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After an uncharacteristically sluggish 1982, the dynamic economies of the Pacific region surged again in 1983. The U.S. recovery allowed South Korea, Singapore and Taiwan to boost exports and achieve growth rates in the 6%-to-9% range. Japan's economy grew at a more modest 3.5% pace, but the government unveiled a program to spur consumer demand with tax cuts and new public works spending.
Western Europe's rebound has been painfully slow. The ten nations of the European Community have had an average 1983 growth rate of about 1%, and unemployment hovers at 10.5%. Aftershocks of the recession are still shaking confidence. West Germany's banking system was rocked in November by the collapse of IBH Holding, a giant construction equipment manufacturer that was an estimated $300 million in debt. Hellenic Lines, the largest Greek cargo-shipping company, filed a bankruptcy petition this month, after defaulting on an $80 million credit line from U.S. and European banks.
In the U.S., some of the biggest stories were bankruptcies that never happened. International Harvester, the ailing farm-equipment manufacturer that many on Wall Street had given up for dead, limped through the year. The company said this month that its 200 creditors had agreed to a $3.5 billion debt-restructuring plan that gives the firm hope for survival.
Chrysler moved off the critical list and earned a $582.6 million profit for the first nine months of the year. No one better symbolized the determination of American businessmen to turn things around than Chrysler Chairman Lee lacocca. He saved the third largest U.S. auto company by revamping its product line, trimming and modernizing its operations and gaining wage concessions from workers. In August Chrysler roared past a milestone by repaying, seven years ahead of schedule, the last of the $1.2 billion in federally guaranteed loans it had received as part of the bailout plan that Congress passed in 1979. Beamed lacocca: "We at Chrysler borrow money the old-fashioned way. We pay it back."
Chrysler's survival tactics dramatized several trends that have been transforming the U.S. economy. Pressed by foreign competition, such smokestack industries as autos, steel and rubber have been closing inefficient plants, thinning out their work forces and relying more heavily on state-of-the-art technology and automation. Employment levels in these old-line fields will probably never return to pre-recession levels. Future job growth will increasingly be concentrated in such service sectors as health care and the restaurant business, rather than in manufacturing.
As companies tried to reduce costs in 1983, labor unions lost clout and suffered pay cuts. For some 20,000 packinghouse employees who are members of the United Food and Commercial Workers International Union, the average hourly wage dropped from more than $10 to about $8. Said Union Official Lewie Anderson: "Workers haven't taken this bad a beating since before 1935." Greyhound employees staged a bitter seven-week strike against the bus line. In the end, the workers agreed last week to a 7.8% wage cut.