$400 MILLION THIS TIME ©2012 The New York Times NEWYORK ... · atedby panning to thepair of car-bon-fiber prosthetics that he wore with his track suit. Pistorius, a 400-meter runner

By MONICA DAVEY

CEDARBURG, Wis. — Thecheese curds were sizzling invats of oil, the cartoon-coloredcarnival rides were spinning, andthe tractors, ready to pull some-thing heavy, were revving. Yet allwas not right last week at theOzaukee County Fair, age 153.

Inside the barns here, the en-tries competing for top vegetableand flower were fewer than usu-al. The rabbits vying for prizeswere scarcer, too, said ElaineDiedrich, supervisor of the rabbittent, as she paced the aisles,ready to submerge overheated

animals up to their noses in coldwater.

Some show pigs were skinnierthan normal, and some farm chil-dren in 4-H brought fewer cowsthan planned, after families hadto shrink their herds under theweight of scalding heat, a dearthof feed and no end in sight.

Across the nation’s middle, it isfair season — the time of yearwhen rural life is on proud dis-play, generations of farm familiesgather and deep-fried foods areguiltless.

But at county and state fairsacross corn country this year, themost widespread drought sincethe 1950s is also evident. While

the fairs are soldiering on, dous-ing themselves in Lemon Shake-Ups and Midwestern resolve, thehot, dry, endless summer hasseeped into even the cheeriest,oldest tradition.

“You see the stress of this allon individuals everywhere yougo — even the fair,” said VivianHallett, who most years has en-tries (and winners) in nearly ev-ery imaginable plant category atthe Coles County Fair in Illinois.Not this year.

“We just didn’t have the stuff,”said Ms. Hallett, 65. “All ourpumpkins have died. Zucchinis?Dead. Our green beans are just

Fairs, Like Crops, Are Drooping With the Heat

Continued on Page 4

DARREN HAUCK FOR THE NEW YORK TIMES

With highs in the 90s last week at the Ozaukee County Fair inWisconsin, the trick was keeping people and animals cool.

Plans for two new tribal casinos in Cali-fornia are drawing fierce oppositionfrom nearby tribes with competing op-erations. PAGE 13

NATIONAL 13-19

Tribe vs. Tribe in Casino Fight

By NICHOLAS CONFESSOREand JO CRAVEN McGINTY

President Obama has spentmore campaign cash more quick-ly than any incumbent in recenthistory, betting that heavy earlyinvestments in personnel, fieldoffices and a high-tech campaigninfrastructure will propel him tovictory in November.

Since the beginning of lastyear, Mr. Obama and the Demo-crats have burned through mil-lions of dollars to find and regis-ter voters. They have spent al-most $50 million subsidizingDemocratic state parties to hireworkers, pay for cellphones andupdate voter lists. They havespent tens of millions of dollarson polling, online advertising andsoftware development to turn Mr.Obama’s fallow volunteers corpsinto a grass-roots army.

The price tag: about $400 mil-lion from the beginning of lastyear to June 30 this year, ac-cording to a New York Timesanalysis of Federal Election Com-mission records, including $86million on advertising.

But now Mr. Obama’s big-dol-lar bet is being tested. With lessthan a month to go before the na-tional party conventions begin,the president’s once command-ing cash advantage has evaporat-ed, leaving Mitt Romney and theRepublican National Committeewith about $25 million more cashon hand than the Democrats as ofthe beginning of July.

Despite Mr. Obama’s multi-million-dollar advertising bar-rage against Mr. Romney, he isnow being outspent on the air-waves with Mr. Romney bene-fiting from a deluge of spendingby conservative “super PACs”and outside groups. While Mr.Romney has depleted much of hisfunds from the nominating con-test, he is four weeks away frombeing able to tap into tens of mil-lions of dollars in general electionmoney. And many polls show therace to be very close.

Mr. Obama’s cash needs — hespent $70.8 million in June alone,more than half on advertisingand far more than he raised —have brought new urgency to hiscampaign’s fund-raising efforts.His advisers have had to sched-ule more fund-raising trips thanoriginally planned to big-moneystates like New York, according

RECORD SPENDINGBY OBAMA’S CAMPSHRINKS COFFERS

$400 MILLION THIS TIME

Early-Bird Strategy IsTested as Democrats

Lose Cash Edge

Continued on Page 16

This article is by Bill Vlasic,Hiroko Tabuchi and CharlesDuhigg.

SMYRNA, Tenn. — The dairyfarms that once draped the coun-tryside here were paved over sothe Japanese carmaker Nissancould build its first American as-sembly plant. Eighty miles to thesouth, another green pasture wasreplaced by a Nissan engine fac-tory, and across Tennessee about100 Nissan suppliers dot the land-scape, making steel in Murfrees-boro, air conditioning units inLewisburg, transmission parts inPortland.

Three decades ago, none of thisexisted. The conventional wis-dom at the time was simple: Jap-anese automakers would notbuild many cars anywhere butJapan, where supply chains werein place, costs were tightly con-trolled and the reputation forquality was unparalleled.

“They were very unfamiliardoing anything outside Japan,”said Senator Lamar Alexander, aRepublican who was governor ofTennessee when Nissan openedits factory here in 1983. “Theywere tentative and awkwardeven discussing it.”

Today, echoes of that conven-tional wisdom can be heard with-in the American technology in-dustry. For years, high-tech exec-utives have argued that the Unit-

ed States cannot compete in mak-ing the most popular electronicdevices. Companies like Apple,Dell and Hewlett-Packard, whichrely on huge Asian factories, as-sert that many types of manufac-turing would be too costly and in-efficient in America. Only over-seas, they have said, can theyfind an abundance of educatedmidlevel engineers, low-wageworkers and at-the-ready suppli-ers.

But the migration of Japaneseauto manufacturing to the UnitedStates over the last 30 years of-

fers a case study in how the un-likeliest of transformations canunfold. Despite the decline ofAmerican car companies, theUnited States today remains oneof the top auto manufacturersand employers in the world. Jap-anese and other foreign compa-nies account for more than 40percent of cars built in the UnitedStates, employing about 95,000people directly and hundreds ofthousands more among partssuppliers.

The United States gained thesejobs through a combination ofpublic and Congressional pres-sure on Japan, “voluntary” quo-tas on car exports from Japanand incentives like tax breaksthat encouraged Japanese auto-makers to build factories inAmerica. Pressuring technologycompanies to move manufactur-ing here would pose differentchallenges. For one thing, Appleand many other technology gi-ants are American, not foreign,and so are viewed differently bypoliticians and the public. But itis possible and the benefits mightbe worth it, some economists say.

“The U.S. has a long history ofdemanding that companies buildhere if they want to sell here, be-cause it jump-starts industries,”said Clyde V. Prestowitz Jr., asenior trade official in the Rea-

An American Model for Tech Jobs?When Tennessee Lured Nissan, the Impossible Became Possible

MARK HUMPHREY/ASSOCIATED PRESS

Lamar Alexander of Tennes-see and Marvin Runyon ofNissan in 1984 in Smyrna.

THE iECONOMY

Bringing Home Work


By ALISSA J. RUBIN

KABUL, Afghanistan — TheAfghan Parliament voted Satur-day to dismiss the two most pow-erful members of PresidentHamid Karzai’s security team, asurprise move that could createnew turmoil as the United States-led coalition prepares to leave thecountry.

Lawmakers explained themove — which would cast out thedefense minister and the interiorminister in the middle of a war —as part of an effort to end thecrippling corruption and crony-ism endemic in the government.They also criticized the two min-isters for failing to protect thecountry against recent cross-bor-der rocket attacks from Pakistan.

Mr. Karzai could try to delaytheir departure, but early indica-tions were that he would accedeto Parliament’s wishes.

A shift in leadership is sure tocause upheaval in both ministriesat a critical time, as Afghan sol-diers and the police are takingover responsibility for security inmuch of the country. DefenseMinister Abdul Rahim Wardakand Interior Minister BismullahKhan Mohammadi shoulder mostof the responsibility for buildingan army and police force strongenough to fight the Taliban with-out the coalition forces, who areset to withdraw by the end of2014.

Ousting the ministers couldalso complicate relations with theUnited States. American officialsvalue their longstanding collabo-ration in particular with Mr. War-dak, who is seen as a stable allycompared with the mercurial Mr.Karzai. In addition, both minis-ters have long experience infighting the insurgency.

“Even if this is only a politicalgesture and current ministersstay, this is a warning about theweakness of the Karzai govern-

2 Top MinistersFace DismissalIn Afghanistan

Security Officials LoseParliamentary Vote

Continued on Page 9

As fighting raged in Syria’s two largestcities, 48 Iranian pilgrims were report-edly seized by “armed groups” in Da-mascus, Iran’s state media said. PAGE 12

INTERNATIONAL 6-12

Clashes Rock Syrian Cities

VOL. CLXI . . No. 55,854 © 2012 The New York Times NEW YORK, SUNDAY, AUGUST 5, 2012

The question for Marcus Samuelsson,the chef, restaurateur and media per-sonality, is how far and how fast he canexpand his personal brand. PAGE 1

SUNDAY BUSINESS

Trading Kitchen for SpotlightThe president of Peru has faced strongcriticism and some of the fiercest hascome from his own flesh and blood, inparticular his outspoken father. PAGE 6

A President’s Worst Critics Maureen Dowd PAGE 1

OPINION IN SUNDAY REVIEW

By SIMON ROMERO

RIO DE JANEIRO — Her nomde guerre was Estela. Part of ashadowy urban guerrilla group atthe time of her capture in 1970,she spent three years behindbars, where interrogators repeat-edly tortured her with electricshocks to her feet and ears, andforced her into the pau de arara,or parrot’s perch, in which vic-tims are suspended upside downnaked, from a stick, with boundwrists and ankles.

That former guerrilla is nowBrazil’s president, Dilma Rous-seff. As a truth commission be-gins examining the military’scrackdown on the population dur-ing a dictatorship that lasted twodecades, Brazilians are rivetedby chilling details emergingabout the painful pasts of boththeir country and their president.

The schisms of that era, whichstretched from 1964 to 1985, liveon here. Retired military officials,including Maurício Lopes Lima,76, a former lieutenant colonel ac-cused of torturing Ms. Rousseff,have questioned the evidencelinking the military to abuses.Rights groups, meanwhile, are

Leader’s TortureIn the ’70s StirsGhosts in Brazil


U(D5E71D)x+@!$!/!#!?

JED JACOBSOHN FOR THE NEW YORK TIMES

Oscar Pistorius became the first double-amputee runner in the Olympics. Later Saturday,Michael Phelps of the U.S. won his 18th gold medal. Full Olympic coverage in SportsSunday.

By JERÉ LONGMAN

LONDON — Oscar Pistoriusrocked back and forth near thestart line Saturday as the public-address announcer introducedhim as the Blade Runner. AnOlympic Stadium camera cooper-ated by panning to the pair of car-bon-fiber prosthetics that hewore with his track suit.

Pistorius, a 400-meter runnerfrom South Africa, soon crouchedto the track and placed his pros-thetics into the starting blocks.Then, with the firecracker soundof the starter’s pistol, he becamethe first double-amputee runnerto compete in the Games.

This has been an Olympics fullof firsts: Each nation has sent fe-male athletes, including thosefrom Saudi Arabia, Qatar andBrunei. A black woman, GabbyDouglas, won the Olympic all-around title in gymnastics. Aman from South Sudan, theworld’s newest country, is com-peting in the men’s marathon asan independent athlete.

While these milestones havebeen widely embraced as signs ofsocial progress, Pistorius’s pres-ence raises more complicatedquestions about the line betweendisabled and able-bodied athletes— and it may ultimately prove to

In One Race,Runner GlidesPast Milestone

Continued in SportsSunday, Page 2

Today, humid, an afternoon thun-derstorm, high 88. Tonight, show-ers and storms, low 72. Tomorrow,morning clouds give way to sun,high 86. Weather map, Page 18.

$6 beyond the greater New York metropolitan area. $5.00

Late Edition

C M Y K Nxxx,2012-08-05,A,001,Bs-BK,E3

Smyrna, Tenn.

The dairy farms that once draped the countryside here were paved over so the Japanese carmaker nissan could build

its first american assembly plant. eighty miles to the south, another green pasture was re-placed by a nissan engine factory, and across Tennessee about 100 nissan suppliers dot the landscape, making steel in murfreesboro, air conditioning units in Lewisburg, transmission parts in Portland.

Three decades ago, none of this existed. The conventional wisdom at the time was simple: Japanese automakers would not build many cars anywhere but Japan, where supply chains were in place, costs were tightly controlled and the reputation for quality was unparalleled.

“They were very unfamiliar doing anything outside Japan,” said Senator Lamar alexander, a republican who was governor of Tennessee when nissan opened its factory here in 1983. “They were tentative and awkward even discussing it.”

Today, echoes of that conventional wisdom can be heard within the american technology industry. For years, high-tech executives have argued that the United States cannot compete in making the most popular electronic devices. Companies like apple, Dell and hewlett-Pack-ard, which rely on huge asian factories, assert that many types of manufacturing would be too costly and inefficient in america. Only overseas, they have said, can they find an abundance of

educated midlevel engineers, low-wage work-ers and at-the-ready suppliers.

But the migration of Japanese auto manu-facturing to the United States over the last 30 years offers a case study in how the unlikeli-est of transformations can unfold. Despite the decline of american car companies, the United States today remains one of the top auto manu-facturers and employers in the world. Japanese

and other foreign companies ac-count for more than 40 percent of cars built in the United States, employing about 95,000 people directly and hundreds of thou-sands more among parts suppli-ers.

The United States gained these jobs through a combina-tion of public and Congressional pressure on Japan, “voluntary” quotas on car exports from Japan and incentives like tax breaks that encouraged Japanese au-tomakers to build factories in america. Pressuring technology companies to move manufactur-ing here would pose different challenges. For one thing, apple

and many other technology giants are ameri-can, not foreign, and so are viewed differently by politicians and the public. But it is possible and the benefits might be worth it, some econo-mists say.

“The U.S. has a long history of demanding that companies build here if they want to sell here, because it jump-starts industries,” said Clyde V. Prestowitz Jr., a senior trade official in the reagan administration who helped negotiate

By BILL VLASIC, HIROKO TABUCHI and CHARLES DUHIGG

By MONICA DAVEY











Continued on Page 4




NATIONAL 13-19












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THE iECONOMY

Bringing Home Work


By ALISSA J. RUBIN









Continued on Page 9


INTERNATIONAL 6-12




SUNDAY BUSINESS




By SIMON ROMERO






U(D5E71D)x+@!$!/!#!?



By JERÉ LONGMAN









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C M Y K Nxxx,2012-08-05,A,001,Bs-BK,E3

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Bringing Home Work


By ALISSA J. RUBIN









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SUNDAY BUSINESS




By SIMON ROMERO






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By JERÉ LONGMAN









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C M Y K Nxxx,2012-08-05,A,001,Bs-BK,E3

with Japan in the 1980s. The government could also encourage domestic production of technolo-gies, including display manufacturing and ad-vanced semiconductor fabrication, that would nurture new industries. “Instead, we let those jobs go to asia, and then the supply chains follow, and then r&D follows, and soon it makes sense to build everything overseas,” he said. “If apple or Congress wanted to make the valuable parts of the iPhone in america, it wouldn’t be hard.”

One country has recently succeeded at forc-ing technology jobs to relocate. Last year, Bra-zilian politicians used subsidies and the threat of continued high tariffs on imports to persuade Foxconn — which makes smartphones and computers in asia for dozens of technology companies — to start producing iPhones, iPads and other devices in a factory north of São Pau-lo. Today, the new plant has 1,000 workers, and could employ many more. apple and Foxconn declined to comment about the specifics of their Brazilian manufacturing.

however, a developing country like Brazil

can adopt trade policies that would be difficult for the United States to do. Taking a hard line to reduce imports of technology goods and en-courage domestic manufacturing could violate international trade agreements and set off a trade confrontation. “We’re a long way from even talking about limits on imported iPhones or iPads,” said a former high-ranking Obama administration official who did not want to be named because he was not authorized to speak.

Protectionism is bad policy in today’s glo-balized world, many economists argue. Coun-tries benefit most when they concentrate on what they do best, and trade barriers harm consumers by driving up prices and undermine a nation’s competitiveness by shielding indus-tries from market forces that spur innovation. The United States needs to create new jobs, economists say, but it should not chase low-paid electronics assembly work that at some point may be replaced by robots. Instead, it should fo-cus on higher-paying jobs.

“Closing our border is a 20th-century

14 N NATIONALTHE NEW YORK TIMES SUNDAY, AUGUST 5, 2012

gan administration who helped negoti-ate with Japan in the 1980s. The govern-ment could also encourage domesticproduction of technologies, includingdisplay manufacturing and advancedsemiconductor fabrication, that wouldnurture new industries. “Instead, we letthose jobs go to Asia, and then the sup-ply chains follow, and then R&D follows,and soon it makes sense to build every-thing overseas,” he said. “If Apple orCongress wanted to make the valuableparts of the iPhone in America, it would-n’t be hard.”

One country has recently succeededat forcing technology jobs to relocate.Last year, Brazilian politicians usedsubsidies and the threat of continuedhigh tariffs on imports to persuade Fox-conn — which makes smartphones andcomputers in Asia for dozens of technol-ogy companies — to start producingiPhones, iPads and other devices in afactory north of São Paulo. Today, thenew plant has 1,000 workers, and couldemploy many more. Apple and Foxconndeclined to comment about the specificsof their Brazilian manufacturing.

However, a developing country likeBrazil can adopt trade policies thatwould be difficult for the United Statesto do. Taking a hard line to reduce im-ports of technology goods and encour-age domestic manufacturing could vio-late international trade agreements andset off a trade confrontation. “We’re along way from even talking about limitson imported iPhones or iPads,” said aformer high-ranking Obama adminis-tration official who did not want to benamed because he was not authorizedto speak.

Protectionism is bad policy in today’sglobalized world, many economists ar-gue. Countries benefit most when theyconcentrate on what they do best, andtrade barriers harm consumers by driv-ing up prices and undermine a nation’scompetitiveness by shielding industriesfrom market forces that spur innova-

tion. The United States needs to createnew jobs, economists say, but it shouldnot chase low-paid electronics assemblywork that at some point may be re-placed by robots. Instead, it should fo-cus on higher-paying jobs.

“Closing our border is a 20th-centurythought, and it will only weaken theeconomy over the long term,” said An-drew N. Liveris, president of DowChemical and co-chairman of the Ad-vanced Manufacturing Partnership, agroup of executives and academics con-vened by the White House who havestudied ways to encourage domesticmanufacturing.

The debate is not just economic, how-ever. Increasingly, it is political. Withhigh unemployment, the question ofhow to create jobs has taken a role inthe presidential race between PresidentObama and Mitt Romney, and both havetraded barbs on outsourcing by Ameri-can companies.

Although the car and technology in-dustries are different, and the eras areseparated by 30 years, the resurgenceof American auto manufacturing in the1980s is an example of how one industrycreated tens of thousands of good jobs.Since its first pickup truck rolled off theline here on June 16, 1983, Nissan hasproduced more than seven million vehi-cles in the United States. It now em-ploys 15,000 people in this country. Itmakes more than a half-million cars,trucks and S.U.V.’s a year, with the plantin Smyrna building six models, includ-ing the soon-to-be-produced, all-electricNissan Leaf.

Other foreign carmakers settled inAmerica — Honda, Toyota, Hyundai,BMW, Mercedes-Benz and, most re-cently, Volkswagen — after a failed at-tempt decades ago. And some of thosefactories have become among the bestin the world. The Nissan engine plant inDecherd, Tenn., for instance, exportsengines to Japan. “We have 14 compa-nies now that produce light vehicleshere, and that is enormous,” said Thom-as Klier, a senior economist at the Fed-eral Reserve Bank in Chicago. “There isno major market in the world that com-pares to it.”

Tennessee?“Where is Tennessee?”It was a blunt question, posed by

Takashi Ishihara, president of Nissan,to Mr. Alexander, then the state’s gover-nor.

Mr. Alexander, who had journeyed toTokyo in 1979 to pitch Nissan on build-ing a plant in his state, was ready withhis answer: “I said, ‘It’s right in themiddle.’” To help out, he displayed asatellite photograph of the UnitedStates at night, showing the brightlights shining on the East and WestCoasts and the relative darkness of Ten-nessee.

“We were the third-poorest state inthe nation back then,” Mr. Alexandersaid. “President Carter had told all theU.S. governors to go to Japan and per-suade the Japanese to make in the U.S.what they sell in the U.S.”

Mr. Alexander recalled that the Nis-san executives were “incredibly anx-ious” about testing their homegrownproduction systems abroad. Could theJapanese car companies achieve thesame quality using American workers?

Despite the concerns, pressures weregrowing for Nissan to break out of itsmanufacturing cocoon in Japan, includ-ing currency fluctuations that made ex-porting more expensive. The final pushcame from American anger as importsgrabbed one-fourth of the United Statesmarket.

“Japanese automakers had achievedrapid growth by exporting to America,”said Hidetoshi Imazu, a senior manu-facturing executive at Nissan in Tokyowho led the development of the planthere in its early years. “But it was clearthat model would no longer work.”

In the fall of 1980, Congress held hear-ings to limit Japanese imports. Withtensions running high, Nissan an-nounced plans for the $300 million as-sembly plant in Smyrna. That gave thecompany a head start in circumventinglooming restrictions. In May 1981, Japanagreed to limit exports to America to1.68 million cars annually, a 7 percent re-duction from a year earlier. In addition,the United States imposed a 25 percenttax on imported pickup trucks.

“The pressure put on the Japanesewas absolutely critical for them to agreeto export restraints,” said Stephen D.Cohen, a professor emeritus of interna-tional studies at American University.

Rural Tennessee may not haveseemed a likely place to build a giantautomotive factory, but its location wasactually a selling point. It was far fromDetroit and the United Auto Workers —and the Japanese wanted to work with-out what they saw as union interfer-ence.

Nissan’s choice of Tennessee was notpopular with everyone. On a 20-degreeFebruary morning in 1981, trade un-ionists jeered Mr. Alexander and Nissanexecutives as they turned the first shov-elfuls of dirt for the factory, protestingnonunion construction crews. An air-plane circled overhead, urging a boycottof Japanese vehicles.

Standing nearby was Marvin Run-yon, a 37-year veteran of Ford who hadbeen recruited as Nissan’s first Ameri-can plant manager. In a later interviewwith The New York Times, Mr. Runyonwas asked what his old colleagues inDetroit thought of his new job. “Theywish me luck,” he said. “But not toomuch.”

Success did not come overnight.Many Japanese were skeptical of their

Volkswagen opened the first foreign-owned auto assembly plant since World War II in Westmoreland County, Pa., in 1978.

Nissan opened its first plant in the U.S. in Smyrna, Tenn., in 1983. By 1990, there were seven foreign-owned assembly plants operating in the U.S. and the number of foreign-owned supply plants had grown threefold to at least 335.

Over the next decade, another 100 suppliers were added, and three more assembly plants were in operation.

In 2009, there were about 470 foreign-owned auto supply plants. Today there are 18 foreign-owned assembly plants, compared with 24 domestically owned plants.

1980

1990

2000

2009

Evolution of a Manufacturing Supply ChainExecutives in the electronics industry often say that popular devices can’t be made in the U.S. largely because it would be too costly and inefficient. But in another industry, foreign auto companies have grown over the last 30 years to account for over 40 percent of vehicles built here.

Source: Thomas Klier, Federal Reserve Bank of Chicago

1 assembly plant

16 parts producers

Foreign-owned automotive plants

Toyota, San Antonio)(

Honda

Honda

Toyota

Toyota

Toyota

Mitsubishi

Mercedes

BMW

Kia

AutoAlliance*

Subaru

Hyundai

VW

Nissan

Nissan

*Joint venture between Mazda and Ford Motor.

KARL RUSSELL/THE NEW YORK TIMES

An American ModelFor Attracting Tech Jobs?

THE ASSOCIATED PRESS

A NISSAN PLANT’S GROUNDBREAKING IN SMYRNA, TENN. Lamar Alexander, then governor of Tennessee, surrounded by protesting union members in 1981.

COMPETING WITH THE BEST Engines ready to be exported from the Nissan manufacturing plant in Decherd, Tenn.

JOSH ANDERSON FOR THE NEW YORK TIMES

Articles in this series are examiningchallenges posed by increasingly global-ized high-tech industries.

The iEconomy

ONLINE: A slide show and graphicshowing foreign carmakers’ moves

into the United States, and a Room forDebate panel will discuss policies toencourage more domestic technologymanufacturing.

nytimes.com/ieconomy

From Page 1

C M Y K Nxxx,2012-08-05,A,014,Bs-4C,E1

thought, and it will only weaken the economy over the long term,” said andrew n. Liveris, president of Dow Chemical and co-chairman of the advanced manufacturing Partnership, a group of executives and academics convened by the White house who have studied ways to encourage domestic manufacturing.

The debate is not just economic, however. Increasingly, it is political. With high unemploy-ment, the question of how to create jobs has taken a role in the presidential race between President Obama and mitt romney, and both have traded barbs on outsourcing by american companies.

although the car and technology indus-tries are different, and the eras are separated by 30 years, the resurgence of american auto manufacturing in the 1980s is an example of how one industry created tens of thousands of good jobs. Since its first pickup truck rolled off the line here on June 16, 1983, nissan has pro-duced more than seven million vehicles in the United States. It now employs 15,000 people in this country. It makes more than a half-million cars, trucks and S.U.V.’s a year, with the plant in Smyrna building six models, including the soon-to-be-produced, all-electric nissan Leaf.

Other foreign carmakers settled in america — honda, Toyota, hyundai, BmW, mercedes-Benz and, most recently, Volkswagen — after a failed attempt decades ago. and some of those factories have become among the best in the world. The nissan engine plant in Decherd, Tenn., for instance, exports engines to Japan. “We have 14 companies now that produce light vehicles here, and that is enormous,” said Thomas Klier, a senior economist at the Federal reserve Bank in Chicago. “There is no major market in the world that compares to it.”

Tennessee?“Where is Tennessee?”It was a blunt question, posed by Takashi

Ishihara, president of nissan, to mr. alexander, then the state’s governor.

mr. alexander, who had journeyed to Tokyo in 1979 to pitch nissan on building a plant in his state, was ready with his answer: “I said, ‘It’s right in the middle.’” To help out, he displayed a satellite photograph of the United States at night, showing the bright lights shining on the east and West Coasts and the relative darkness of Tennessee.

“We were the third-poorest state in the na-tion back then,” mr. alexander said. “President Carter had told all the U.S. governors to go to Ja-pan and persuade the Japanese to make in the U.S. what they sell in the U.S.”

mr. alexander recalled that the nissan exec-utives were “incredibly anxious” about testing their homegrown production systems abroad. Could the Japanese car companies achieve the same quality using american workers?

Despite the concerns, pressures were grow-ing for nissan to break out of its manufacturing cocoon in Japan, including currency fluctuations that made exporting more expensive. The final push came from american anger as imports grabbed one-fourth of the United States market.

“Japanese automakers had achieved rapid growth by exporting to america,” said hidetoshi Imazu, a senior manufacturing executive at nissan in Tokyo who led the development of the plant here in its early years. “But it was clear that model would no longer work.”

In the fall of 1980, Congress held hearings to limit Japanese imports. With tensions running high, nissan announced plans for the $300 mil-lion assembly plant in Smyrna. That gave the company a head start in circumventing looming restrictions. In may 1981, Japan agreed to limit exports to america to 1.68 million cars annually, a 7 percent reduction from a year earlier. In ad-dition, the United States imposed a 25 percent tax on imported pickup trucks.

“The pressure put on the Japanese was absolutely critical for them to agree to export restraints,” said Stephen D. Cohen, a professor emeritus of international studies at american University.

rural Tennessee may not have seemed a likely place to build a giant automotive factory, but its location was actually a selling point. It was far from Detroit and the United auto Work-ers — and the Japanese wanted to work without what they saw as union interference.

nissan’s choice of Tennessee was not pop-ular with everyone. On a 20-degree February morning in 1981, trade unionists jeered mr. alex-ander and nissan executives as they turned the first shovelfuls of dirt for the factory, protesting nonunion construction crews. an airplane circled overhead, urging a boycott of Japanese vehicles.

Standing nearby was marvin runyon, a 37-year veteran of Ford who had been recruited




























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as nissan’s first american plant manager. In a later interview with The new york Times, mr. runyon was asked what his old colleagues in Detroit thought of his new job. “They wish me luck,” he said. “But not too much.”

Success did not come overnight. many Jap-anese were skeptical of their new colleagues. americans, they had heard, were soft, lazy and incapable of mastering the precision manufac-turing that had made nissan great.

To train its new american engineers, nis-san flew workers to its Zama factory in east-ern Japan. There the nissan officials, assisted by english-speaking Japanese workers called “communication helpers,” imparted the intrica-cies of the company’s production techniques to the americans.

Beginnings at Nissanearly on, nissan guarded against quality

concerns by not relying on parts from ameri-can suppliers. most components were either shipped from Japan or produced by Japanese companies that set up operations nearby. “We

felt sourcing parts in the U.S. wouldn’t allow us to make cars in our own way,” said mr. Imazu, the nissan manufacturing executive.

By 1985, nissan was confident enough about the quality that it added passenger cars to Smyrna’s assembly lines. Gradually, ameri-can parts makers were allowed to bid on supply contracts. even that came amid arm-twisting by Congress, which passed a law in 1992 requir-ing auto makers to inform consumers of the per-centage of parts in United States-made cars that came from north america, asia or elsewhere.

Calsonic Kansei of Tokyo opened its first plant in Tennessee in the mid-1980s, and now employs about 2,600 americans making instru-ment panels, exhaust systems, and heating and cooling modules for nissan. “The Japanese sup-pliers were encouraged to localize production,” said matt mulliniks, vice president for sales and marketing at Calsonic Kansei in Tennessee.

nissan’s early doubts are reflected in re-cent debates over whether american workers can compete with overseas laborers. Within the technology industry, workers in asia are viewed




























1980

1990

2000

2009



1 assembly plant

16 parts producers



Honda

Honda

Toyota

Toyota

Toyota

Mitsubishi

Mercedes

BMW

Kia

AutoAlliance*

Subaru

Hyundai

VW

Nissan

Nissan









The iEconomy




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C M Y K Nxxx,2012-08-05,A,014,Bs-4C,E1

as hungrier and more willing to tolerate harsh work schedules to achieve productivity. The numbingly repetitive jobs of assembling cell-phones and tablet computers, executives say, would be scorned here; they worry that many americans would not make the sacrifices that success demands, and want too much vacation time and predictable work schedules.

In the auto industry, the belief that ameri-can workers could not match Japanese workers has long since faded. “a big part of the reluc-tance of Japanese automakers to come to the U.S. was the belief that their manufacturing sys-tems could only work with loyal Japanese em-ployees,” said Dr. Cohen, the american Univer-sity professor. “everybody was surprised how quickly the systems were adopted here.”

This year, nissan held an internal competi-tion to decide where to produce a new Infiniti-brand luxury sport utility vehicle. The plant in Smyrna was vying against one in Japan.

The surprising winner: Smyrna.“all my life I’ve heard about how great lux-

ury brands like Lexus and BmW are,” said rich-ard Soloman, a 20-year veteran at the Smyrna plant. “now we will be building a vehicle of that standard right here in Tennessee.”

The Japanese presence has rippled through the South. But no place has benefited to the extent of Tennessee, which counts more than 60,000 jobs related to automobile and parts pro-duction. The state’s jobless rate, which exceed-ed the national average by a significant margin in 1983 when nissan opened its plant, is now lower — 8.1 percent in June versus 8.2 percent nationwide.

Brazil’s Breakthroughearlier this year, when apple’s chief ex-

ecutive, Tim Cook, took the stage at a technol-ogy conference, he was asked if his company — which once made computers in america, but now locates most assembly in China and other countries — would ever build another product in the United States.

“I hope so,” mr. Cook replied. “One day.”That day came recently for Brazil.In Jundiaí, an hour’s drive from São Paulo,

a strip of asphalt has recently been rechris-tened avenida Steve Jobs, or Steve Jobs av-enue. alongside is a factory where workers make iPhones and iPads. Brazil got these jobs

through tactics the United States once used to persuade nissan and other foreign carmakers to build plants in america: it cajoled apple and Foxconn with a combination of financial incen-tives and import penalties.

Like the United States, Brazil is a big mar-ket — the third largest for computers after Chi-na and the United States. It has long imposed tariffs on imported technology products to en-courage domestic manufacturing. Those fees mean that smartphones and laptops often cost consumers more in Brazil, and that domestic manufacturers can be at a disadvantage if their products require imported parts.

In april 2011, Brazil’s president, Dilma rousseff, traveled to asia with a pitch, much as mr. alexander did in 1979. The federal gov-ernment would give Foxconn tax breaks, subsi-dized loans and special access through customs and lower tariffs for imported parts if it started assembling apple products in Brazil, where Foxconn was already producing electronics for Dell, Sony and hewlett-Packard.

Foxconn agreed. Within months, new Brazil-ian engineers were flying to China for training. By year’s end, Foxconn was making iPhones in Jundiaí, and it began making iPads there in early 2012, according to evandro Oliveira San-tos, director of the Jundiaí metalworkers Union, whose members work at the plant. Stores now carry apple products with the inscription “Fab-ricado no Brasil” — “made in Brazil.”

apple products remain expensive; the lat-est iPad, for instance, costs about $760 in Brazil, compared with $499 in the United States. But be-cause those devices are made in Brazil and low-er tariffs are charged on parts used to assemble them, Foxconn and apple are pocketing larger shares of the profits, analysts say, offsetting the increased costs of building outside China.

Foxconn declined to discuss specific cus-tomers, but said that the Brazilian government’s incentive programs had influenced its decisions and that the company expected to generate more Brazilian jobs and aid the government’s goal of furthering the country’s technology in-dustries.

Indeed, Brazil hopes that compelling Fox-conn to assemble iPhones and iPads domesti-cally will help set off a technology explosion. ms. rousseff has said that Foxconn could invest $12 billion more in Brazil. and as an electronics

supply chain develops within the country, as it has in China, the expectation is that other man-ufacturers will build factories.

The government also hopes to use consumer electronics as a springboard for more advanced manufacturing. Targeting high-tech parts like computer displays and semiconductors could help Brazil reduce its trade deficit in these prod-ucts and develop a robust homegrown industry, said Virgilio almeida, information technology secretary at the ministry of Science and Technol-ogy. “They are deemed high priority in the Bra-zilian industrial policy and are part of the Greater Brazil Plan,” he said. “Brazil has developed spe-cific policies that grant incentives to foment re-search, development and industrial production.”

America’s GapThroughout his term, mr. Obama has regu-

larly gathered advisers to discuss manufactur-ing, according to former high-ranking White house officials. as one meeting was breaking up, mr. Obama casually tapped an aide’s iPhone

to raise a point. Since the device is designed do-mestically, he said, it should be possible to make it in this country as well.

But it became clear at the meetings that there were differences of opinion over how best to bring manufacturing home, according to people familiar with the discussions who did not want to be named because the sessions were private. everyone shared the same goal: establishing a level playing field and creating as many jobs in america as possible. But the debate centered, in part, on choosing among different tactics the american government has used in the past: pen-alties like tariffs against foreign countries that do not play by the rules or incentives like tax breaks to encourage more domestic manufacturing. On one side were officials like ron Bloom, until ear-lier this year the president’s senior counselor for manufacturing policy, who favored more aggres-sive stances to counter policies used by asian countries. he argued that the United States should fight China’s efforts to keep its currency weak. If China’s currency were stronger, ameri-

N 15NATIONALTHE NEW YORK TIMES SUNDAY, AUGUST 5, 2012

new colleagues. Americans, they hadheard, were soft, lazy and incapable ofmastering the precision manufacturingthat had made Nissan great.

To train its new American engineers,Nissan flew workers to its Zama factoryin eastern Japan. There the Nissan offi-cials, assisted by English-speaking Jap-anese workers called “communicationhelpers,” imparted the intricacies of thecompany’s production techniques to theAmericans.

Beginnings at NissanEarly on, Nissan guarded against

quality concerns by not relying on partsfrom American suppliers. Most compo-nents were either shipped from Japanor produced by Japanese companiesthat set up operations nearby. “We feltsourcing parts in the U.S. wouldn’t al-low us to make cars in our own way,”said Mr. Imazu, the Nissan manufactur-ing executive.

By 1985, Nissan was confident enoughabout the quality that it added pas-senger cars to Smyrna’s assembly lines.Gradually, American parts makers wereallowed to bid on supply contracts. Eventhat came amid arm-twisting by Con-gress, which passed a law in 1992 re-quiring auto makers to inform consum-ers of the percentage of parts in UnitedStates-made cars that came from NorthAmerica, Asia or elsewhere.

Calsonic Kansei of Tokyo opened itsfirst plant in Tennessee in themid-1980s, and now employs about 2,600Americans making instrument panels,exhaust systems, and heating and cool-ing modules for Nissan. “The Japanesesuppliers were encouraged to localizeproduction,” said Matt Mulliniks, vicepresident for sales and marketing atCalsonic Kansei in Tennessee.

Nissan’s early doubts are reflected inrecent debates over whether Americanworkers can compete with overseas la-borers. Within the technology industry,workers in Asia are viewed as hungrierand more willing to tolerate harsh workschedules to achieve productivity. Thenumbingly repetitive jobs of assemblingcellphones and tablet computers, execu-tives say, would be scorned here; theyworry that many Americans would notmake the sacrifices that success de-mands, and want too much vacationtime and predictable work schedules.

In the auto industry, the belief thatAmerican workers could not match Jap-anese workers has long since faded. “Abig part of the reluctance of Japaneseautomakers to come to the U.S. was thebelief that their manufacturing systemscould only work with loyal Japaneseemployees,” said Dr. Cohen, the Ameri-can University professor. “Everybodywas surprised how quickly the systemswere adopted here.”

This year, Nissan held an internalcompetition to decide where to producea new Infiniti-brand luxury sport utilityvehicle. The plant in Smyrna was vyingagainst one in Japan.

The surprising winner: Smyrna. “All my life I’ve heard about how

great luxury brands like Lexus andBMW are,” said Richard Soloman, a 20-year veteran at the Smyrna plant. “Nowwe will be building a vehicle of thatstandard right here in Tennessee.”

The Japanese presence has rippledthrough the South. But no place hasbenefited to the extent of Tennessee,which counts more than 60,000 jobs re-lated to automobile and parts produc-tion. The state’s jobless rate, which ex-ceeded the national average by a signif-icant margin in 1983 when Nissanopened its plant, is now lower — 8.1 per-cent in June versus 8.2 percent na-tionwide.

Brazil’s BreakthroughEarlier this year, when Apple’s chief

executive, Tim Cook, took the stage at atechnology conference, he was asked ifhis company — which once made com-puters in America, but now locates mostassembly in China and other countries— would ever build another product inthe United States.

“I hope so,” Mr. Cook replied. “Oneday.”

That day came recently for Brazil.In Jundiaí, an hour’s drive from São

Paulo, a strip of asphalt has recentlybeen rechristened Avenida Steve Jobs,or Steve Jobs Avenue. Alongside is afactory where workers make iPhonesand iPads. Brazil got these jobs throughtactics the United States once used to

persuade Nissan and other foreign car-makers to build plants in America: it ca-joled Apple and Foxconn with a combi-nation of financial incentives and im-port penalties.

Like the United States, Brazil is a bigmarket — the third largest for comput-ers after China and the United States. Ithas long imposed tariffs on importedtechnology products to encourage do-mestic manufacturing. Those fees meanthat smartphones and laptops often costconsumers more in Brazil, and that do-mestic manufacturers can be at a disad-vantage if their products require im-ported parts.

In April 2011, Brazil’s president, Dil-ma Rousseff, traveled to Asia with apitch, much as Mr. Alexander did in1979. The federal government wouldgive Foxconn tax breaks, subsidizedloans and special access through cus-toms and lower tariffs for importedparts if it started assembling Appleproducts in Brazil, where Foxconn wasalready producing electronics for Dell,Sony and Hewlett-Packard.

Foxconn agreed. Within months, newBrazilian engineers were flying to Chinafor training. By year’s end, Foxconnwas making iPhones in Jundiaí, and itbegan making iPads there in early 2012,according to Evandro Oliveira Santos,director of the Jundiaí MetalworkersUnion, whose members work at theplant. Stores now carry Apple productswith the inscription “Fabricado no Bra-sil” — “Made in Brazil.”

Apple products remain expensive;the latest iPad, for instance, costs about

$760 in Brazil, compared with $499 inthe United States. But because those de-vices are made in Brazil and lower tar-iffs are charged on parts used to assem-ble them, Foxconn and Apple are pock-eting larger shares of the profits, ana-lysts say, offsetting the increased costsof building outside China.

Foxconn declined to discuss specificcustomers, but said that the Braziliangovernment’s incentive programs hadinfluenced its decisions and that thecompany expected to generate moreBrazilian jobs and aid the government’sgoal of furthering the country’s technol-ogy industries.

Indeed, Brazil hopes that compellingFoxconn to assemble iPhones and iPadsdomestically will help set off a technol-ogy explosion. Ms. Rousseff has saidthat Foxconn could invest $12 billionmore in Brazil. And as an electronicssupply chain develops within the coun-try, as it has in China, the expectation isthat other manufacturers will build fac-tories.

The government also hopes to useconsumer electronics as a springboardfor more advanced manufacturing. Tar-geting high-tech parts like computerdisplays and semiconductors could helpBrazil reduce its trade deficit in theseproducts and develop a robust home-grown industry, said Virgilio Almeida,information technology secretary at theMinistry of Science and Technology.“They are deemed high priority in theBrazilian industrial policy and are partof the Greater Brazil Plan,” he said.“Brazil has developed specific policiesthat grant incentives to foment re-search, development and industrial pro-duction.”

America’s GapThroughout his term, Mr. Obama has

regularly gathered advisers to discussmanufacturing, according to formerhigh-ranking White House officials. Asone meeting was breaking up, Mr. Oba-ma casually tapped an aide’s iPhone toraise a point. Since the device is de-signed domestically, he said, it shouldbe possible to make it in this country aswell.

But it became clear at the meetingsthat there were differences of opinionover how best to bring manufacturinghome, according to people familiar withthe discussions who did not want to benamed because the sessions were pri-vate. Everyone shared the same goal:establishing a level playing field andcreating as many jobs in America aspossible. But the debate centered, inpart, on choosing among different tac-tics the American government has usedin the past: penalties like tariffs againstforeign countries that do not play by therules or incentives like tax breaks to en-courage more domestic manufacturing.On one side were officials like Ron

Bloom, until earlier this year the presi-dent’s senior counselor for manufactur-ing policy, who favored more aggressivestances to counter policies used byAsian countries. He argued that theUnited States should fight China’s ef-forts to keep its currency weak. If Chi-na’s currency were stronger, Americancompanies might find it costlier to maketheir goods in China and could havegreater incentive to manufacture morein this country.

Aligned on the other side at timeswere two powerful voices: Lawrence H.Summers, the top economic adviser toMr. Obama until 2010, and Treasury Sec-retary Timothy F. Geithner. Along withmany economists, Mr. Summers arguedthat an overly aggressive trade stancecould hurt manufacturing — by, for in-stance, pushing up the price of importedsteel used by carmakers — and overtime, drive companies away.

Mr. Geithner thought diplomacy wasmore effective than confrontational tac-tics like labeling China a currency ma-nipulator. “He told us, ‘It’s going to be atrade war if we go there,’” according toa person who attended the meetings.But this person countered that Chinawould respond only to pressure. “Whatdoesn’t work is the quiet stuff,” he said.

Mr. Summers, in a recent interview,declined to discuss his role at the WhiteHouse. But speaking more broadly, hesaid that protectionist measures mightincite new domestic manufacturing inthe short run, but that it would come ata high price. “People will pay more forthe product because it’s produced in aplace that can’t make it at the lowestcost,” he said. “It burdens exporters be-cause they pay more for their inputs.And it removes the spur of competi-tion.”

A spokeswoman for Mr. Geithnersaid, “A multidimensional approach totough yet smart engagement with Chi-na is the most effective way to level theplaying field.” This strategy has hadsome success in persuading China to in-crease the value of its currency, she not-ed.

One of the president’s economic ad-visers also said that, despite some dif-ferences, Mr. Obama’s team, includingMr. Geithner and Mr. Summers, unitedto preserve manufacturing jobs in acritical area by bailing out the auto in-dustry in the wake of the financial cri-sis.

But the divisions within the WhiteHouse have often frustrated those whowanted a sharper focus on manufactur-ing. “The critics would say we didn’treally fight for manufacturing policy,”said another former high-ranking offi-cial who took part in many of thosemeetings and who did not want to benamed because the discussions wereconfidential. “They have a strongpoint.”

Now, with unemployment high and agrowing debate over outsourcing ofjobs, manufacturing is on the politicalagenda. In March, Gene B. Sperling, di-rector of the White House’s NationalEconomic Council, outlined initiatives— including tax breaks for building fac-tories here, infrastructure investmentsand going after “unfair trade practices”— to reinvigorate manufacturing. InMay, the Commerce Department an-nounced tariffs on Chinese solar panelsfor selling below fair-market value. TheWhite House has challenged China’strade practices on tires and rare-earthmetals, and has established an “inter-agency trade enforcement center” tocombat unfair trade.

Washington, however, has generallyshied from addressing the protectionistmeasures of countries like China withcountermeasures, as politicians oncedid against Japan.

After the Senate passed legislationlast year imposing tariffs on nationswhose currency is undervalued — a sal-vo aimed at China — the bill went no-where in the House of Representatives,and the White House indicated it did notlike the proposal.

However, champions of “in-sourcing”legislation — which takes away benefitsfrom companies moving jobs abroadand provides incentives for those bring-ing jobs back — said the tenor of the de-bate was changing. “The public by andlarge has been betrayed by large Ameri-can corporations that outsource. I thinkCongress is catching on to that,” saidSenator Sherrod Brown, Democrat ofOhio.

Still, he does not advocate tariffs orquotas. Senator Debbie Stabenow, Dem-ocrat of Michigan, also favors taxbreaks, rather than penalties. “I lovemy iPad,” she said. “And I want it madein America.”

One reason for the difference today:Unlike in the 1980s, when Japanese autoimports upset many voters, there hasbeen little public outcry over importedcellphones and computers.

Back then, American workers werelosing jobs as imports from Japanesecompanies cut into sales of the BigThree automakers.

But consumer electronics are differ-ent. Though some jobs have moved toAsia, many were never here to beginwith. And the biggest technology im-porters — like Apple, Hewlett-Packard,Dell and Microsoft — are Americancompanies.

Today, many consumers do not knowor care where their smartphones aremade. “Where it was built, what itmeans for politics, how it affects theeconomy,” said Raymond Stata, afounder of Analog Devices, one of thelargest semiconductor manufacturers,“that’s not something people thinkabout when they buy.”

ANA OTTONI FOR THE NEW YORK TIMES

A RECENT RECHRISTENING Alongside this road in Jundiaí,Brazil, is a Foxconn factory that

makes iPhones and iPads.


DOWN THE ASSEMBLY LINE Nissan’s manufacturing plant in Smyrna, Tenn., builds six car models, including the soon-to-be-produced, all-electric Nissan Leaf.

Bill Vlasic reported from Smyrna, Tenn.,Hiroko Tabuchi from Tokyo, and CharlesDuhigg from New York. Lis Horta Mor-iconi contributed from Rio de Janeiro.

By MICHAEL CIEPLY

SANTA MONICA, Calif. — TheHotel Shangri-La, an Art Decopalace on a bluff next to the Pa-cific Ocean, looks the way LosAngeles is supposed to look butmostly doesn’t: its exterior isbright white, with rounded cor-ners, glass tiles and upper-storyrailings. Its look is matched by itslore, a Hollywood haunt whereBill Clinton and Tom Cruise havebeen spotted among the guestsand where a favorite story has itthat Sean Penn courted Madon-na.

It remains one of this beachcity’s tonier hotels, a palmy ref-uge for those who want to peek atthe waves without the bother ofMalibu.

But things have been far fromidyllic here in the last week, asabout a dozen Jewish plaintiffs,mostly young professionals,squared off in court against thehotel and its owner, TehminaAdaya, over a charge that has notoften surfaced in Santa Monicalately: anti-Semitism.

Ms. Adaya was on the spot last

week defending herself against aclaim that she had violated Cali-fornia’s Unruh Civil Rights Act, alaw that bars hotels and otherbusinesses from discriminatingin their dealings on the basis ofsex, race, religion or a number ofother traits or conditions.

“No, I did not,” Ms. Adaya an-swered, twice, when askedwhether she had used a harshprofanity in ordering her staff toclear either the hotel or its pool ofJewish party guests on July 11,2010, at a gathering sponsored bythe Friends of the Israel DefenseForces.

She spoke from the witnessstand on Wednesday before ajury and Judge H. Chester HornJr. in the Santa Monica division ofLos Angeles County SuperiorCourt. Ms. Adaya was occasional-ly flustered when fumbling fordetails, but she was emphatic indenying the central charge: thatshe had ordered the Jews to closetheir prearranged event, for fearthat her family, who are Muslims,would cut off her financing.

“I did not, how could I?” she

said at one point. “My familyknows I have so many Jewishfriends.”

Other testimony through theweek painted a different pictureof Ms. Adaya’s behavior whenshe showed up at one of the ho-tel’s poolside cabanas that Sun-day to watch on television asSpain played the Netherlands ina World Cup soccer final match.

“Oh, my God,” she supposedlysaid on discovering the gather-ing, complete with a banner ortwo and some promotional leaf-lets, according to the depositiontestimony of a former employee,which was read in court onThursday.

The employee, Nathan Codrey,was not present. Lawyers forboth sides and Judge Hornagreed to substitute portions ofthe deposition for live testimonybecause, they said, Mr. Codreywas out of the state and could notbe served with a subpoena.

Mr. Codrey’s deposition de-scribed Ms. Adaya as repeatedlyusing profanity as she orderedthe event — which had been ar-

ranged through a promoter, Plati-num Events, with executives as-sociated with the hotel’s food andbeverage operator — to close.(She eventually agreed to let thegroup stay once the banners andleaflets were removed.)

“She was Muslim, her parents

or family were Muslim,” Mr.Codrey, who had been an assist-ant manager, testified in wordsthat were read by a stand-in. “Ifmy parents find out there’s aJewish event here, they’re goingto pull money from me immedi-ately,” he recalled Ms. Adaya say-ing, though he noted that shemight have said “family,” as herfather is dead.

Ms. Adaya inherited control of

the hotel from her father, AhmadAdaya, after he died in 2006.Since it was built in 1939, theShangri-La has been closely as-sociated with Hollywood celebri-ty. The rooftop tango in the mid-dle of Randy Newman’s “I LoveL.A.” music video took place atthe Shangri-La. In 2010, L.A.Weekly said the Shangri-La wasthe region’s “Best GlamourpussPosh Hotel.” That was a rare dis-tinction in a place full of glam-ourpuss posh hotels.

But Ms. Adaya and her backersspent $30 million on a renovationoverseen by Marc Smith, whohelped make the Shangri-La andits lounges as hip as his clubVynyl in Hollywood or his rebornGolden Gopher bar in downtownLos Angeles.

Though anti-Semitic stormshave been known to erupt in theentertainment industry — the in-cendiary remark by Mel Gibsoncomes to mind — Santa Monicahas experienced few controver-sies involving Jews in recentyears.

Perhaps the most vibrant one

occurred last year, when it brieflyseemed that a proposal to bancircumcision in the city would ap-pear on a ballot. But the measurewas quickly dropped.

Carl Arvilla, a security directorfor the Shangri-La, testified onWednesday afternoon that thehotel was simply enforcing stand-ing policies that ban leaflets andlimit the use of its pool to guests.

Ms. Adaya clearly did not re-gard the claims — which couldlead not only to monetary dam-ages, but also a lasting blot onher hotel — as routine.

Born in Pakistan but raisedfrom an early age in the UnitedStates, Ms. Adaya said she hadexperienced life as a minoritymember during her time in theSanta Monica public schools andlater at a private girls’ school. “Iwas the only one,” she said whenasked if there had been otherMuslims in a heavily Jewishschool she once attended.

“I would never do that,” shesaid of the charge that she hadsingled out the supporters of Is-rael for eviction.

Muslim Hotel Owner in California Defends Herself Against Anti-Semitism Charge

Far from idyllic at theShangri-La after adisputed incident.

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can companies might find it costlier to make their goods in China and could have greater incentive to manufacture more in this country.

aligned on the other side at times were two powerful voices: Lawrence h. Summers, the top economic adviser to mr. Obama until 2010, and Treasury Secretary Timothy F. Geithner. along with many economists, mr. Summers argued that an overly aggressive trade stance could hurt manufacturing — by, for instance, pushing up the price of imported steel used by carmak-ers — and over time, drive companies away.

mr. Geithner thought diplomacy was more effective than confrontational tactics like label-ing China a currency manipulator. “he told us, ‘It’s going to be a trade war if we go there,’” ac-cording to a person who attended the meetings. But this person countered that China would re-spond only to pressure. “What doesn’t work is the quiet stuff,” he said.

mr. Summers, in a recent interview, declined to discuss his role at the White house. But speak-ing more broadly, he said that protectionist mea-sures might incite new domestic manufacturing in the short run, but that it would come at a high price. “People will pay more for the product be-cause it’s produced in a place that can’t make it at the lowest cost,” he said. “It burdens exporters because they pay more for their inputs. and it removes the spur of competition.”

a spokeswoman for mr. Geithner said, “a multidimen-sional approach to tough yet smart engagement with China is the most effective way to level the playing field.” This strategy has had some success in per-suading China to increase the value of its currency, she noted.

One of the president’s eco-nomic advisers also said that, despite some differences, mr. Obama’s team, including mr. Geithner and mr. Summers, united to preserve manufactur-ing jobs in a critical area by bail-ing out the auto industry in the wake of the financial crisis.

But the divisions within the White house have often frustrated those who wanted a

sharper focus on manufacturing. “The critics would say we didn’t really fight for manufactur-ing policy,” said another former high-ranking official who took part in many of those meet-ings and who did not want to be named because the discussions were confidential. “They have a strong point.”

now, with unemployment high and a grow-ing debate over outsourcing of jobs, manufac-turing is on the political agenda. In march, Gene B. Sperling, director of the White house’s national economic Council, outlined initiatives — including tax breaks for building factories here, infrastructure investments and going af-ter “unfair trade practices” — to reinvigorate manufacturing. In may, the Commerce Depart-ment announced tariffs on Chinese solar panels for selling below fair-market value. The White house has challenged China’s trade practices on tires and rare-earth metals, and has estab-lished an “interagency trade enforcement cen-ter” to combat unfair trade.

Washington, however, has generally shied from addressing the protectionist measures of countries like China with countermeasures, as politicians once did against Japan.

after the Senate passed legislation last year imposing tariffs on nations whose cur-

rency is undervalued — a salvo aimed at China — the bill went nowhere in the house of rep-resentatives, and the White house indicated it did not like the proposal.

however, champions of “in-sourcing” legislation — which takes away benefits from com-panies moving jobs abroad and provides incentives for those bringing jobs back — said the tenor of the debate was chang-ing. “The public by and large has been betrayed by large american corporations that outsource. I think Congress is catching on to that,” said Sena-tor Sherrod Brown, Democrat of Ohio.

Still, he does not advo-cate tariffs or quotas. Senator Debbie Stabenow, Democrat of michigan, also favors tax





















































By MICHAEL CIEPLY





























C M Y K Nxxx,2012-08-05,A,015,Bs-4C,E1

breaks, rather than penalties. “I love my iPad,” she said. “and I want it made in america.”

One reason for the difference today: Unlike in the 1980s, when Japanese auto imports upset many voters, there has been little public outcry over imported cellphones and computers.

Back then, american workers were losing jobs as imports from Japanese companies cut into sales of the Big Three automakers.

But consumer electronics are different. Though some jobs have moved to asia, many were never here to begin with. and the biggest technology importers — like apple, hewlett-Packard, Dell and microsoft — are american companies.

Today, many consumers do not know or care where their smartphones are made. “Where it was built, what it means for politics, how it affects the economy,” said raymond Stata, a founder of analog Devices, one of the largest semiconductor manufacturers, “that’s not something people think about when they buy. n

Bill Vlasic reported from Smyrna, Tenn., Hiroko Tabuchi from Tokyo and Charles Duhigg from New York. Lis Horta Moriconi contributed from Rio de Janeiro.

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$400 MILLION THIS TIME ©2012 The New York Times NEWYORK ... · atedby panning to thepair of car-bon-fiber prosthetics that he wore with his track suit. Pistorius, a 400-meter runner