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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?

#171

Post by sbuccini »

drmpeg wrote: post #38
mauvehaus wrote: post #14

If you're into machining, the American Precision Museum[0] in Windsor, VT is highly worth a visit. I had the good fortune to tour the Starrett factory some years back. They were still running pre-NC screw machines to make parts. It really is true that old machines, well cared for, will last just about forever. Apparently it's something of an axiom in the machining industry that tools that are no longer economically v…

I worked at my fathers machine shop (which was a subsidiary of New Britain Machine Company) a couple of summers when I was in high school in the mid 70's. It was quite an experience and the employees were some of the crustiest characters I've ever met. The second summer, I worked with this guy named Ray on a huge machine that made the heads to ratchet wrenches (the square part with the little ball). He was one of the…

Did you ever shop at my grandfather’s hardware store?

Re: What happened to the US machine tool industry?

#173

Post by jameshart »

rr808 wrote: post #159
nostrademons wrote: post #118

Earlier quoted context omitted.

You're on the right track. In a normal, non-reserve-currency situation, the demand for a country's currency is proportional to the demand for its products. After all, that's what you use a currency for: to buy the products that are sold in that currency. This has a well-behaved equilibrium, because if a country produces a lot of good products, that means the value of its currency will rise, which makes goods develope…

> For example, oil is priced in dollars; if India wants to buy oil from Saudi Arabia, it needs dollars to make the transaction, and then Saudi Arabia has an excess of dollars. Frequently it uses these to buy U.S. T-bills or invest in American If it priced the oil in Euros or Yen or Riyals or Rupees or US Dollars it has to pay its costs. Sure it may end up with a profit its then free to invest those where it likes, th…

> Clearly this is not true. The largest companies in the USA are not financial

According to this list[1] of the top 100 largest (public) companies in the US, 14 of the largest companies are in the financial industry, and five more are in insurance. Six if you count Berkshire Hathaway; eight if you also count health insurers (although they're not exactly a financial service exporter, so probably don't count).

So between 19-22 of the largest 100 US companies are in the finance industry. In comparison, there are only eight or nine tech companies, and 11 petroleum businesses. So sure, the.. six largest companies aren't financial companies, but finance is very well represented among the largest companies in the US below that level.

[1] https://en.wikipedia.org/wiki/List_of_largest_companies_in_t...

Re: What happened to the US machine tool industry?

#174

Post by shiroiuma »

barelyauser wrote: post #59
Joel_Mckay wrote: post #26

1. lack of stable production lines due to real-estate securitization and zoning. i.e. it is a huge liability to install something expensive likely to break if moved, and burning capital in a sucker lease. 2. lack of cheap 3-phase power in said zoning, and aging power infrastructure. EVs will likely make the problem worse. 3. lack of skilled labor due to career churn from outsourcing. i.e. it became a demand-deficient…

Value blindness is the bane of my existence. Thin walled plastic everywhere. Things are difficult to clean because they are filled with grooves, because you need grooves and bends to make thin walled plastic stiffer. A very good criteria for quality and value is: how easy is it to clean? If it is hard then you probably are dealing with a low value disposable product. Consider porcelain, lasts forever, cleans beautifu…

>Consider porcelain, lasts forever,

This isn't true. Porcelain is brittle and delicate, and usually shatters when dropped. It's easily broken through normal handling. Just guessing, I imagine most new inexpensive porcelain dishware is purchased to replace broken stuff.

Sure, if you put it in a cabinet and never use it except for once-a-year special occasions, it might last a lifetime, but the stuff you use every day won't.

Re: What happened to the US machine tool industry?

#175

Post by kalleboo »

shiroiuma wrote: post #174
barelyauser wrote: post #59

Earlier quoted context omitted.

Value blindness is the bane of my existence. Thin walled plastic everywhere. Things are difficult to clean because they are filled with grooves, because you need grooves and bends to make thin walled plastic stiffer. A very good criteria for quality and value is: how easy is it to clean? If it is hard then you probably are dealing with a low value disposable product. Consider porcelain, lasts forever, cleans beautifu…

>Consider porcelain, lasts forever, This isn't true. Porcelain is brittle and delicate, and usually shatters when dropped. It's easily broken through normal handling. Just guessing, I imagine most new inexpensive porcelain dishware is purchased to replace broken stuff. Sure, if you put it in a cabinet and never use it except for once-a-year special occasions, it might last a lifetime, but the stuff you use every day…

When my parents moved abroad, I inherited the bone porcelain set they got as a wedding gift (a Swedish Rörstrand set). It was used every day when I was a kid and it's used everyday now 40 years later by my kids. It's been dropped hundreds of times and there are maybe only one or two chips among all the plates and bowls.

Meanwhile all the cheap IKEA dishes I bought as a student always broke within a year of purchase.

Re: What happened to the US machine tool industry?

#176

Post by mikeyouse »

bmitc wrote: post #170
roenxi wrote: post #148

Earlier quoted context omitted.

There are three aspects to this - cost of manufacturing in the US, cost of manufacturing + shipping in China and exchange rates. I do think the relative dollar strength is a factor, but Chinese labour was effectively free vs US labour. If someone is willing to do work for free, then the economy will give them work. The issue that the free marketeers have been railing about for approximately the last 50 years it seems…

> The real question is whether it is a bad outcome or not. It's definitely bad. The U.S. won't even have the world's biggest navy pretty soon because of that. And there are tons of scenarios where the U.S. is economically hosed because of some international conflict. Not only does the U.S. not make things, it doesn't know how to.

We should absolutely increase our industrial capacity but who gives a shit about the biggest Navy? Outside of the problem countries like China and Russia, we have military alliances with nearly every country on earth..

US has somewhere around 450 Navy vessels.. China has closer to 350 but is rapidly adding new tonnage. Sounds ominous! Except Japan has another 150, Australia has 50 more, the UK has 70 more, Spain has 150, France 180, Korea has 160, if some war ever comes down to the sheer number of available ships -- it literally won't matter who has more since the nukes will have flown long before some Canadian frigate is exchanging fire with some Chinese gunboat.

Re: What happened to the US machine tool industry?

#177

Post by mitthrowaway2 »

ddingus wrote: post #155
poncho_romero wrote: post #108

Earlier quoted context omitted.

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.

Right now there are mandates to build out the manufacturing base needed for military efforts. They know the tech sent off shore will, for the most part, remain off shore. Additive manufacturing, an example of "latest tech", is a primary build up target here. It is new and expertise is being created as the tech itself is.

Additive manufacturing doesn't help much if you want to build Liberty ship volumes, or roller-bearing tolerances, unfortunately.

Re: What happened to the US machine tool industry?

#178

Post by wolverine876 »

bmitc wrote: post #170
roenxi wrote: post #148

Earlier quoted context omitted.

There are three aspects to this - cost of manufacturing in the US, cost of manufacturing + shipping in China and exchange rates. I do think the relative dollar strength is a factor, but Chinese labour was effectively free vs US labour. If someone is willing to do work for free, then the economy will give them work. The issue that the free marketeers have been railing about for approximately the last 50 years it seems…

> The real question is whether it is a bad outcome or not. It's definitely bad. The U.S. won't even have the world's biggest navy pretty soon because of that. And there are tons of scenarios where the U.S. is economically hosed because of some international conflict. Not only does the U.S. not make things, it doesn't know how to.

Why is 'making things' tied to income or wealth? In the mid-20th century it was, but those are the 'good old days'. We don't want a mid-20th century economy.

The US has the most productive, wealthiest economy in the history of the world, and a very strong one at the moment, without so much of the 'making things'. Why change?

(And why do American taxpayers have to subsidize someone else's uncompetitive, unproductive business? Perhaps they are better off letting the free market allocate the revenue.)

Re: What happened to the US machine tool industry?

#179

Post by mikeyouse »

justsomehnguy wrote: post #145
FirmwareBurner wrote: post #143

Earlier quoted context omitted.

>_Right now_, all of NATO combined can't even outproduce Russia alone. What? Don't know where you're getting your sources but NATO combined definitely can outproduce Russia. Why it isn't, is that Russia is in war mobilization mode with all their industry running 3 shifts for the war effort, while NATO's industry is still in peace-time mode because they're not under attack.

> with all their industry running 3 shifts for the war effort Lol? Where are you getting your sources?

Putin and Chemezov themselves?

https://www.themoscowtimes.com/2023/01/02/russian-defense-ch...

Re: What happened to the US machine tool industry?

#180

Post by fwlr »

“Historically, machine tool companies were small operations run by people (often descendants of the original founders) who had spent their whole life in the machine tool industry and knew it inside and out. Because of the cyclical nature of the industry, machine tool firms tended to be managed conservatively, and they operated with little debt. … [In] the 1960s, machine tool companies began to be acquired by the latest fashion in US business, the conglomerate: enormous, diversified companies that seemed to make anything and everything as long as there was profit in it. The machine tool industry was on a sales upswing … [and] machine tool firms' high profitability (and low debts) made them attractive acquisitions for the conglomerates. …

“Though the conglomerates enjoyed owning machine tool firms in the boom times when profits were high, they quickly became disillusioned during the lean periods when new orders slowed to a trickle. The new owners’ focus on profits meant that they were reluctant to make the long-term investments in R&D or new equipment needed… Conglomerates were often quick to divest their machine tool holdings when the companies began to struggle, resulting in frequent management changes and organizational whiplash…

“In his history of the American machine tool industry, Albert Albrecht states that “the actions of these larger corporations and conglomerates, under the leadership of financial MBA’s, perhaps more than any other factor, contributed to the restructuring and decline of the US machine tool industry at the end of the 20th century”.”

Bingo.

The article points to cycles of high variance in demand for machine tools. Other commenters have pointed the dominance of foreign companies (eg Japan due to their national standardisation on FANUC), globalization and “more cost-effective to import” more generally, and also suggested America is in a “post-machining” stage of manufacturing.

I think all of these claims have merit, but the real underlying cause is most certainly the humble MBA. To wit: they bought themselves into a cyclic industry, replaced the survivor-mindset management, and effectively took these resilient existing businesses and crystallized them into brittle conglomerates while the industry was on the rise of one such cycle, and when they where wholly unprepared for the inevitable down stage of the cycle, they divested, leaving a wasteland behind.

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