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Using new concepts—and taking advantage of Common Market tariffs—U.S. companies have stopped thinking in terms of borders. General Motors is building a $75 million transmission plant at Strasbourg, France, to provide parts for German Opels as well as British Vauxhalls. Ford's farm tractors are being assembled in Antwerp with parts from Detroit and from Basildon, England. A new $100 million Caterpillar Tractor plant outside Brussels will make parts for other Caterpillar plants in Scotland and France. Honeywell's computer plant at Newhouse, England, will build computers for the Continent as well as for Britain.
Question of Control. Regional operations cause many a U.S. corporation to reconsider how much control it wants of a foreign subsidiary and what kind of local partnerships it should have. G.M. represents one end of a broad range of thinking. "We have no partners in our foreign subsidiaries," states Chairman James M. Rocheflatly. At the other end of the scale is Northrop Corp., which is selling its technology in 37 nations so far. Northrop Chairman Thomas V. Jones makes it a rule to take no more than a 40% interest in a foreign company. "Many American companies," says he, "say 'we need to have control so that we can have the management.' Well, it doesn't give me any comfort to have a guy from California managing a company in France when I know that the problems are French problems."
Most companies prefer complete control where feasible, joint partnerships where practical or where they help to ward off the threat of nationalization.
International Harvester, operating in 143 nations, has 32 subsidiaries and seven joint ventures. Jersey Standard and Royal Dutch/Shell are jointly marketing natural gas from the North Sea's Groningen fields off The Netherlands and will soon begin pumping gas together from newer fields off the English coast. Fast-growing Boise Cascade Corp. devised a plan of management contracts for its ventures. Local partners hold the majority interest in joint ventures, but Boise Cascade as manager runs the operation. Even the U.S. banks that have followed American business abroad are developing partnerships. Bank of America has formed Societe Financiere Europeene along with the Banque Nationale de Paris, the Dresdner Bank, Banca Nazionale del Lavoro, Barclays Bank and the Algemene Bank Nederland N.V., to raise capital and work out mergers on a grand Common Market scale.
Globalization is altering the personnel charts of U.S. corporations as well as the tables of organization. American managers abroad today, remarks a Danish businessman, "rotate like ambassadors." Indeed they must, for the sake of the company and for their own careers. Experience in only one country is no longer sufficient in companies that operate around the world. And where overseas assignments were once considered sentences to Siberia, they are now the route to the top. "I don't think you have a total understanding of world trade unless you've had a fair amount of time overseas," says 3M Chairman Bert S. Cross.