The post-1990 rebirth of the US machine tool industry: a temporary recovery?

After several decades of decline, the US machine tool (MT) industry entered a modest period of recovery in the mid-1990s. With the slowdown of the global economy in the early 2000s, however, this recovery has stalled. By now, there are clear signs that rates of firm exit are increasing. This paper compares the results of a survey of MT producers (conducted in 2000) with more recent industry data (2004). Four years after the optimistic findings of the 2000 survey were reported, we find that many of the small-to-medium sized producers have either ceased operations or have downscaled substantially. While virtually every US manufacturer of MT products has been negatively affected by the global economic downswing, adverse business conditions have had a disproportionately severe impact upon firms that cater primarily to local markets. MT manufacturers located within the nation's traditional industrial heartland have been the hardest hit, notably as a result of rising import competition. In contrast to locally-oriented producers, our findings suggest that a small number of innovative MT companies have been faring quite well as a result of continued export development. The paper concludes with a brief discussion of several futures for the domestic MT sector.