> between 1964 and 1967, Japanese machine tool exports to the US rose over 1200%.
Worthwhile to note the reason behind those dates is that the US entered the Vietnam war by shipping a massive amount of full containers across the Pacific ocean which would then make a leg across to Japan to fill their containers for the journey home, massively decreasing the cost of exporting to the US market. A huge chunk of the Japanese economy was put into overdrive via this inadvertent subsidy.
See Levinson's TheBox, p253 of the paperback: '"We've got these empty ships coming back from Vietnam," former Sea-Land executive Scot Morrison recalled. ... With its ship operating costs fully covered by its military contracts for Vietnam, Sea-Land was guaranteed to make money no matter how little cargo it picked up in Japan.'
Given how over-used the word "disruption" is (the word in the Clayton Christensen sense), I hesitate to write this, but... this looks like a good case of true disruption. In that the Japanese found it easier to sell simple machines and then upgrade their capabilities, than the Americans found it to bring down the cost of their more advanced machines. I did some consulting work in the 1980s for one of the last independent American MT companies standing, Lamb Technicon, which to its credit spent half its Board meeting time figuring out how to compete... but the other half reassuring itself that the Japanese tools were cheap/uncompetitive/not serious/etc. I think after a series of M&A moves LT is now owned by a German company.
So wait, the companies that took over machine tooling were exactly the axis powers? I wonder if there's a common element where losing their original machine tooling industry forced them to build a modern one from scratch, which was better in the long term.
This was very interesting, thanks for writing this up. Some questions:
1. You mentioned American companies were hit by this accelerator effect, but why weren't Japanese companies?
2. It's a trope that MBAs came in and ruined everything. Is there an explanation for this trope? If every company that hires MBAs sees their assets decline over time and loss of shareholder value, why do they keep getting hired? It sounds like these conglomerates lost a lot of money buying these American machine tool companies. Is that because of the MBAs who demanded higher output, or because the Japanese companies had higher output for lower price? These are mutually exclusive narratives!
3. Is there actually a broad problem with publicly held companies not investing in long term R&D? Why are investors ok with lots of R&D spend for modern software companies but not these machine tool companies?
In general the financial industry is expert at converting long-term value into short-term cash, and has little to no incentive to care about what happens after that. The current stakeholders are usually happy with that trade because they get to exchange their equity in a respected company for a house in Aspen and a yacht in Miami.
This doesn't make sense though. Only shareholders who sell at the top are happy. And no one can price where the top actually is so some make it out, some don't. The ones who don't are going to blame poor management for not investing in longer term value when they can't flip their stocks the next year.
Or another way to think about it; if it was obvious that this trope happened, you could make free money off of it by buying call options for the short term, but then holding a short position on the stock further into the future. The implication of this position is that there's free million dollar bills laying around to pick up just by watching if MBAs are hired at a company, which ironically would mean the financial industry is super bad at making money. I generally buy that most stock markets are pretty efficient, so it seems unlikely that it's clear MBAs destroy long term value as a rule.
that's the explanation for the "MBA'd ruined everything" shorthand. As a finance/marketing MBA, that's a but simplistic. ONe could equally say "quants ruined everything" or going further back "Taylor ruined everything.
About your point 2, I think in many cases where the company has a good core concept but also management issues, MBAs and such often do a good job making it more efficient. The problem here is that the companies had actual technical issues, not just bad management, so the MBAs shaking up management couldn't fix it and just made things worse.
on 2., Ford was one of the first US companies to see a massive influx of finance/business school grads amongst managers. The top line growth rates were lower post ww2 in the automobile industry, disincentivizing development of risky new cars. This pushed out product and engineering people in management, and ushered in the influence of finance types. Henry Ford II became CEO during this time, and he (1) lacked vision for innovative car designs and (2) saw the new finance-orientated managers as preservers of his rather limited inheritance of the Ford empire.
Similar growth headwinds and incentives were prevalent for many post war US manufacturing industries, and finance types slowly took over from the engineers and builders. See The Reckoning by Halberstam for more on this.
This is excellent, except it completely omits the German ascendency in machine tools between the world wars. When I visited the Deutsches Museum in the later '80s, I was gobstruck walking into the exhibit on machine tools. It was precisely a replica of the shop my dad worked in in the '50s, owned by German immigrants to Chicago. My dad also worked in the can-making industry, including with Japanese partners in the '70s.
I love your choice of topics. I think machine tools are perhaps the most neglected industrial technology compared to their importance. It is really hard to find good books on the topic.
You might be interested in my summary of this book about machine tools in the early Industrial Revolution:
One of the heroes in the book is "Big Bill" Knudsen, who was the creative engineering genius behind both Ford Motors and General Motors. He also played a critical role in organizing the military buildup in WW2. The man was unbelievable!
I remember that he believed the key factors of the American military build-up were:
1) The Pentagon deciding how many of each weapon system they needed, so private industry could do the following:
2) Ordering machine tools and arranging them in the most efficient manner on the factory floor.
3) Hiring and training of skilled laborers who knew how to run those machine tools.
He believed that if you get those factors right, then the rest would fall into place. He was also the only one to understand how complicated it was to rebuild the American machine tool industry after it collapsed in the Great Depression.
Where was the Soviet machine tool industry in all this? That’s the second great 20th century industrial power. They imported an entire Ford factory and a US Steel mill during the ‘20s and Depression. Did they also import American machine tools? Presumably they couldn’t do that by the time of the war. Did they have an exporting industry? Then there’s the famous scandal of them buying Toshiba and Swedish CNC machines in the early ‘80s. Now I’m going to be down a rabbit hole if I can.
I think you'll find this (long) article somewhat interesting, it's about operation Barbarossa. The author mentions how the Russians were trading grain and oil to the Germans in exchange for machine tools prior to the Germans invading.
I can't find the quote, but the author also said the Russains intentionally decided to prioritize the evacuation of factory equipment and machine tools instead of troops from areas they knew they were about to lose to the Germans. The Germans captured tens of thousands of Russian soldiers because of this choice.
"In 1941, Nazi Germany and the Soviet Union were still technically operating under a set of agreements which included a non-aggression pact, a trade agreement (which largely exchanged German machine tools and technology for Soviet raw materials), and an agreement on borders and spheres of influence which history knows as the Molotov Ribbentrop pact."
"The disintegration of Nazi-Soviet relations was multi-causal. The arrangement was rather unpalatable for Hitler in the sense that it made Germany dependent on Soviet grain, oil, and other materials. Given Hitler’s ideological presuppositions about the necessity of economic self sufficiency, ongoing dependence on Stalin for materials was a bitter pill to swallow indeed. Furthermore, the specific terms of Nazi-Soviet trade were strategically disadvantageous to Germany, because they were sending the Soviet Union industrial tools and technology that made the USSR more powerful over time, while receiving only consumable materials in exchange."
"The Soviet Union spent a considerable amount of energy evacuating factories out of the German path, although contrary to communist boasting these industrial assets were not rebuilt without a hitch in the rear areas. Evacuating a single factory involved hundreds, if not thousands of rail cars worth of equipment, and in the chaos of the war these loads tended to congregate at railway junctions, creating great heaps of disorganized machinery and equipment. By one estimate, roughly 1.5 million railcar loads worth of factory equipment were evacuated to the rear areas (the Urals, the Volga valley, Siberia, and Central Asia)."
US manufacturing is stronger in other areas though. Believe it or not, additive is being pioneered here by a number of aerospace companies or their immediate domestic suppliers. Medical continues to be fairly well established too, higher up the value chain. Then there's industrial automation, which is doing really well.
There's a huge opportunity to reshore though. And not just machine tools, but for consumer and home appliances. We should rethink quality and product longevity and how OEMs keep a stable business without planned obsolescence.
While I think reshoring the appliance industry would be damned difficult if not impossible, near-shoring it to countries which share at least some of our interests and values is likely more doable and can also be used to stabilize the situation to our south such that fewer people feel the need to flee here for a better life.
That said, I have occasionally wondered if an "appliance as a service" model might not make sense, not in the software sense of wringing a ridiculous stream of rents out of the end consumer, but in the sense that it would incentivize the lessor to build appliances which do not suck wind. Consumers are far too sensitive to up-front costs and only vaguely able to evaluate whether a sticker price reflects quality or marketing, even when we're fairly sophisticated and have time to research.
I'd love to consider high-end stuff like Miele and Sub-Zero next time I need appliances, in the hopes that they will last 20 years or more but I am simply not at all confident that they actually will be worth it. On the other hand, I have an early-model front-loading Bosch washer and dryer set that's going on 20 years old, bought used 8 years ago and ticking along perfectly.
- Appliance as a Service but you incentivize with bundles - IE, one OEM for fridge, dishwasher, microwave, water heater. Upfront costs go down as you add to it, and monthly never exceeds a certain amount. You want to control the whole house.
- EASY to repair and extremely portable control system. Think Raspberry Pi PICO scale, like it costs like $10 to replace a control unit in any appliance. And most appliances have 2 control systems, you get notified when one dies.
- ADD a streaming service. IE, spin up a home-and-garden network and hire content creators out the yiz to pump for you. It's like you get HGTV when you join.
- Manufacturing - do it in Mexico or LATAM for human labor where needed, but invest in high robotization ASAP (LOTS of open source and multi-modal LLM powered bots hitting use - go check out Loupe).
- Materials - Use materials with very little processing steps that are easy to shape and easy to recycle. Maybe something like aluminum. Moving parts and pumps you'll need motors but that's about to pickup anyway with electric vehicles and drones. Or expand vertically and sell to those companies too.
Looking at Miehle they seem like a good group to emulate for parts of that list, of course the devil is in the details and no plan survives reality.
I have a kid, another on the way, a pretty intensive day job, a home addition in the design phase for which I'll be PMing construction, and a pretty intensive side business with my wife. I just don't know where I'd steal the time.
Ha, I have almost the same set of factors in my life too. Shoot me a message if you want to connect anyways. Goodness knows its good to have options :D
Yes! Reshoring certain "accidentally critical industries" is absolutely paramount yet no one ever talks about it.
Example: Refrigerators. if my refrigerator dies I lose somewhere between a full day and several or many days of work. (Be there for the repair guy 1 to 3 times before a replacement is agreed to; stay home a 2nd-4th day to receive the new fridge; substantial amount of time spent making sure food stays edible in the interim period; somehow secure an "interim refrigerator" on craigslist and install it in the Garage).
I've given this maybe an excess of thought since we had a refrigerator fail at a beach house a few years ago. Offshoring the manufacture of items whose failure dramatically impacts daily life is an absurd imposition on one's countrymen.
To get pedantic, "illicit" is not the same as "illegal" -- it can also mean just "not permitted by custom." So for some people (not all), copying a rival's design can be illicit even if not illegal. (I am not weighing in on the substance of the issue at hand, only pointing out the nuance in the word.)
Generally, trade agreements, including membership in the WTO, require that countries respect the intellectual property and patent rights of individuals and corporations in foreign countries.
he story of the US machine tool industry's boom during the rise of the automobile is mind-blowing! From cranking out 30% of machine tools for cars in 1910 to Ford's assembly plant with a whopping 50,000 tools.
I think the coupling of rapid growth in end products like automobiles with critical categories of suppliers is very underreported. Brian did a great job calling this out. It's also no coincidence the rise of Nissan, Toyota and the Japanese automobile industry happened coincident to the advancement in the Japanese machine tool industry.
We're seeing a similar coupling with EVs and high volume battery pack manufacturing today.
From 1973 to '79 I worked for a specialty division of Valeron Corp out of Sterling Hts, MI. We made Highspeed specialty cutting tools used by automated Machine Tools. Moved on to work for Fenton Machine Tool, div of Acme Clvd Twist Drill, originally owned by the LA Salle Tool Company. Remember their resetable "Gang Drill" presses? Quite unique for the time. Used old Machine Tools of every flavor. FMT made those boring machines for Russia as a Political trade deal. Read up on the dropped boring Machine as it was being loaded on a ship. This was in 1976- 1978. I escaped in time, 1983, just as FMT was sold to Litton Industies. I landed in Engineering Machine shop supporting advanced Buick Engine development. Great career history from '73 to '99. Saw so many old tools still hard at work after 20 years of production use. Iron/steel weldments to cut bar stock. Never ever to be repeated, just ancient history. Glad I lived/worked it.
I'm late to the party, but there are some fun notes, here. Firstly, some mentioned Haas - I think their VF2 is the most purchased CNC machine tool in the US. Also, I worked at the company that emerged from the collapse of the one that made the 50,000 ton press mentioned here. They made many of their own machine tools, which are still in service at the same facility.
> between 1964 and 1967, Japanese machine tool exports to the US rose over 1200%.
Worthwhile to note the reason behind those dates is that the US entered the Vietnam war by shipping a massive amount of full containers across the Pacific ocean which would then make a leg across to Japan to fill their containers for the journey home, massively decreasing the cost of exporting to the US market. A huge chunk of the Japanese economy was put into overdrive via this inadvertent subsidy.
Dear Zhang
Could you give us more detail in this issue?
Sincerely
Engin YILMAZ
See Levinson's TheBox, p253 of the paperback: '"We've got these empty ships coming back from Vietnam," former Sea-Land executive Scot Morrison recalled. ... With its ship operating costs fully covered by its military contracts for Vietnam, Sea-Land was guaranteed to make money no matter how little cargo it picked up in Japan.'
For those who are interested in more details, here is a summary of that book on my online library of book summaries:
https://techratchet.com/2021/01/26/book-summary-the-box-by-marc-levinson/
Given how over-used the word "disruption" is (the word in the Clayton Christensen sense), I hesitate to write this, but... this looks like a good case of true disruption. In that the Japanese found it easier to sell simple machines and then upgrade their capabilities, than the Americans found it to bring down the cost of their more advanced machines. I did some consulting work in the 1980s for one of the last independent American MT companies standing, Lamb Technicon, which to its credit spent half its Board meeting time figuring out how to compete... but the other half reassuring itself that the Japanese tools were cheap/uncompetitive/not serious/etc. I think after a series of M&A moves LT is now owned by a German company.
So wait, the companies that took over machine tooling were exactly the axis powers? I wonder if there's a common element where losing their original machine tooling industry forced them to build a modern one from scratch, which was better in the long term.
Yes, the best US MT companies were founded by German emigres.
That’s also why London, Berlin, and Tokyo are all far more fire-safe than NYC and Boston.
This was very interesting, thanks for writing this up. Some questions:
1. You mentioned American companies were hit by this accelerator effect, but why weren't Japanese companies?
2. It's a trope that MBAs came in and ruined everything. Is there an explanation for this trope? If every company that hires MBAs sees their assets decline over time and loss of shareholder value, why do they keep getting hired? It sounds like these conglomerates lost a lot of money buying these American machine tool companies. Is that because of the MBAs who demanded higher output, or because the Japanese companies had higher output for lower price? These are mutually exclusive narratives!
3. Is there actually a broad problem with publicly held companies not investing in long term R&D? Why are investors ok with lots of R&D spend for modern software companies but not these machine tool companies?
In general the financial industry is expert at converting long-term value into short-term cash, and has little to no incentive to care about what happens after that. The current stakeholders are usually happy with that trade because they get to exchange their equity in a respected company for a house in Aspen and a yacht in Miami.
This doesn't make sense though. Only shareholders who sell at the top are happy. And no one can price where the top actually is so some make it out, some don't. The ones who don't are going to blame poor management for not investing in longer term value when they can't flip their stocks the next year.
Or another way to think about it; if it was obvious that this trope happened, you could make free money off of it by buying call options for the short term, but then holding a short position on the stock further into the future. The implication of this position is that there's free million dollar bills laying around to pick up just by watching if MBAs are hired at a company, which ironically would mean the financial industry is super bad at making money. I generally buy that most stock markets are pretty efficient, so it seems unlikely that it's clear MBAs destroy long term value as a rule.
Near-term is more definite than long-term; it requires discipline and courage to stick to a long-term plan and vision.
and much easier to measure!
that's the explanation for the "MBA'd ruined everything" shorthand. As a finance/marketing MBA, that's a but simplistic. ONe could equally say "quants ruined everything" or going further back "Taylor ruined everything.
About your point 2, I think in many cases where the company has a good core concept but also management issues, MBAs and such often do a good job making it more efficient. The problem here is that the companies had actual technical issues, not just bad management, so the MBAs shaking up management couldn't fix it and just made things worse.
on 2., Ford was one of the first US companies to see a massive influx of finance/business school grads amongst managers. The top line growth rates were lower post ww2 in the automobile industry, disincentivizing development of risky new cars. This pushed out product and engineering people in management, and ushered in the influence of finance types. Henry Ford II became CEO during this time, and he (1) lacked vision for innovative car designs and (2) saw the new finance-orientated managers as preservers of his rather limited inheritance of the Ford empire.
Similar growth headwinds and incentives were prevalent for many post war US manufacturing industries, and finance types slowly took over from the engineers and builders. See The Reckoning by Halberstam for more on this.
This is excellent, except it completely omits the German ascendency in machine tools between the world wars. When I visited the Deutsches Museum in the later '80s, I was gobstruck walking into the exhibit on machine tools. It was precisely a replica of the shop my dad worked in in the '50s, owned by German immigrants to Chicago. My dad also worked in the can-making industry, including with Japanese partners in the '70s.
I love your choice of topics. I think machine tools are perhaps the most neglected industrial technology compared to their importance. It is really hard to find good books on the topic.
You might be interested in my summary of this book about machine tools in the early Industrial Revolution:
https://techratchet.com/2020/05/01/book-summary-tools-for-the-job-a-short-history-of-machine-tools-by-ltc-rolt/
I don't have a summary of it, but I would also recommend reading "Freedom's Forge":
https://www.amazon.com/Freedoms-Forge-American-Business-Produced/dp/0812982045
One of the heroes in the book is "Big Bill" Knudsen, who was the creative engineering genius behind both Ford Motors and General Motors. He also played a critical role in organizing the military buildup in WW2. The man was unbelievable!
I remember that he believed the key factors of the American military build-up were:
1) The Pentagon deciding how many of each weapon system they needed, so private industry could do the following:
2) Ordering machine tools and arranging them in the most efficient manner on the factory floor.
3) Hiring and training of skilled laborers who knew how to run those machine tools.
He believed that if you get those factors right, then the rest would fall into place. He was also the only one to understand how complicated it was to rebuild the American machine tool industry after it collapsed in the Great Depression.
https://www.militarytrader.com/militaria-collecting-101/remembering-big-bill
This is the best posting I’ve read in a long time.
Where was the Soviet machine tool industry in all this? That’s the second great 20th century industrial power. They imported an entire Ford factory and a US Steel mill during the ‘20s and Depression. Did they also import American machine tools? Presumably they couldn’t do that by the time of the war. Did they have an exporting industry? Then there’s the famous scandal of them buying Toshiba and Swedish CNC machines in the early ‘80s. Now I’m going to be down a rabbit hole if I can.
I think you'll find this (long) article somewhat interesting, it's about operation Barbarossa. The author mentions how the Russians were trading grain and oil to the Germans in exchange for machine tools prior to the Germans invading.
I can't find the quote, but the author also said the Russains intentionally decided to prioritize the evacuation of factory equipment and machine tools instead of troops from areas they knew they were about to lose to the Germans. The Germans captured tens of thousands of Russian soldiers because of this choice.
"In 1941, Nazi Germany and the Soviet Union were still technically operating under a set of agreements which included a non-aggression pact, a trade agreement (which largely exchanged German machine tools and technology for Soviet raw materials), and an agreement on borders and spheres of influence which history knows as the Molotov Ribbentrop pact."
"The disintegration of Nazi-Soviet relations was multi-causal. The arrangement was rather unpalatable for Hitler in the sense that it made Germany dependent on Soviet grain, oil, and other materials. Given Hitler’s ideological presuppositions about the necessity of economic self sufficiency, ongoing dependence on Stalin for materials was a bitter pill to swallow indeed. Furthermore, the specific terms of Nazi-Soviet trade were strategically disadvantageous to Germany, because they were sending the Soviet Union industrial tools and technology that made the USSR more powerful over time, while receiving only consumable materials in exchange."
"The Soviet Union spent a considerable amount of energy evacuating factories out of the German path, although contrary to communist boasting these industrial assets were not rebuilt without a hitch in the rear areas. Evacuating a single factory involved hundreds, if not thousands of rail cars worth of equipment, and in the chaos of the war these loads tended to congregate at railway junctions, creating great heaps of disorganized machinery and equipment. By one estimate, roughly 1.5 million railcar loads worth of factory equipment were evacuated to the rear areas (the Urals, the Volga valley, Siberia, and Central Asia)."
https://bigserge.substack.com/p/apocalypse-operation-barbarossa
US manufacturing is stronger in other areas though. Believe it or not, additive is being pioneered here by a number of aerospace companies or their immediate domestic suppliers. Medical continues to be fairly well established too, higher up the value chain. Then there's industrial automation, which is doing really well.
There's a huge opportunity to reshore though. And not just machine tools, but for consumer and home appliances. We should rethink quality and product longevity and how OEMs keep a stable business without planned obsolescence.
While I think reshoring the appliance industry would be damned difficult if not impossible, near-shoring it to countries which share at least some of our interests and values is likely more doable and can also be used to stabilize the situation to our south such that fewer people feel the need to flee here for a better life.
That said, I have occasionally wondered if an "appliance as a service" model might not make sense, not in the software sense of wringing a ridiculous stream of rents out of the end consumer, but in the sense that it would incentivize the lessor to build appliances which do not suck wind. Consumers are far too sensitive to up-front costs and only vaguely able to evaluate whether a sticker price reflects quality or marketing, even when we're fairly sophisticated and have time to research.
I'd love to consider high-end stuff like Miele and Sub-Zero next time I need appliances, in the hopes that they will last 20 years or more but I am simply not at all confident that they actually will be worth it. On the other hand, I have an early-model front-loading Bosch washer and dryer set that's going on 20 years old, bought used 8 years ago and ticking along perfectly.
Okay. Here's how I'd do it.
- Appliance as a Service but you incentivize with bundles - IE, one OEM for fridge, dishwasher, microwave, water heater. Upfront costs go down as you add to it, and monthly never exceeds a certain amount. You want to control the whole house.
- EASY to repair and extremely portable control system. Think Raspberry Pi PICO scale, like it costs like $10 to replace a control unit in any appliance. And most appliances have 2 control systems, you get notified when one dies.
- ADD a streaming service. IE, spin up a home-and-garden network and hire content creators out the yiz to pump for you. It's like you get HGTV when you join.
- Manufacturing - do it in Mexico or LATAM for human labor where needed, but invest in high robotization ASAP (LOTS of open source and multi-modal LLM powered bots hitting use - go check out Loupe).
- Materials - Use materials with very little processing steps that are easy to shape and easy to recycle. Maybe something like aluminum. Moving parts and pumps you'll need motors but that's about to pickup anyway with electric vehicles and drones. Or expand vertically and sell to those companies too.
Looking at Miehle they seem like a good group to emulate for parts of that list, of course the devil is in the details and no plan survives reality.
Cheers!
We should write up a business plan, I bet we can get a green investment fund to back it.
Except that the mere thought of trying to operationalize it gives me a headache.
No DMs on Substack. What's up with that?
iontom AT gmail - I'm slammed but let's chat and draft something!
Let me think on that.
I have a kid, another on the way, a pretty intensive day job, a home addition in the design phase for which I'll be PMing construction, and a pretty intensive side business with my wife. I just don't know where I'd steal the time.
Ha, I have almost the same set of factors in my life too. Shoot me a message if you want to connect anyways. Goodness knows its good to have options :D
Yes! Reshoring certain "accidentally critical industries" is absolutely paramount yet no one ever talks about it.
Example: Refrigerators. if my refrigerator dies I lose somewhere between a full day and several or many days of work. (Be there for the repair guy 1 to 3 times before a replacement is agreed to; stay home a 2nd-4th day to receive the new fridge; substantial amount of time spent making sure food stays edible in the interim period; somehow secure an "interim refrigerator" on craigslist and install it in the Garage).
I've given this maybe an excess of thought since we had a refrigerator fail at a beach house a few years ago. Offshoring the manufacture of items whose failure dramatically impacts daily life is an absurd imposition on one's countrymen.
> Japanese companies were also not above simply illicitly duplicating American designs
Which law(s) did they break?
To get pedantic, "illicit" is not the same as "illegal" -- it can also mean just "not permitted by custom." So for some people (not all), copying a rival's design can be illicit even if not illegal. (I am not weighing in on the substance of the issue at hand, only pointing out the nuance in the word.)
Generally, trade agreements, including membership in the WTO, require that countries respect the intellectual property and patent rights of individuals and corporations in foreign countries.
he story of the US machine tool industry's boom during the rise of the automobile is mind-blowing! From cranking out 30% of machine tools for cars in 1910 to Ford's assembly plant with a whopping 50,000 tools.
I think the coupling of rapid growth in end products like automobiles with critical categories of suppliers is very underreported. Brian did a great job calling this out. It's also no coincidence the rise of Nissan, Toyota and the Japanese automobile industry happened coincident to the advancement in the Japanese machine tool industry.
We're seeing a similar coupling with EVs and high volume battery pack manufacturing today.
"A strong dollar made imports even cheaper by comparison, and high interest rates reduced the demand for capital investment."
I think this period was very short, and this argument can explain only a small part of the decline in the U.S. Machine Tool Industry
Not that short
https://fred.stlouisfed.org/series/FEDFUNDS
Have you read Nathan Rosenberg's famous article on the industry? From "portentously rapid" rise to precipitous decline...
From 1973 to '79 I worked for a specialty division of Valeron Corp out of Sterling Hts, MI. We made Highspeed specialty cutting tools used by automated Machine Tools. Moved on to work for Fenton Machine Tool, div of Acme Clvd Twist Drill, originally owned by the LA Salle Tool Company. Remember their resetable "Gang Drill" presses? Quite unique for the time. Used old Machine Tools of every flavor. FMT made those boring machines for Russia as a Political trade deal. Read up on the dropped boring Machine as it was being loaded on a ship. This was in 1976- 1978. I escaped in time, 1983, just as FMT was sold to Litton Industies. I landed in Engineering Machine shop supporting advanced Buick Engine development. Great career history from '73 to '99. Saw so many old tools still hard at work after 20 years of production use. Iron/steel weldments to cut bar stock. Never ever to be repeated, just ancient history. Glad I lived/worked it.
Really interesting read. Would be interested to read about GB machine tool industry in a similar level of detail.
I'm late to the party, but there are some fun notes, here. Firstly, some mentioned Haas - I think their VF2 is the most purchased CNC machine tool in the US. Also, I worked at the company that emerged from the collapse of the one that made the 50,000 ton press mentioned here. They made many of their own machine tools, which are still in service at the same facility.