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What happened to the US machine tool industry?

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Re: What happened to the US machine tool industry?

#101

Post by maxglute »

bluGill wrote: post #22
psychlops wrote: post #21

> A strong dollar made imports even cheaper by comparison I think that summarizes the article. It has been cheaper to import, so we do. The strong dollar policy supports some industries at the expense of others.

I'd say MBAs driving for quarterly numbers were unable to manage the business cycle is a better summary.

Article says machinist industry failed to lobby the same way as US steel. Not that US steel is doing healthy. But at some point it's the govs foresight / job to reign in MBAs via protectionism and industrial policy for strategic sectors. As other's have mentioned, JP has MBAs too. Maybe lesson is JP Gov listened to Zaibatsu/conglomerate lobbying power.

Re: What happened to the US machine tool industry?

#102

Post by maxglute »

AnthonyMouse wrote: post #100
bsder wrote: post #81

Earlier quoted context omitted.

> It’s not necessarily the case that greedy, ignorant MBAs came in and ruined everything. Like, if their practices were so inferior, then any domestic firm that didn’t get taken over by them should’ve had a leg up and could’ve dominated the domestic market. In this instance, it was people like Icahn. Machine tools were a very cyclical market. Consequently, they did well as part of a vertically integrated conglomerate…

> When forced to spin out and stand alone by corporate raiders, those companies were effectively doomed as you just ripped out their ability to do R&D. It would be just as fair to blame the original culture of having vertically integrated conglomerates to begin with. If there is anyone who should be able to figure out how to automate manufacturing with a small number of workers, it should be a bunch of machinists. Bu…

> you can't outsource plumbers and electricians

Not yet. Wonder where west would be if politics threw trades to the wolves and kept machinists. Maintain manufacturing prowess and build cheap factories.

Re: What happened to the US machine tool industry?

#103

Post by citizenpaul »

jillesvangurp wrote: post #42

> Constant pressure to hit quarterly performance targets meant that machine quality often suffered. In some cases, machines would be shipped out the door unfinished so the delivery could be booked, and assembly would be completed by service technicians at the customer’s location. In his history of the American machine tool industry, Albert Albrecht states that “the actions of these larger corporations and conglomerat…

I've long been sounding the alarm on MBA'ification destroying everything. To me its the most under discussed problem with society in better quality of life areas.

In the beginning they cleaned up messy, inefficient, wasteful processes. However for the most part MBA's ran out of real stuff to do 10-20 years ago. Ever since then it has just been about how much more can they shave off of 0.1% of 0.1% of just one more thing that doesnt need it but hey they have a quartly bonus attached.

Or like a comedian I recently saw said, every new business these days are basically something like:

Hey you know how a taxi driver can afford to feed his family?

What if he couldn't anymore?

Re: What happened to the US machine tool industry?

#104

Post by lazide »

hasty_pudding wrote: post #93
mywittyname wrote: post #88

Earlier quoted context omitted.

MBAs are taught techniques for optimizing for quality and cost. It's not always an either/or decision. Even when it is an either/or situation, sometimes it's better to build a product that is half the price for a quarter of the lifespan. A buyer who will use a tool for 30 hours doesn't really care if the service life of a tool has been reduced from 1000 hours to 250 if the price is halved.

> techniques for optimizing for quality and cost Some of those techniques: 1. hiring each other and bloating bureaucracy in healthcare and education and other industries jacking up prices that werent expensive before 2. come up with ideas like 'shrinkflation' and 'planned obsolescence 3. reducing quality and making products unrepairable so we have massive waste in landfills and things like a giant pacific garbage pat…

The issue isn’t MBAs. They are just a symptom.

What the issue is, is that we’re essentially in the third ‘wave’ of US economic change post WW2 manufacturing boom.

Post WW2, the United States was the only manufacturing economy that hadn’t been bombed to smithereens, has not only little to no real debt, but a lot of debtors that would repay them, and had massive amounts of undeveloped land ripe for development, and a major new manufacturing base looking for things to do.

This allowed the US to become the world’s reserve currency (along with gold) in the Bretton Woods agreement in ‘44. That lasted until ‘71.

[https://en.m.wikipedia.org/wiki/Bretton_Woods_system] when the dollar stopped being backed by gold, allowing periods of increased inflation.

At around the same time, the economies of Western Europe and Asia had mostly recovered, and they were starting to catch up on manufacturing to compete with the US.

This led to increasing competitive pressures with US manufacturing, and increasing incentives to go towards Globalization and outsourcing to chase the cheap labor and more willing to compete manufacturers in these locations. Switching the US to a ‘knowledge economy’ was the natural progression.

That easy money is mostly gone now, and the US is also no longer far ahead in many areas on knowledge.

China in particular is starting to come close on almost all metrics. If Europe has a recession, their primary disadvantage (cost) may turn into an advantage.

So then the US is much more on par with everyone else - for the first time in several generations.

And that causes quite a rude awakening economically, as now the US potentially has real and actual competitors it isn’t 5 steps ahead of already.

MBA’ism is because long ago the economy switched from ‘actually leaps and bounds ahead of competitors’ to optimization. As most of the actual structural differences have now equalized, and we’re down to who can make it cheaper/simpler. No one wants a 5 lb drill that costs $100 if they can have a 2lb drill that costs $50 and does the jobs they want well.

Re: What happened to the US machine tool industry?

#105

Post by sokoloff »

AnthonyMouse wrote: post #100
bsder wrote: post #81

Earlier quoted context omitted.

> It’s not necessarily the case that greedy, ignorant MBAs came in and ruined everything. Like, if their practices were so inferior, then any domestic firm that didn’t get taken over by them should’ve had a leg up and could’ve dominated the domestic market. In this instance, it was people like Icahn. Machine tools were a very cyclical market. Consequently, they did well as part of a vertically integrated conglomerate…

> When forced to spin out and stand alone by corporate raiders, those companies were effectively doomed as you just ripped out their ability to do R&D. It would be just as fair to blame the original culture of having vertically integrated conglomerates to begin with. If there is anyone who should be able to figure out how to automate manufacturing with a small number of workers, it should be a bunch of machinists. Bu…

> you can't outsource plumbers and electricians

You can outsource trades (that's literally what almost every general contractor builder does->outsource specialist trades to subcontractors).

You can't off-shore them (or at least not nearly so easily and completely).

Re: What happened to the US machine tool industry?

#106

Post by neuralRiot »

michaelbrave wrote: post #84
baron816 wrote: post #50

Earlier quoted context omitted.

> Constant pressure to hit quarterly performance targets meant that machine quality often suffered. It’s not necessarily the case that greedy, ignorant MBAs came in and ruined everything. Like, if their practices were so inferior, then any domestic firm that didn’t get taken over by them should’ve had a leg up and could’ve dominated the domestic market. Don’t you think the more likely source of “pressure” was the int…

Brand names carry weight for several years before the damage becomes apparent. Often their cost cutting measures seem positive at first as it creates a profit uptick, but it's usually at the cost of the brand, so 3-5 years later things take a turn (once the consumer has figured out the brand can't be trusted anymore). By that point it's hard to put the blame on the appropriate person or identify the appropriate reaso…

I said it thousand times in different but related at root topics, quality and reliability are possible but why would somebody build something that would last forever? It’s more profitable to churn cheap garbage over and over specially when customers wouldn’t pay for quality products or when a new, more flashy and feature-rich one is launched everyday. It’s the same for electronics, fashion, cars, machines and anything. Manufacturers just push consumers to “desire” the brand new product but the grinder is spinning faster and faster and the landfills getting higher and higher.

Re: What happened to the US machine tool industry?

#107

Post by KRAKRISMOTT »

sokoloff wrote: post #105
AnthonyMouse wrote: post #100

Earlier quoted context omitted.

> When forced to spin out and stand alone by corporate raiders, those companies were effectively doomed as you just ripped out their ability to do R&D. It would be just as fair to blame the original culture of having vertically integrated conglomerates to begin with. If there is anyone who should be able to figure out how to automate manufacturing with a small number of workers, it should be a bunch of machinists. Bu…

> you can't outsource plumbers and electricians You can outsource trades (that's literally what almost every general contractor builder does->outsource specialist trades to subcontractors). You can't off-shore them (or at least not nearly so easily and completely).

Mexico is a large country with a very liquid labor supply

Re: What happened to the US machine tool industry?

#108

Post by poncho_romero »

grow2grow wrote: post #2

Right, it seems the U.S. economy is trying to say, "making elementary machine tools is beneath us." The important bit is at the end: the U.S. is still a top buyer of machine tools (made elsewhere). Is the same thing to happen with software? When it becomes worth the time of the U.S. economy to produce basic machine tools again, they'll get to create new machine tools factories using all the latest technology: so it i…

Will “all the latest technology” be available? The expertise the US once had in this area is largely gone, and won’t come back immediately. I think there’s real reasons to be concerned that the US will fall behind countries like China in areas like innovation because of this self-inflicted brain drain.

Re: What happened to the US machine tool industry?

#109

Post by edgyquant »

specialist wrote: post #45
edgyquant wrote: post #24

Earlier quoted context omitted.

This is the answer to all American manufacturing woes. The dollar as a reserve currency gives the US a ton of global leverage but requires a trade deficit thus it comes at the expense of domestic industries.

I'd love to understand statements like this. Lemme try: Because trade deficits induce demand for dollars? Like how Japan and now China hold a bajillion US dollars? So if the US had (prolonged) trade surplus, no one would be holding dollars? But wouldn't trade partners still need US dollars to buy US goods? Like the situation post-WWII? So then we'd "loan" partners US dollars to buy our stuff? Aiugh. My brain just bro…

Honestly I learned the basics in Econ classes during college and have an interest in international relations/geopolitics so I’m not sure a good single source for learning about it all. But yeah there is some macroeconomic wizardry involved here. I’ll add it is a political thing and not a right v wrong policy. Choosing manufacturing power or global influence is a trade off with pros and cons.

Re: What happened to the US machine tool industry?

#110

Post by edgyquant »

fuzztester wrote: post #87
specialist wrote: post #45

Earlier quoted context omitted.

I'd love to understand statements like this. Lemme try: Because trade deficits induce demand for dollars? Like how Japan and now China hold a bajillion US dollars? So if the US had (prolonged) trade surplus, no one would be holding dollars? But wouldn't trade partners still need US dollars to buy US goods? Like the situation post-WWII? So then we'd "loan" partners US dollars to buy our stuff? Aiugh. My brain just bro…

"Aiugh. My brain just broke. How does a noob like me learn about these systems. I know it all probably makes sense to the learned. But with my folk (mis)understanding, these claims sound counterintuitive. Thanks. " don't worry, your intuition is right. you are on the right track when you say that your brain broke. you are more learned, or rather, more wise than those guys. because a lot of economics is BS, a hotchpot…

Not sure how you can pretend I’m wrong when what I stated is an observation of the world and not an opinion. The US moved its industry overseas and switched to exporting dollars in an effort to buy sway inside of other countries. It did this to isolate Russia and win the Cold War.
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