America’s lost technological edge

Ford’s plans to ramp up hybrid production using Toyota’s technology points to the broader problem of America losing technological prowess in clean energy.

Ford’s challenge mirrors that in a number of other industries in which Japanese manufacturers have opened up a big lead on their U.S. rivals in the use of alternative energies.
Japan’s solar-panel makers, for instance, currently control half the global market — once dominated by U.S. and European companies. Sharp Corp., a top flat-panel TV maker, has built a $1 billion-a-year business in solar technology with double-digit growth.

Sharp’s biggest U.S. markets include New Jersey and California, which have incentive programs for alternative-fuel sources. Federal Express Corp. last month turned the switch on an Oakland, Calif., processing hub that has 5,700 solar panels covering a facility of 81,000 square feet, supplying 25% to 30% of the facility’s electricity.

Separately, Toshiba Corp., Hitachi Ltd. and Fujitsu Ltd. plan to launch laptops, cellphones and MP3 players in the next few years that run on fuel cells, which make electricity from hydrogen combined with oxygen from the air, with water as exhaust. U.S. technology firms such as Motorola Corp. have been researching the technology too, but are further behind the commercialization curve.

For now, the market for fuel-efficient technologies, while growing, remains small. _But the initial Japanese success in developing such products, combined with the difficulty of bringing them to market, is beginning to stir concern among U.S. competitors as some analysts warn that fossil fuels such as oil will be costly for the foreseeable future._

“The Japanese are particularly good at focusing on promising technologies and commercializing them,” said David C. Victor, director of Stanford University’s Program on Energy and Sustainable Development. While there are many innovative U.S. companies, he said, the Japanese have a proven knack for “managing innovation,” and “integrating innovation into the manufacturing process.”

Analysts said Japan’s current edge in the alternative-fuel arena in part comes from making a virtue of necessity. The country has few domestic sources of oil and natural gas, prompting Japanese manufacturers to explore alternative technologies years before the recent surge in oil prices. Toyota, for instance, introduced its first hybrid in 1997.

More important, perhaps, are generous subsidies and other support from the government, which has long worried about the country’s dependence on imported oil. Buyers of solar panels, for example, have received more than $1 billion in subsidies from the Japanese government during the past decade.

By no means does Japan’s lead extend to all alternative technologies. General Electric Co., for example, has won plaudits from environmentalists for its turbines that create power from wind, a promising innovation that hasn’t caught on widely in Japan. The Japanese are lagging behind, too, in areas such as biomass, a potentially significant energy source in which organic waste is burned to create steam that turns a turbine.

What’s more, not all alternative technologies may pan out. “It’s clear the hybrid vehicle could well be a platform for innovation in automobiles,” said Mr. Victor of Stanford. But with fuel cells or solar panels, he says, “it isn’t yet clear these are winners.”

Japan Inc.’s strategy of “picking winners” may not ultimately produce the best results, but I’m sure it’ll work better than America Inc.’s strategy of keeping its head in the sand and prioritizing the illusion of cheap, abundant oil above all else.