Relief for the Machine Tool Industry?
American DIB policy, as we have seen, has relied almost exclusively on market forces as the best means to provide U.S. troops with effective weapons. This hands-off policy persists, even though many economic indicators highlight growing foreign dependence and erosion of the industrial base. Policy ideas dating back to the early 1950s continued to influence policymakers throughout the 1980s, preventing them from contemplating more active support for the DIB. The lingering power of these policy ideas makes the decision to actively support the U.S. machine tool industry especially remarkable.
The machine tool sector was the one of the first industries whose decline was widely cited for its dangerous impact on U.S. national security. Indeed, the 1980 Ichord Panel report paid special attention to the machine tool industry's plight, noting that "import penetration into certain industrial sectors, such as machine tools. . . suggests an unacceptable dependency on foreign sources for key elements of defense production."1
As the U.S. machine tool sector continued to deteriorate, demands for action grew. During the early and mid-1980s, reversing the industry's slide became a cause celebre for many advocates of a government industrial policy.
In the end, the machine tool industry's supporters succeeded in convincing the Reagan administration to negotiate trade protection for U.S. firms and to create a package of domestic initiatives to revitalize the industry. Yet success was slow in coming as the Reagan administration delayed action for more than three years. This success is largely attributable to the industry's ability to educate key policymakers about the importance of machine tools, and policymakers' own search for new solutions to the unfamiliar problem of defense dependence.
The machine tool industry is quite small and accounts for only 0.10 percent of