Exporting a Bottleneck?

First U. S. industry to be called a bottleneck (and fed up with it) is the machine-tool industry. Of its 200-odd parochial manufacturers, not more than 25 can be classed as streamlined; none can be called big. Yet its plight (and the sorrier plight of its customers) is more widely pointed at than understood. Last week, to those who did not understand it, the machine-tool problem seemed to be viewed by the Defense Commission and the President in exactly opposite lights.

When Defense Commissioner Bill Knudsen was president of General Motors, he was the machine-tool industry's No. 1 customer. Last week, at G. M. Chairman Alfred P. Sloan's annual New York Auto Show luncheon, Bill Knudsen talked from the other side of the table. Warned he: "The machine-tool industry in 1932 and 1933 produced about $130,000,000 worth of tools a year, and this year it is going to be asked to turn out $500,000,000 worth.

. . . The entire output of the machine-tool industry for the next year is sold out right now. . . . We have gone so far as to tell the machine-tool people that they had better not think of expanding their plants but to subcontract some of the pieces to the smaller shops of the country." Continuing to use the planning "we," Knudsen called the manufacturers "you." Said he: "If you gentlemen figure you are going to need a lot of machine tools in order to carry on your American way of life, you had better take another look."

This flat statement jarred many a businessman into emergency-mindedness. But the same day they were confused by other news. Under the President's export control proclamation of last July, many a machine tool built for export (to France, U. S. S. R., Japan) has been detained at the docks. Last week President Roosevelt issued an executive order making it possible for the U. S. to requisition such barred shipments, export them to "friendly" foreign powers. Since Sumner Welles and Soviet Ambassador Constantine A. Oumansky were known to be talking about machine tools, it was clear that Washington was using them as a diplomatic weapon in the Far East. Few days later, Soviet purchasing agents began ordering heavy machinery (shovels, drilling rigs, pumps, tubing)--orders to total more than $25,000,000 before the year's end. Exporters attributed the orders to the U. S.'s efforts to bargain with the U. S. S. R.

If the State Department's horse trade was to include machine tools, why should Bill Knudsen have to wave a flag at his automaking friends? Or, as the Wall Street Journal demanded: "If any of the machine tools awaiting license for export to Russia or any other country are usable here, why let them go?"

Actually, the conflict of policies was more apparent than real. Russia's orders for heavy machinery (much of it for copper mining near the Chinese border at Lake Balkhash) impinged on no U. S. bottleneck. Neither, for that matter, would her participation in the U. S. machine-tool market. The name "machine tool" covers every power-driven affair that automatically cuts identical shapes into metal passed through it. Some models are bench tools of typewriter size, are produced in quantity. It is always possible to spare odds & ends of a model produced in quantity; and no one would kick if the Russians were thrown a few such bones.

Bigger machine tools may take anything up to a year or two to build, cost as much as $100,000 apiece, are tailor-made. Idle in warehouses are a few such artillery pieces, built to Japanese or French designs and never shipped: the Russians might get a few of these. But in the main these big tailor-made tools are the ones crucially needed for U. S. defense.

The machine-tool industry is now operating at 95% of estimated capacity. Its best shops are working three shifts a day and expanding. Some promise no delivery on new orders before next July or later. From such producers, Russian buyers can expect a place at the end of the line.

Despite this partial jam, the industry (which is still exporting heavily) retained its ancient confidence last week. General Manager Tell Berna of the National Machine Tool Builders' Association announced that a battery of tools had been designed to turn out a shell a minute whenever needed. The industry, said he, "will be able to produce the machine tools required just as rapidly as plants will be ready for their installation." Ralph Edward Flanders of Jones & Lamson Machine Co., the industry's Washington representative, hoped for normalcy.

Reason for such confidence was that few machine-tool builders had seen many ordnance blueprints yet. The more old-fashioned units saw no need for expansion, hoped they might avoid it. With most of U. S. rearmament still in the pre-blueprint stage, few had an inkling of how big and complex the job would soon be.

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