Minister's office, the Foreign Ministry, and the Ministries of Transport and Construction, as well as senior representatives of the Diet. In these meetings we stressed the urgency of the issue and the need for concrete implementation of the Prime Minister's commitment.

Next, in Osaka, the entire U.S. delegation attended a seminar presented by the KIAC and the U.S. Commerce Department and hosted by KIAC President Yoshio Takeuchi. The seminar dealt with procurement practices of KIAC. Attendance was not limited to U.S. delegation members. Over 75 executives or representatives of U.S. companies attended. We also met with the governor and mayor of Osaka.

We did more than listen to the informative presentations on the current system. Our delegation offered views on how the system might be improved to facilitate bidding by competitive U.S. firms on KIAC contracts.