Small Business Economics 4/1989. [antikvár]

Small-Scale Industry at a Crossroads: U.S. Machine Tools in Global Perspective Bo Carlsson ABSTRACT. In 1975, the United States was the world's largest producer of machine tools, the second largest exporter, and had the lowest degree of dependence on imports of all major machine tool producing countries. By 1987, the U.S. had süpped into fourth place as producer of machine tools (behind Japan, West Germany, and the U.S.S.R.), into sixth place in exports (behind Switzerland, East Germany, and Italy), and relied on imports for more than haif of its supply of machine tools. It is the object of this paper (1) to explain what happened globally in the machine tool industry since the mid-1970s, (2) to examine the arguments concerning the strategic role of the industry in industrial development, and (3) to analyze the implications for the future and to recommend courses of action. Introduction In 1975, the United States was the world's largest producer of machine tools, the second largest exporter, and had the lowest degree of dependence on imports of all major machine tool producing countries. By 1987, the U.S. had slipped into fourth place as producer of machine tools (behind Japan, West Germany, and the U.S.S.R.), into sixth place in exports (behind Switzerland, East Germany, and Italy), and relied on imports for more than half of its supply of machine tools. This dramatic turn of events reflects the upheaval in the machine tool industry worldwide in the last decade. Until the early 1970s, the machine tool industry could be characterized as a mature industry with highly stable product technology, markét structure, and competitive environment, although the demand for machine tools has always been extremely cyclical. As a result, it was not unusual to find 30- to 40-year-old products as major 'breadwinners' even in leading machine tool companies (Rendeiro, 1984, p. 62). But after the mid-1970s, all that changed. The machine tool industry is now in a profound state of flux and disequilibrium, in the United States as well as in several West European countries. Given that the machine tool industry is often considered to be strategically important - illustrated by the fact that there is no major industrial country without a domestic machine tool industry and by the importance attached to that industry in the newly industrialized countries (NICs) - this development is clearly of grave concern. It is the object of this paper (1) to explain what happened globally in the machine tool industry since the mid-1970s, (2) to examine the arguments concerning the strategic role of the industry in industrial development, and (3) to analyze the implications for the future and to recommend courses of action. The plan of the paper is as follows. The basic characteristics of the machine tool industry, the recent development of output and international trade, and recent changes in technology are described in the next three sections. These are followed by an analysis of the current restructuring of the industry in the United States and Western Europe, and of the causes of the observed development. The strategic role of the industry and the implications for the future are discussed in the final sections of the paper.