Politically, Atari symbolized the notion that high-technology employment could replace jobs lost in the United States in basic industries--that gleaming factories in the Silicon Valley of California could absorb workers from the devastated industrial "rust bowl."
"Atari Democrats" was the label hung on Democrats who advocated more emphasis on developing jobs and international trade through high-technology industries. And when President Reagan touted the role of high-technology in America's future in his State of the Union address, he earned the label "Atari Republican."
As a result, the announcement last week by home-computer and video-game manufacturer Atari, a division of Warner Communications Inc., that it was firing a quarter of its U.S. workforce and shifting production overseas seemed an ironic blow to the notion that high-tech jobs might be waiting for laid-off automobile and steel workers.
But some economists and "Atari Democrats" disputed that conclusion and suggested that what happened to Atari reveals how misleading a simple, catchy phrase can be in a debate over a subject as complex as the nature of America's industrial future.
For one thing, by the time Atari decided to depart these shores and leave 1,700 workers behind, its video games and home computers were no longer high technology. So rapid is the evolution in consumer electronics that yesterday's "gee whiz" can be transformed quickly into today's "ho hum."
"What you see happening here is the industry is changing," said Max Donner, a research associate at the Harvard business school and a consultant to the American Electronics Association. "Some fields which have been clearly high technology have been shifting into mass market standard technology. . . . The technology of a typical $500 personal computer is, in the spectrum of time, no more sophisticated than an electronic watch or a hand-held calculator in 1975."
When such a change occurs manufacturing becomes "more cost driven than technologically driven," he noted. Manufacturers of virtually every consumer-electronics item, as well as manufacturers of textiles and a host of other items, have looked to overseas manufacturing as a way to reduce costs.
"As far as moving a labor-intensive manufacturing facility to the Far East, Atari is really a johnny-come-lately," said Harry Sello, head of a firm that specializes in establishing overseas operations, joint ventures and marketing plans for U.S. firms.
The manufacture of integrated circuits, which helped create today's electronics products, began moving to Taiwan, South Korea and Singapore about 15 years ago. Approximately 90 to 95 percent of the semiconductor industry's assembly work is done overseas, according to industry officials.
"That ended up creating a lot more jobs in the high-tech area in the U.S. because it expanded the markets for those products," Sello said. "It's been a striking growth. It kept the U.S. companies competitive and allowed them to grow."
The basic argument of those who see no reason for gloom in the Atari news is that it makes sense to allow industries that require low-level skills and in which labor costs play a major role to shift overseas. When U.S. firms move production abroad, they are able to keep their market share, which in turn allows more investment in research and development and permits American industry to keep moving toward industrial frontiers, according to advocates of such a view.
According to Donner, the Atari move is actually promising. "It's very encouraging that people are catching on to it as early as they are here, as opposed to with color television and electronic watches," he said. "By the time the color-television industry moved to a global manufacturing strategy with Zenith and RCA looking at manufacturing abroad, 85 percent of the other U.S. manfuacturers had already gone out of business, and there weren't any jobs at all."
"We're seeing the creation of all sorts of companies that didn't exist 10 years ago and are now on the New York Stock Exchange," said Rep. Tim Wirth (D-Colo.), one of the most prominent of the so-called Atari Democrats.
The label "contains a couple of ramifications that are very unfortunate and very wrong," said Wirth, who said that the term suggests a narrow focus on electronics and implies such Democrats are writing off basic industries. Not true, said Wirth.
As jobs disappear, as they did last week in Sunnyvale, Calif., when Atari announced its move, other jobs are created. "There are kinds of other things going on in the economy which are very exciting and very challenging," he said. That "argues very strongly for continuing the development of the new frontiers of industry in this country. We do not live in a static economy," Wirth said.
Even so, assuming that jobs will continue to be produced at the shifting frontiers of high technology, there is the question of whether they will be produced in sufficient numbers and whether the workers looking for jobs will mesh with those available.
Electronics manufacturing is moving abroad, a shift created not just by lower labor costs but also because the relative strength of the dollar makes it cheaper to produce overseas, AFL-CIO research director Rudy Oswald noted. Other high-technology fields, such as bioengineering, employe relatively few, scientifically-trained workers. "That doesn't offer much hope for displaced automobile or steel workers," he said.
"The number of high-technolgy jobs will be very small," Oswald said. "It certainly won't take care of 12 million unemployed, or even the 1.5 million annual net growth in the labor force in the next five years," he said.
"I think the fact that Atari is moving so many jobs overseas is good evidence of the reality that the choice is not between high-tech and smokestack industries," said Harvard economist Robert B. Reich. A prominent economic adviser to Democratic candidates, Reich said the move indicates that "the lowest skill ends in every industry are going to move abroad."
As a result, for competitive survival, he said, the United States must train its workers for what Reich calls "the highest value-added segments in all industries."
Eventually all the low-skilled, routine jobs in every industry will be shifted overseas, Reich said. "But in every industry some highly skilled jobs entailing precision engineering, or maintenance of sophisticated machines or custom design and fabrication" will remain, he said. "We need to move into those niches because those will be the industries of the future," he said. "Potentially there is a lot of employment."
Some low-skill workers will still find some jobs, Reich and others said. Donner said that estimates are that every high-technology job creates 3.4 to eight jobs in support industries. "They are in unglamorous things, such as custodial jobs, clerical work in accounting firms, legal services, trade and banking-related work," he said.
Jobs in such service industries, which already employ a large percentage of the workforce, will never be lost because they must be close to the customer, Reich noted. A McDonald's in Taiwan is no good to customers in Takoma Park. "Unfortunately, there is not a lot of future in those jobs in terms of advancement, job security and just real income," he said.
Many assembly-line workers and others in routine manufacturing jobs can be successfully trained for jobs that require a higher level of skills, he said. Many of them are bright, well educated and have "enormous potential," he said. "For too long we've been writing off a percentage of our labor force, assuming that they can't do more skilled work."
Companies themselves will do the training required for the more skilled jobs, according to Reich. At least they will if they use the savings realized from moving manufacturing abroad to create a different kind of industry in the United States.
"The issue is not moving abroad," he said. "The central issue is whether they move into higher value-added industries."
Even if moves, such as Atari's, bode well for the future, they are painful for the displaced workers. "It is conspicuous by occurring at a time when the emphasis on jobs and unemployment is high," noted Sello.
"In the not-too-far-distant future, it Atari's move will create more jobs than have been eliminated in the U.S. by allowing Atari to regain its lost share of the video-game market," he said. But, he added, European and Japanese firms are moving their manufacturing to the same low-cost area. In the intense competition for the market, Atari's eventual success is far from assured.
"The critical question is not answered," Reich said. That question is, in effect, what happens next? "The same question could have been asked in 1940 or 1910 or 1890. Industrial movement is movement constantly to higher value-added production," he said. "Miraculously, if you do move in that direction, markets open up."
But he added, "The problem has been in the last 10 years that we haven't moved."