Eastman Kodak Co. lost $3 billion over the past four years because of the overvalued dollar, which swamped improvements in productivity and forced the company to increase overseas purchases of parts and products, Kodak's chairman told the Senate Finance Committee yesterday.
"Continuing inequality in currency values will force American companies, Kodak included, to move more and more to offshore manufacturing," said Colby H. Chander at the first of a series of Finance Committee hearings on the high dollar's impact on international trade.
"Even the cost advantages of a 13 percent productivity increase are not sufficient to offset the dramatic appreciation of the dollar," he continued.
At the same hearing, Senate Republicans and Democrats attacked the Reagan administration's international economic policies, and economic experts urged government intervention to bring the dollar to a soft landing.
"Everyone outside the White House sees the damage," said Sen. Max Baucus (D-Mont.). "Administration policy on the dollar can best be described as benign neglect," added Sen. John Heinz (R-Pa.).
Chairman Bob Packwood (R-Ore.) said more experts disagree on how to bring down the dollar than on any other economic issue before the Finance Committee, including tax reform. Nonetheless, he said he hoped the hearings will provide other ideas for tackling the overvalued dollar that go beyond reducing the budget deficit.
Chander followed conventional economic wisdom, laying most of the blame for the soaring dollar on the budget deficit. But he said that improved industrial productivity and government intervention could help lower the dollar's value.
He said that Kodak's net earnings over the past four years would have been $3 billion greater if the dollar had remained at its 1980 level. Using a more conservative method of figuring the cost of the overvalued dollar, Kodak told its stockholders this year that currency-related losses amounted to $1 billion since 1980.
The result, Chander said, has been an all-new effort by Kodak to buy more supplies and -- in some cases, "whole new lines of finished products" -- overseas to overcome the high dollar. Kodak's foreign purchases last year increased 100 percent over 1983, he said.
Three international economists -- Robert V. Roosa of Brown Brothers Harriman Co., Scott E. Pardee of Discount Corp. of America and Gary Hufbauer of the Institute for International Economics -- favored some degree of coordinated government intervention to bring down the dollar.
The Reagan administration consistently has opposed intervention, although there are indications that Treasury Secretary James A. Baker III may be willing to shift.
Pardee blamed ideology for opposition to intervention and added, "Not to intervene, however, leaves our nation's currency at the mercy of market forces. It also leaves active intervention policy totally in the hands of foreign authorities."
He said he favored "central bank cooperation," which he said "is strictly in the United States' self interest." He suggested, moreover, that the United States buy major currencies to build a "strategic currency reserve" to moderate the rise of the dollar -- a proposal that Roosa endorsed.