The Payoff


The Payoff

In the mid 1990s, an American auto company requested quotations from international special machine tool companies for several operations in a non-traditional approach to automotive crankshaft production processes. One of those had to do with drilling long oil passage holes. The traditional way involved a very expensive, many-stationed machine and, in some cases, two different machines in sequence. This type of machine is very specific for a specific crankshaft and they cannot be converted readily.

The time required to remove them from service for the conversion would be prohibitive in terms of lost production. In the traditional method, the engine designer cannot change anything in that engine that is affected by the location of those oil holes. That includes the stroke of the engine, which is a major factor in engine performance without major cost and time penalties.

The request was to find a way to make that operation flexible, providing capability to change the locations of the holes readily. This would untie the hands of the engine designer and would extend the life of the machinery through normal model changes, allowing processing more than one kind of crankshaft with simple changeover.

25 machines, each better than the last, have now been built for eight engine builders in six countries that accomplish all of that. They can produce at much faster rates as well. The American company whose solution was chosen had little or no experience in deep hole drilling, and therefore had no “this is the way it’s done” paradigms. That provided a virtual “no rules” environment and Yankee ingenuity prevailed.

Those machines in turn inspired competing machines with similar attributes from around the world to keep those competitors in the game benefiting the procuring companies.

The piston example brought the production of these pistons back to the U.S. from the previous supplier in Asia, based on the innovative process and hardware proposed. The result for the buyer was a lower cost, higher-quality piston at higher production rates. It did not take long to return the investment at that production rate. Several more of these machines were built for competing producers, as well as a second machine for the first buyer, each better than the last.

In the wing spar example, the completed machine tool will do at least five times the work of any previous machine tool designed for similar purposes. That is high enough to justify a change in or a practical alternative to aircraft wing construction techniques. This is an important example of the buyer benefiting from manufacturing’s technological advances, precipitated by an American special purpose machine tool company’s vision of the future.

The challenge involved in the conception of this machine and then the commitment to implement it for the first time for a real live production requirement rivaled that of Eli Whitney’s musket challenges.

The imaginative solution, competitive price, and delivery promise determined supplier selection. The risk is that the cost of failure or delivery delay could easily exceed the net worth of the supplying company. For example, the financial consequences of not producing the gasoline engines because of piston problems for an existing chainsaw market at 360 per hour, three shifts, and seven days a week is mind- boggling.

The courage to accept the challenges and take the risks evidenced by the producers of these special machine tools, like those taken by Eli Whitney 200 years earlier, is fundamental to the realization of the fruits of human imagination - progress.

The special machine tool engineers are a unique blend of manufacturing engineers and machine tool design engineers. First they devise the winning competitive manufacturing process solution. They then engineer a unique machine tool, hardware and software, applying contemporary and emerging technology for the production of component parts for other industries. They grow and prosper by finding new and better ways. They out-think their worldwide competition for every order, providing value and manufacturing advances to their customers. Supplying a quality, reliable, first of a kind, complex product that satisfies a discriminating and demanding customer from anywhere in the world, under extreme production pressure, is truly an adventure. Profiting from the experience and furthering the organization’s reputation returns a great sense of accomplishment.

The notable special machine tool companies have each had staffs of a 100 or more engineers. In normal busy times, each company managed a large number of contract engineers as well. Examples exist of those engineers and others of their peers advancing to the highest level of responsibility in those companies. There are also significant examples of those who left those companies to begin their own successful related businesses, in some cases selling engineering capacity to the very companies they left as well as to competing companies.

During the 1960s, 70s, and 80s, the largest of the then-American companies, F. Jos. Lamb, Ingersoll Milling Machine Company, The Cross Company, Bendix Machine Tool Company, EX-CELL-O Corporation, and LaSalle Machine Tool Company competed for business from the global auto companies. They served the heavy vehicle, aircraft builders and other industries as well. The total number of people staffing their engineering departments, including their contractors, would probably exceed 1,000. They were typically paid for an average of 55 hours per week. 55,000 hours of specialized engineering every week were sold to their customers as a part of special machine tool orders for the advancement of their production capability - the intellectual portion of their products.

It may seem to be a meaningless extrapolation to some, but in the 30 years suggested above, there were in the neighborhood of 80 million hours of engineering experience accrued. Those hours advanced the state of the art for the production of machined parts largely for the American auto companies. The free enterprise principles of the day and Yankee ingenuity produced dynamic value by developing and exploiting emerging technology. The loss of that accrued experience, irreplaceable by itself, is not nearly as serious as the loss of the capability to continue and to exploit the now exploding technological goldmine.

That engineering capability was focused on the development of the new and unique concepts that would satisfy orders won against other clever manufacturing engineers from around the world. Approximately 20 percent of an order value was engineering content and consumed approximately 40 percent of its schedule.

That capability today is a very small fraction of what it was in those years and is still declining and could even disappear. One might get the idea that it must no longer be required. While there is no intent to directly connect the two, the American automotive market share in 2002 in the North American market is about half of what it was in the 1960s and is still declining. Logically, no potential advantage such as the use of that accrued experience and the Yankee ingenuity behind it should be overlooked.

There are times when we are so accustomed to our surroundings and our activities that some important things may not even register in our consciousness. As a society today, we are so preoccupied with an astounding array of high tech products and what is being done with them and what is expected from them in the future that we take for granted other less glamorous products.

The automobile is an example of this. It still has four wheels and an engine, but its present form would be totally foreign to Henry Ford or Karl Benz. It has become indispensable to the American way of life. Yet, its engineering and manufacture is thought to be part of the American rust belt even with the very high level of high tech content. Special machine tools are a close parallel.

If we lift our heads up and look around, it’s obvious that most of the items referred to in Christy Borth’s “more abundant life” are manufactured items. When we add consideration for the impact of newly available technologies, including vast computer application possibilities, Yankee ingenuity is more relevant in manufacturing today than ever before.

The special machine tool industry has been an important part of American industry and the advances fostered by the benevolent cycle (progress). Today the industry is seriously failing and its very survival is in question. There are several reasons some of which are discussed in the following chapters. Two prominent reasons follow:

  1. The American dollar has steadily gained strength against the German and Japanese currencies since the late 1960s. For example, the deutsche mark was less than half its value against the dollar in 1998 from what it was in 1971. Today, the Euro has regained some strength but is still about 55 percent of what the deutsche mark was in the late 60s. The Japanese yen in 2001 is about a third of what it was against the dollar in 1971. Those relationships have a direct effect on the competitive position of American companies against the German companies, their main competition, and against the Japanese companies. The American dollar will buy about twice as many German machine tools today as it would in 1971.

    Some believe that Yankee ingenuity will offset part of the currency handicap but it is still a very serious problem.

  2. The American auto companies (the principal market for special machine tools) had about 65 percent of the North American market in 2001, down from 85 percent in 1975. Both the auto imports and the transplants are very nationalistic when selecting capital equipment for their production needs, which makes auto market share a direct translation to the size of the market for machine tools.

Today, the real special machine tool market is 76 percent of its size, and foreign competition has a 2-1 price advantage (currency exchange rate) compared to that of 1970. Chrysler, now owned by Daimler Benz, has about 13 percent of the market. It’s entirely conceivable that the corresponding special machine tool market share could follow.

These issues also affect American companies operating in other countries the same way. The local, transplanted, and imported auto companies in the European market for example utilize their own national suppliers and the currency exchange problem is duplicated as well.