Newspaper article The Christian Science Monitor

US Machine-Tool Manufacturers Rebound after Foreign Trouncing Continued Success Lies in Taking the Contest to Expanding Foreign Markets, Analysts Contend Series: HONING US COMPETITION. Strong American Machine-Tool and Aerospace Industries Face Tough Competition from Asia and Europe. Machine-Tools Sector Hits Turbulence Boeing Navigates without Subsidies

Newspaper article The Christian Science Monitor

US Machine-Tool Manufacturers Rebound after Foreign Trouncing Continued Success Lies in Taking the Contest to Expanding Foreign Markets, Analysts Contend Series: HONING US COMPETITION. Strong American Machine-Tool and Aerospace Industries Face Tough Competition from Asia and Europe. Machine-Tools Sector Hits Turbulence Boeing Navigates without Subsidies

Article excerpt

UNITED States manufacturers owe some of the credit for their widely hailed resurgence to the low-profile makers of machine tools.

Laboring in the shadows of auto, steel, and other manufacturers, small machine-tool workshops provide the essential building blocks for industry. They produce everything from nuts, bolts, and screws to the robots, presses, and casters vital to a myriad of manufacturers.

After years of painful streamlining, consolidation, and technological upgrading, US machine-tool manufacturers are more productive and competitive than they have been for more than two decades, industry executives and analysts say. "There is very little doubt that productivity and efficiency of domestic machine-tool producers has improved dramatically," says Peter Toja, president of Economic Planning Associates Inc., in Smithtown, N.Y.

The opportunity for growth for the US industry is also extraordinarily good, industry experts say. With the US economy on the upswing, orders received in 1993 by US companies for metal-cutting and metal-forming machine tools surged 33 percent over the previous year. In the first six months of 1994, industry orders jumped 23.6 percent over the same period last year.

US machine-tool manufacturers are better positioned than their foreign rivals to sell to the booming markets of North America. Moreover, companies are seizing on the burgeoning markets of China and other developing countries in Asia.

Still, machine-tool manufacturers face steep challenges. Japanese and European competitors swooped into the US market after import curbs expired last year. These foreign manufacturers are especially aggressive because of the low demand in their own recessionary economies. Also, government restrictions on the export of sophisticated machine tools hobble efforts by American companies overseas. The US industry estimates that cold-war-era export bans cost it $150 million annually in sales and discourage the creation of about 3,000 export-related jobs.

Most US machine-tool manufacturers operate on a small scale and lack the capital for the research and innovation necessary to stay ahead of large foreign rivals. Mostly mom-and-pop operations

In general, "machine-tool companies are still mom-and-pop operations with comparatively few employees, relying on a few big purchases," says John Townsend, a spokesman for Giddings & Lewis Inc., in Fond du Lac, Wis., the largest US producer of machine tools. Many US companies were founded by highly skilled entrepreneurs and are family-run and owned.

Fortunately, machine-tool manufacturers are not strangers to harsh competition. They have learned firsthand about the high costs of complacency, the danger of indifference toward foreign competition, and the imperative for technological advancement. In 1956, US machine-tool manufacturers controlled more than 80 percent of the domestic market and employed about 75,000 workers. They were the world's No. 1 producers, building nearly one-half of the world's machine tools, exporting more machines than any other country, and, on a per-worker basis, leading the world in investment and productivity.

Within three decades, however, the US industry was brought almost to its knees because of government and corporate neglect at home and intense, sometimes predatory, trading by companies abroad.

By 1982, the US could claim just 10 percent of world production. During the same period, Japan rose from a weakling in machine tools to the world's leader. …

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