Posted on 01/01/2004 9:04:11 AM PST by Willie Green
Government is hiring.
"Would you like fries with that rant?"
Huh?
Maybe you need them for your outburst.
I suppose Kerry is your man ;)
With Foreign Rivals Making The Cut, Toolmakers Dwindle
China, Others Put the Squeeze On Small, Costly Plants; Fears of Innovation Flight
By TIMOTHY AEPPEL
Staff Reporter of THE WALL STREET JOURNAL
When Microsoft Corp. wanted to build a better mouse, it turned to a toolmaker named Ernst Buchmayer.
The final parts of Microsoft's mouses weren't always fitting together correctly on the assembly line. An immigrant from Austria with a reputation for perfectionism, Mr. Buchmayer spent half a year making Microsoft new molds so uniform the differences were measured in increments 1/10th the width of a human hair. Microsoft's failure rates promptly plummeted. Year after year the company came to Mr. Buchmayer for new tools.
Then in 1998, Microsoft asked if he could match a lower price from an American competitor who was working with a Taiwanese mold maker. Mr. Buchmayer refused, and his company, Western Industrial Tooling Inc. of Redmond, Wash., lost the chance to build a new generation of molds. After that, his business from Microsoft ebbed away.
All over America, toolmakers -- a once-vital craft at the heart of the nation's industrial sector -- are seeing their work vanish. The National Tooling and Machining Association estimates that 30% of the toolmakers in the U.S. have shut down in the past three years, and it expects many more to close in the next few years. Orders for the machines used by the toolmakers have plunged nearly 70% since 1997.
The association estimates that annual sales for the U.S. toolmaking industry, after being carried along by the economic boom of the 1990s to a peak in the range of $25 billion to $27 billion in 2000, have declined to about $20 billion currently.
The toolmaker's craft is little known or understood. The toolmaker doesn't produce hammers or screwdrivers, but rather the dies, molds, jigs, fixtures, gauges and other devices used on factory floors to make other things. Many tools are custom-designed to churn out specific products, usually in vast quantities.
Abundant Fruits
Most American consumers never see toolmakers' creations -- only the abundant fruits of them. Everything from flat-screen televisions to sippy cups owes its existence to toolmakers. Toolmakers, generally small companies, fashion the devices that thump out car doors and the machines that put metal wrappers around corks on wine bottles. They're behind the surgical devices in operating rooms and the laser-guided bombs that hit Iraq. During World War II and through the early years of Vietnam, toolmakers were one of the categories of workers that could be exempted from the draft.
U.S. toolmakers withstood growing competition from lower-cost foreign producers for years. But China's sudden emergence as a manufacturing powerhouse and an unbeatable pricing opponent has them reeling.
Nearly every industry, from shoemaking in New England to tire production in Akron, Ohio, eventually matures and starts hopscotching the globe in search of lower costs. But without a strong tooling industry in the U.S., some people worry that an important engine of basic innovation could be at risk.
"We can lose our ability to make blenders and garden shovels, but there are other things that we have to be able to make in order to be masters of our destiny," says Bill Wood, president of Mountaintop Economics and Research, a Greenfield, Mass., market-analysis firm.
He points to unmanned drones and body armor for soldiers, both of which are made from composite materials that rely on special molds and other advanced tools. "I don't know whether it's in our long-term interest to rely on a foreign source for that kind of material or the tooling to make it," he says.
One of only two companies in the U.S. that made tools capable of laying carbon fiber and tape in the precise patterns needed to build components of stealth aircraft went bankrupt recently. That company, Ingersoll Machine Tools Inc. in Rockford, Ill., eventually was bought by an Italian company, which plans to keep producing the machines. But the bankruptcy caused a public outcry about the loss of U.S. toolmaking muscle.
Mr. Buchmayer, 72 years old, says he sees some younger toolmakers rushing to forge alliances with counterparts in China because they can't stay home and beat the Chinese. When William Bachman, president of Bachman Machine Co. in St. Louis, was asked to submit a bid to make tools to stamp metal parts for car jacks, and to also produce the parts themselves, he priced the tools at $595,000. His Chinese competitor offered to make the tools free.
"It really doesn't matter how much I automate," Mr. Bachman says, "I can't compete with zero." As for making the car-jack parts from the tools, the Chinese company is doing so for $1.06 each, less than half Mr. Bachman's price of $2.18.
Eli Whitney is often considered the father of U.S. toolmaking -- not because of his famous cotton gin, but because of guns. In 1798, the U.S. government enlisted him to produce 10,000 muskets. And for the first time, they were to be made with interchangeable parts. Mr. Whitney built jigs and gauges so that the parts would come out as nearly identical as possible. The concept opened the way for Henry Ford's assembly lines.
A Future in Plastics
Mr. Buchmayer's first job in the U.S. was in a Ford plant in Buffalo, N.Y., after an apprenticeship in Austria and a stint in Canada in the early 1950s. One day he went into his drycleaners and noticed a wall calendar with a picture from the Pacific Northwest that reminded him of Austria. He moved his family to Seattle and launched his company in 1969. It specialized in making molds because those were the tools most closely associated with the fast-growing plastics business.
Leading the way onto his factory's floor, Mr. Buchmayer points to a mold on a workbench. It's a cube, about the size of a microwave oven, that is made from layers of steel and contains several cavities. When the cube is inserted into a molding machine, molten plastic is shot into the cavities. The mold is then opened and finished parts pop out.
In the 1970s, Mr. Buchmayer made molds to churn out airplane parts for Boeing Co. A decade later, it was calculators for Texas Instruments Inc., and later still, ink cartridges for Hewlett-Packard Co. When one industry slumped or moved production offshore, a bigger and more lucrative market emerged to replace it. "I used to just go down to Oregon or California to find work when it got bad around here," he says. "There was always something, somewhere."
The economics of toolmaking are complex and closely intertwined with questions of quality and precision. It's a given that molds made in a shop such as Mr. Buchmayer's produce parts with as few flaws as possible. But there are other important measures of tool quality, such as the number of parts a tool can produce before it has to be scrapped or repaired, and how fast a machine can run with the tool.
The best toolmakers are adept at solving problems. Two years ago, Mr. Buchmayer was approached by a molder who makes plastic disks for a new type of blood centrifuge. The disks have a spot in the middle where a drop of blood is placed and tiny channels that guide the blood out to spaces along the periphery for testing. The existing molds were producing too many rejects. Mr. Buchmayer has spent two years studying the design, to try to figure out how to come up with a mold that will produce even more exact dimensions on the final part.
"You can't see the changes I'm making with the naked eye," Mr. Buchmayer says. "You have to look at it under a microscope."
Signs of Trouble
At the peak of Mr. Buchmayer's tiny slice of the tech boom, Western Industrial churned out 39 molds for Microsoft in a year. With prices ranging from $35,000 to $250,000, depending on the complexity of each mold, it was a sweet time for the toolmaker.
But there were signs of trouble. Other customers, including Hewlett-Packard, started pressing for lower prices. Mr. Buchmayer still does some work for the high-tech company, but he lost much of that business at the same time Microsoft fell away. Western Industrial's sales plunged 70% from its boom-years peak to just over $3 million last year, when it posted a loss of $500,000. The company has shed 30 of its 55 workers.
Microsoft spokeswoman Stacy Drake says her company "explored different avenues that would allow us to gain needed cost efficiencies while continuing our relationship with Western Industrial Tool, but unfortunately we were unable to do so."
Howard Holt, 60, a Western Industrial employee, says he has only to glance at his pay stubs to realize this is no longer the priesthood of manufacturing it once was. His income, including bonuses, shrank to $62,000 last year from $98,000 in 1995, and he expects it to drop a further $8,000 this year.
Sitting in a restaurant overlooking a lake near the Western Industrial plant, Helen Buchmayer pats her husband's hand as she recalls the sudden hardship of recent years. She has worked alongside her husband for three decades and still serves as the company's secretary and treasurer.
It helps that they're frugal. Despite their success, the couple still lives in the modest suburban house they built in 1969. He drives a 1998 minivan, while his wife drives a 1993 Camry. For now, the couple is dipping into their savings to keep the factory going and say they aren't sure how much longer they can go on doing that.
Mr. Buchmayer admits that the lush times of the 1990s blinded him to the growing focus on price that was playing havoc with the rest of his industry. He cut back on mining customers for new business, he says, calling that a huge mistake. One of his best hopes now is tiny plastic parts used in fiber-optic systems that would replace more-expensive glass components. The plastic parts require some of the most precise work he has ever done.
"A part like this is a nightmare to produce," he says, picking up what looks like a plastic elbow smaller than a fingernail. The manufacturer is looking for someone who can make molds capable of producing these. Right now, they want only a few molds, because demand hasn't taken off for the switching equipment these parts would ultimately be used in.
"The tools will be built here and proofed," says Mr. Buchmayer, meaning they'll be checked to make sure the parts are coming out right. For manufacturing, he adds, "they'll go to Singapore."
Write to Timothy Aeppel at timothy.aeppel@wsj.com
_____
Samsung Commence Expansion Project At Austin Site Including Nano-Scale Capabilities
Samsung Electronics Co., Ltd., the world leader in advanced semiconductor memory technology, today broke ground on the second stage of the expansion of its Austin memory chip fabrication plant.
The 34,000 square foot expansion of its manufacturing area is part of a succession of investments that will equip its Austin plant for next-generation advanced semiconductor fabrication technology.
Samsung’s three-year investment plan of $500 million announced May 2003, will upgrade, expand, and increase capacity to produce nano-scale semiconductor memory technology at the Austin plant. The nano-tech upgrade investments will enable Samsung Austin Semiconductor to deliver 0.1-micron geometry designs down to 0.08-microns at a capacity of 50,000 wafers per month for manufacturing giga-density DRAM devices.
Currently, the Austin plant manufactures several types of memory chips including 16, 64 and 256-megabit chips in the .123 micron feature size. The northeastern Austin plant has about 970 employees.
Phase-two involves the construction of a linked fabrication line, a means to increase the total capacity. The outer shell and the clean room of the new extension, initiated this year, will be followed by equipment set-ups by July 2005.
Samsung plans to increase employment of approximately 300 to join Samsung over the three-year term.
The additional 300 jobs, with an average wage of almost $53,000 per year will put more than $15 million per year into the Austin economy, according to a recent economic impact study conducted by the Greater Austin Chamber of Commerce. That spending, plus the associated spending on equipment and materials, will mean as much as $753.3 million to the Austin economy in direct and spin-off effects when the fab is totally operational, according to the study. The Chamber report also concluded that during the construction phase, the expansion could generate about $135.2 million and create over 1,100 jobs on the project, most of them temporary.
Samsung Austin Semiconductor, established in 1996 is Samsung’s single semiconductor fabrication plant outside of Korea. The Austin plant has been a successful link between the Korea-based electronics company and its long-term business relations with customers in the US.
The relationship Samsung has established with the Austin community is a benchmark investment to Samsung. The past eight years has enabled Samsung to experience true globalization through successful localization of management and integration of its advanced memory technology.
Samsung Initiates $75 Million Second-Stage Expansion of Austin [Texas] Plant
What's your point? Are you practising thinking?
Practise, practise, practise. Try it sometime.
Spelling, spelling, spelling. Try it sometime.
It's an acceptable spelling, gosh you are thick.
I'm not convinced that it's necessarily a sin for a shift in our economy from manufacturing to research, design, management, logistics. If it makes sense for me as a businessman to subcontract the manufacturing of my goods to my neighbor (and it makes sense to him, too), it stands to reason that the same sense can be made for a nation to do so with a neighboring nation.
In the book The Great Betrayal:
"Manufacturing is the key to national power. Not only does it pay more than service industries, the rates of productivity growth are higher and the potential of new industries arising is far greater. From radio came television, VCRs, and flat-panel screens. From adding machines came calculators and computers. From the electric typewriter came the word processors. Research and development follow manufacturing."
How about a quick shortcut --- in case it hasn't been mentioned:
Disband NAFTA and GAT.
As a businessman, manufacturing might be key to my enterprise's survival. But if conditions are such that I can subcontract -- with control -- the function in order to make better use of my capital, it may make sense to do it.
If I subcontract to a jurisdiction where the rule of law is interpreted differently, I may have a greater expense involved in enforcing my contracts. It still might make sense, however. Of course there is risk involved. But that is the nature of things.
"I am voting for President Bush."
That is the ONLY sensible thing you said.
Hey, if people can make stuff that is COMPETITIVE, I'm all for it HOWEVER I refuse to pay two and THREE times as much for a UNION made product or even if it is NOT union made.
Go ahead pay more than what the product is worth. I'll continue to shop on price and pay what the product is really worth. Go ahead pay more for moron work.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.