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| Copyright © 2009. National Academy of Sciences. All rights reserved. Terms of Use and Privacy Statement |
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OCR for page R1
The U.S. Machine
Too! Industry and the
Defense Industrial Base
C.
omm~ttee on the Machine Tool Indllstrv
.\1anufacturing Studies Board
Commission on Engineering and Technical Systems
.Nat~onal Research Council
NATIONAL ACADEMY PRESS
Washington D.C. 1983
OCR for page R2
NOTICE: The project that is the subject of this report
was approved by the Governing Board of the National
Research Council, whose members are drawn from the
councils of the National Academy of Sciences, the
National Academy of Engineering, and the Institute of
Medicine. The members of the co`.~,ittee responsible for
the report were chosen for their special competences and
with regard for appropriate balance.
This report has been reviewed by a group other than
the authors according to procedures approved by a Report
Review Committee consisting of members of the National
Academy of Sciences, the National Academy of Engineering,
and the Institute of Medicine.
The National Research Council was established by the
National Academy of Sciences in 1916 to associate the
broad community of science and technology with the
Academy' s purposes of further ing knowledge and of
adv is ing the federal government. The Counc it operates in
accordance with general policies determined by the
Academy under the authority of its congressional charter
of 1863, which establishes the Academy as a private,
nonprofit, self-governing membership corporation. The
Council has become the principal operating agency of both
the National Academy of Sciences and the National Academy
of Engineering in the conduct of their services to the
government, the public, and the scientific and
engineering communities. It is administered jointly by
both Academies and the Institute of Medicine. The
National Academy of Engineering and the Institute of
Medicine were established in 1964 and L970, respectively,
under the charter of the National Academy of Sciences.
This report represents work under contract number
D~AK21-82-C-0091 between the U.S. Department of the Army
and the National Academy of Sciences.
A limited number of copies are available from:
Manufacturing Studies Board
National Academy of Sciences
2101 Constitution Avenue, N.W
Washington, D.C. 20418
Printed in the United States of America
OCR for page R3
COMMITTEE ON THE MACHINE TOOL INDUSTRY, Phase II
JAMES E. ASHTON, Vice President, Rockwell International,
Chairman
MARGARET 8.W. GRAHAM, School of Management, Boston
University, Vice Chairman
ARDEN L. BEMENT, Vice President, Technical Resources,
TRW, Incorporated
JOSEPH E. CLANCY, President, Bridgeport Machine
MICHAEL W. DAVIS, President, White-Sundstrand Machine
Tool Company
BELA GOLD, Director, Research Program in Industrial
Economics, Case Western Reserve Univers ity
HAMILTON HERMAN, Management Consultant
NATHANIEL S. HOWE, Senior Vice President, Litton
Industries
RICHARD A. JAY, President, Work in Northeast Ohio Council
ROBERT B. KURTZ, Retired Senior Vice President, General
Electric
WALTER L. MACORITTO, Manager, Manufacturing Research,
Lockheed Corporation
ROGER 8. ORLOFF, Vice President, Corporate Finance Group,
Girard Bank
HENRY D. SHARPE, Jr., Chairman, Brown and Sharpe
Manufacturing Company
CEDRIC L. SUZMAN, Vice President and Educational Program
Director, Southern Center for International Studies
JOHN G.T. THORNTON, Editor, Robot Insider
ROBERT TRIMBLE, Vice President, Contracts, Martin
Marietta Aerospace
WILLIAM M. TRUSKA, Jr., President, Rousselle Corporation
BERNARD WATERMAN, Industrial College of the Armed Forces
FRED WOHLFAHRT, Project Manager, Technical Management and
Systems Consulting, General Electric Company
. . .
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PREFACE
This report presents the findings and recommendations of
the second of two committees formed by the Manufacturing
Studies Board at the request of the Department of Defense
to study the defense readiness and international competi-
tiveness of the U.S. machine tool industry.
The Committee on the Machine Tool Industry, Phase I,
was a three-mor:h effort beginning in October 1981. It
reviewed prior studies, defined issues, and designed the
study to be undertaken in Phase II, which has resulted in
this report.
The Phase I study is a stepping stone for the Phase II
analysis--this report--of the machine tool industry's
competitiveness and defense readiness, in the light of
its changing structure and capabilities. The committee
is also indebted to the earlier studies of the machine
tool industry, particularly those by the Machine Tool
Task Force, the Defense Science Board, and the National
Academy of Engineering.
Important trends, however, have intensified in the
machine tool industry since the writing of those earlier
reports. New process technology is rapidly widening the
scope of the industry beyond the traditional concept of
metal-cutting and -forming equipment: further, structural
changes within the industry include an increasing number
of mergers, acquisitions, and joint ventures. A new
study was needed that took as its starting point an
emerging machine tool capability, reflecting both
technological and structural changes.
The Phase I committee designed a study to interpret
the significance of this transformation of the industry
for the Department of Defense (DOD) and to make recom-
mendations for policy based on DOD's needs and the
v
OCR for page R6
emerging industry. This report presents the results of
that study.
The Committee on the Machine Tool Industry, Phase II,
is solely responsible for this report. A number of
others, though, have made invaluable contributions.
Primary thong these is the Phase I committee, whose
definition of issues and study design were the basis for
the work represented in this report. Mel Horwitch
generously gave many hours to assist the Committee in
identifying trends and policy options; he also provided
valuable comments on the several drafts of the report.
Study directors Joel Goldhar (first half) and George
Kuper (second half) contributed many of the insights to
the Committee's discussion. Consultants Stephen Merrill
and Jack Bloom provided analyses of the relationships
among DOD, the machine tool industry, and prime
contractors, and did the initial drafts of sections of
the report. Staff officer Janice Greene assisted in the
Committee's analysis and writing.
Consultant William
Levitt conducted and analyzed a survey of recent machine
tool purchases by domestic firms. Consultant Harold
Davidson provided a wealth of historical and procedural
information from the Department of Defense. Charles
Downer, of the National Machine Tool Builders' Associa-
tion, was another important source of data. Consultant
Edgar Weinberg provided statistical backup. Consultant
George Krumbhaar researched issues pertaining to the
viewpoints of prime contractors and also organized the
Committee's comments into the final version of this
report. Consultant Deborah Tomusko conducted case
studies at machine tool builders; her research forms the
basis for parts of Chapter 2. Staff associate Georgene
Menk was responsible for the administrative work of the
Committee, and Donna Reifsnider and Frances Shaw ably
typed this report.
The aforementioned help notwithstanding, there would
be no report without the diligent efforts of a very
hard-working volunteer committee, including a talented
group of drafters led by our vice Chairperson, Margaret
Graham.
`Tames E. Ash ton
V1
OCR for page R7
CONTENTS
1.
INTRODUCTIONee.ee.
Statement of the Problem...........
The U.S. Machine Tool Industry:
The Problems of Maturity.........
The DOD Interest .e e.
Approach to the Study...
Organization of Study...
Notes 6
2. AN INDUSTRY RESTRUCTURED
Overview of Changes
The Traditional U.S. Machine Tool Industry 8
Technological Trends Shaping the Industry
For; _ m_ ~~ ~
7
New Entr ants and New Competitive Strategies 32
Response of Machine Tool Builders to There
Changes.... e.~eeeeeeeeee.~.ee
Conclusions.. e ~ ~eee~~~e
Notes .
3.
e
THE DEPARTMENT OF DEFENSE' PRIME CONTRACTORS'
AND THE MACHINE TOOL INDUSTRY: RELATIONSHIPS
THAT AFFECT INDUSTRY STRUCTURE........
...52
Size of DOD and Contractor Markets 53
DOD Procurement: Incentives and Disincentives 55
Manufacturing Technology Programs 56
Machine Tool Suppliers' Perspective
on the Defense Procurement Process 63
Perceptions of the U.S. Machine Tool Industry:
The Prime Contractors' Viewpoint 69
Domestic Legislation Affecting the Purchase
of U.S. Produced Machine Tools 76
Conclusions ~ 79
Note~ eee.~.e.~81
4. PROBLEM SYNTHESIS AND RECOMMENDATIONS
Problem
V11
..84
...84
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Recommendations ~ 88
Conclusions ~ 96
APPENDICES e ~ ~ ~ ~ ~ e ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 99
A. Highlights of Phase I Study 101
B. Policies of Foreign Governments lll
C. Questionnaire Sent to Machine Tool
Industry Executives 118
. . .
V11 1
