machine-tool vras: too little too late?

Machine-
Tool VRAs: too little too late?
Last month, we saw a fierce struggle over whether the steel industry voluntary restrictions agreement should be continued, stopped or revised to ease the shortage during periods of strong demand.
Now, we will see a very different situation of the machine tool, in which VRAs has less discomfort for buyers, but less opportunities for builders.
232 petition machine for NMTBA-
The tool industry began to seek import protection in 1983, when NMTBA, the Manufacturing Technology Association, submitted a petition to the Minister of Commerce, based on their views, asking for the repair of import quotas
Imports threaten national security.
On February 1984, Baldridge submitted a report to the president, but Mr. Reagan decided to wait for more updates on the health of the industry and will \"new elements of mobilization, defense and economic planning\"
Baldrige submitted his proposal in 86 years.
Finally, on May 20, 1986, President Reagan announced his decision to reach a voluntary restriction agreement with four countries. -
West Germany and Switzerland in Europe, Japan and Taiwan in the east.
Machine tools in competition are divided into seven categories, accounting for about half of all machines
Tool import: Machining Center, horizontal, vertical CNC lathe, non-CNC lathe, milling machine, CNC punching machine, shearing machine, non-CNC punching machine, shearing machine.
He also promised to integrate USmachine with the MoD and DOC-
Tool companies more fully enter the defense procurement process, modern machines
Provide tool support for national defense, provide $5 m for national R & D technology centers, investigate the possibility of allowing cooperative R & D, and finally monitor the industry status every year.
He said the plan of action \"will make the worldclass US (machine tool)industry.
In November, he received the official 5-
Annual agreement with Japan and Taiwan to limit the seven machines
Category of tools, effective January.
Although West Germany and Switzerland do not agree with the restrictions on VRA, it is understandable from the information that these countries will not enter and take advantage of the vacuum caused by the restrictions agreement with Japan and Taiwan.
The subsequent impact of the exchange rate helped reduce European imports and made some observers think it was an involuntary cut.
In 88, Congress passed the Comprehensive Trade Act in support of the VRA agreement; i. e.
Even if VRAs suddenly stops, the trade bill will be taken over by giving the government new powers to stop importing.
Christopher C. Cole, vice president of machines
Tool Group Worldwide, VRA Cincinnate Kelon said they are very supportive and play a very important role --
Security reasons.
\"We still feel that way.
We saw machines in America.
The tool industry has been hit and even in national emergencies, especially today, it is difficult for the country to meet any step --
Set production targets for any form of mobilization or military preparation.
The first part of the crash is that we don\'t have the manufacturing power of machine tools or machines --
Tool companies have increased production significantly.
\"I think VRAs is a comfort for the government because they know that they may have made a bad decision in delaying the initial 232 petition.
\"In addition to the formal quota, defensive actions have been taken to correct import imbalances: In fiscal 89, the Defense Authorization Act barsfor purchased certain types of machine tools used on naval vessels from outside the United States, by the end of this year, all defense ministry facilities were banned from foreign machine tools.
An offset agreement allows allies who buy weapons from the United States to supply parts or sell related equipment to the United States.
However, there are no restrictions on defense contractors, and the purpose of DODrestraints is temporary, although attempts have been made to include this restriction in the 93 permanent defense authorization statement.
This mandate is part of the Reagan veto package, as it does not provide full funding for SDI and imposes restrictions on weapons --
Control negotiations.
Initiatives to modernize the industry include setting up a series of funds and asking for advice from machines
How to use this money for a tool company with specific technology-
Advance the project.
Approximately 60 proposals have been submitted and are being evaluated as candidates for partial funding.
As explained by the Ministry of Defense, \"as part of the Defense Ministry\'s efforts to strengthen the industrial base, the Air Force issued a project research and development announcement (PRDA)
Can provide us with machines
Tool manufacturers up to $9.
9 million help bringto promote advanced machine tool products and processes to the market.
From the Air Force\'s point of view, this PRDA is not only an important project, but also a great opportunity for American machines --tool industry.
\"Like other VRAs, short-
A supply procedure has been set up to require the DOC to make exceptions to VRAs.
These requests are entered into the Federal Register and there is a period of time for the public to comment on the exception request before the commercial decision is made.
Several cases occurred last year, some of which were approved.
Best example: a transplant that builds its own facility is allowed to introduce machines for its own factory
The floor is used but not for resale.
The chances of anything else are seen as slim.
Is VRAs affected by VRAs reducing imports? Yes, they have.
For example, in 1986, imports accounted for more than 80% of mechanical processing.
Central Market, and threatened to take it all.
Today, this number is close to 50%, although many different \"numbers\" are being discussed: Based on calculations and estimates of the number of machines, machine value, orders, shipments, etc.
Their market share varies.
The most \"official\" import-
The share number is based on the quarterly Bureau of the census report, which has an additional lag for the docdepartment shuffle.
Unfortunately, the latest figures are in the first half of 1988, which is not very representative of the surge in machines --
Tool Orders occurred in the second half of 88.
To monitor VRA compliance, the Commerce Department calculates import shares only based on the value of the machine unit and not the dollar.
In seven VRA-
Limit machine
The share of imports in the domestic market is 58.
The first half of 88 was 8%, compared to 61.
2% for the whole of 1987.
In the first half of 87, the import share was 63. 6 percent.
This and pre-VRA peak of 67. 4 percent.
This is the share of all importing countries in the US market, not just those restricted by VRAs.
For both VRA countries, Japan\'s share of imports is 23.
% Pre-9VRA \'86 to 19.
In the first half of 88, it was 6%, while Taiwan began cutting in 17 years. 7% to 118 percent. (
Remember, these are the number of machines, Taiwanese ship a lot of smaller commodity machines, so the dollar value of the Japanese economy is much larger).
Although many people think the target market
VRAs\'s share of trying to return to Japan is 1981 (
Peak years for Japanese and American manufacturers)
According to DOC, the actual target market for Taiwan\'s CNC tools is 1985
The stock numbers of the two countries have not yet been announced.
However, theVRAs gave Japan £ 57, according to mnats.
5% of the CNC lathe market and 51.
Market share of processing centers 5.
The non-CNC lathe with the highest market share in Taiwan;
They were allowed 24.
7% of the US market.
At least one industry skeptic we \'ve interviewed doesn\'t believe the statistics that have been released showing a sharp drop in machines --tool imports.
\"If that\'s true, then there\'s a lot of equipment being built here, and I know that\'s not going to happen.
\"Unlike steel VRAs, which caused some shortages and rising prices during periods of tight demand, machine tool VRAs has not yet caused a significant increase in prices.
Bureau of Labor Statistics display metal cutting machine-
Tool prices rose 5.
Compared with the previous year, the 88-year-old was 3%, and the metal forming machine tool increased by only 2. 3 percent.
Despite the serious shortage of machines
The tool import has been completed.
All the data show that Japan and Taiwan are fulfilling their commitments. -
Match their goods to the agreed
Statistics and restrictions on goods transferred through third countries.
Their domestic content in the United States
The company at headquarters is a problem to be solved.
1988 the Trade Act gives commerce more power to participate in the discussion of the content as long as a large number of mechanical components and controls are produced domestically.
At the same time transplanting machine-
Tool manufacturers are doing their best to increase domestic content and avoid trade --law showdowns.
We heard some non-vra-
Limited instruments benefit from trade restrictions.
According to a dealer, some goods
Tool imports now cost twice as much as they did two years ago. -Sell well
\"Three years ago,\" he explained, \"there was a lot of relative value for money, low.
Good running imported cost commodity machine tools.
In fact, they run very well and most of their competitors here are out of business.
Now, with this competitor, they can charge $80,000 for a machine that sold half of it three years ago ---
Sell as much
Some distributors (and users)
When builders brag about their booming export business, fares are steamed.
They feel that these big export backlogs are extending domestic delivery. -
Those machines went the wrong way.
However, they should keep in mind that the surge in exports was the first before the domestic surge.
Looking back on the bad timing of the mid-80 s, domestic builders experienced a long, serious decline in machine tools.
Many people have been transferred economically by a clue.
In order to take advantage of the VRA situation, a large amount of capital is required ---
No more money available.
Although quota protection may look like alife-
Few people can take advantage of this opportunity.
Some companies shut down domestic manufacturing and made machines or major components abroad (often Japan).
Back in 1981, the VRA quota was locked in for a period of time, and many of these companies had little or nothing to ship here.
So when the VRA opportunity comes, these companies have phased out domestic capacity that they cannot immediately reopen.
Today, many people find themselves in trouble.
Win situation: they can\'t build here, they can\'t import from Japan or Taiwan, so they can\'t react to a new health market.
With the allocation running out later this year, another impact of VRAs is the first update
Growth last quarter
Quarterly drag effect of making machine
For imported machines, the seasonality of tools is much larger.
Therefore, in the second half of this year, this should bring some advantages to domestic builders.
Also, thanks to cars and machines
Tools VRAs are limited by units, not dollar values, and they have the effect of inducing importers to upgrade their products to increase volume profitslimited market. VRA strategy?
For a large domestic machine tool manufacturer, what are the opportunities for VRA?
Is there anything different you did because of VRAs? We asked Chris Cole of miracon?
\"No, there is nothing direct,\" says herripplis, \"but as a company we will certainly continue to expand our investment in domestically produced machines --
Tool Manufacturing.
No, we can\'t say we built that factory because of VRAs, but we are obviously trying to be competitive.
\"Frankly, I don\'t feel that our efforts have much to do with vras, and more to do with the dollar going back to its pre-run position --
In the early 80 s
I don\'t think vras has much impact on the industry as a whole, although we will definitely have a different feeling in the Japanese league. Nine-
A tenth of the impact is due to a change in the yen/dollar ratio.
\"Cole believes there is no serious shortage of machine tools.
\"Yes, the delivery time is longer now, but this is only an upgrade to the business, not due to the limitations of the VRA.
Prices barely rose in the first half of 88 and then stabilized in the second half.
There is no indication that VRAs has led to a price increase.
There are still many popular devices to choose from today
Despite inflation, dollar prices are still higher than they were in 1980 and 81 years.
Many machines-
The nominal price and actual price of the tool price are lower than before VRAs came into effect.
\"Importer\'s point of view Hitachi precision machine is one of the Japanese importers who have increased their manufacturing capacity under the stimulation of VRAs.
According to their Ed Joyce: \"The US government is creating the environment for people to build factories here, and we are doing the same as some other Japanese companies.
This increase in capacity will ease the impact of the shortage we are seeing for the time being today.
\"In theory, domestic builders should have a start in this regard.
However, for example, we see many of them go overseas to buy devices from South Korea and bypass VRAs.
They\'re working on an agreement to bring the equipment--
Not expanding here.
The only real expansion in capacity is companies that have already imported into the country.
Joyce admitted that, like other importers in Japan and Taiwan, Hitachi\'s precision machines also want higher configuration.
Japanese wayMITI)
In their view, it is very fair to allocate quotas.
In two years, MITI may make some changes.
They are monitoring the situation, and if one importer sells more than it does and the other importer doesn\'t, I\'m sure they will make adjustments.
He warned, \"any change in MITI will have a delay effect, as in the steel industry.
\"The Japanese economy is now very active, so there will be a lag of six months or more between any decision to modify the allocation and increasing the allocation.
Eli Lustgarten, vice president of PaineWeber Inc. , believes that VRAs has done what they should do.
\"If the computer bed is consumed (shipments)
You will see the import share drop to near 1981.
Imports account for 36 of domestic consumption. 4 percent.
Our calculation is 54.
4% in 87, 52% in 87, and we expect 42% in 88.
This is the United States consumption and imports, the United States exports decreased.
\"That\'s what VRAs should do.
The problem is the machine-
The tool market was weak last year and not very strong this year.
Yes, the order is very big now (December \'88)
But shipments will be flat in 88 years.
This has nothing to do with vras.
The problem is that the auto industry has cut machines.
Expenditure on tools in autumn 86.
This has weakened the market in 87 and 88, and we see consumption falling again next year.
As a result, no one really benefited from vras because of the weak market.
\"The purpose of VRAs is to reduce the percentage of Japanese imports to the level of 1981, which has been achieved, but has not reached the exact way everyone wants.
There are ten Japanese now.
In this country, with the increase of factories, tool manufacturers.
For getaround VRAs, Japan is building capacity here, which will be comparable to the impact of VRAs.
The result will be a competitive market.
\"Lustgarten\'s main point is that VRAs will not solve anyone\'s problems until the demand improves. \"We\'vehad a 72-
Percentage increase in orders this year--
The industry has finally shown some signs of life, and everyone will benefit from the use of this growth.
Prices have risen slowly, lagging behind in all capital products.
Pricing won\'t help anyone out of the woods.
This is still a very competitive market with too much capacity.
Seven or eight years ago, the industry produced $5 billion a year.
Half now.
So don\'t expect the price to rise.
The price will be better, but it will continue to be a very competitive market.
\"Who did VRAs help?
Distributors are in a neutral position in import.
\"In general, VRAs\'s injuries outweighed their help,\" said saysScott Murrer, president of Cincinnati Hyundai machinery.
\"VRAs did help the Japanese.
The companies they own, because their capitalization is often more mature, and they are better able to make decisions to enter the manufacturing industry, or have enough funding to support them until they are in that position.
Murrer can name some domestic winners, but he will ask, \"where are the other winners ? \"
Few people here want to bet 12. and 15-percent money.
Japanese can borrow 2-and 3-percent money--we can\'t!
Domestic companies that think Japan is mature ---
Family-oriented-have done well.
But these returns on investment, short-term
There is no long-term thinking and absence of ownership.
\"Does the customer care where his machine tool comes from?
Murrer is not the real answer.
\"In general, he wants to buy the best things, the best quality and the best service with his money.
Like the automotive industry, many of the best machine tools are not made in the United States.
The quality has been greatly improved
The control attitude develops here, but it is impossible to want it and then let it happen overnight. \" Machine-
He believes that tool customers are not very familiar with VRAs.
Few people understand what it all means.
They were not hurt.
They can still get the equipment.
Most of the delays today are considered due to very good business ---high demand--
Not imports. Causing shortages
\"Some of today\'s purchase decisions are based on shorter delivery times.
We lost four major orders in 60 years.
The day difference of transportation.
When our competitors stayed at the age of 30, we reached the age of 90.
\"We have two major suppliers, three to five.
Monthly delivery due to VRAs.
Business has always been good, but now these two are more troublesome than when business is not good.
Sales are avoiding VRA
Limited tools, focus on more available devices, and they die once this happens to small companies in these tight positions.
Bob Gale, president of the American Association of machine tool dealers, said: \"imported construction is a health supply problem for some foreign machine tools, only showing the effectiveness of VRAs.
\"Yes, these needs will eventually be plagued by the importer facilities here, but the machines that will be built here are healthy.
Our government does not object to overseas companies that have business in this country.
They just want to make sure they can produce machine tools here when needed.
However, he acknowledged that domestic builders who made important arrangements are now in trouble.
\"Those who feel that 232 of the petitions have failed, and that there are no restrictions, have not been there for a long time --
The long-term commitment to cutting manufacturing and imports here is mainly from the Far East.
Almost everyone feels that, including myself, the longer the 232 process, the less chance VRAs will appear.
At first, every NMTBA member supported the petition, but when it lasted so long before it finally happened, there were many people who were frustrated by the import arrangements they made.
All of a sudden, they had to kill them. open plants.
\"While this is good for the industry in the long run, it is certainly a situation where the timing is not ripe and there are many new problems.
But American manufacturers have now overcome this, at least to some extent, to benefit from VRAs.
Look at their background. -
Twice as much as a year ago.
Of course, the change in the dollar has a lot to do with it.
\"The window of opportunity and the strong wind open the window of opportunity for domestic builders.
\"Their chances are right now.
If they put the money they make from today\'s demand situation into their assets and produce better products at a cheaper price, they will be fine.
But if they just put it in their pocket and keep making the same old machine, say, \"Okay, it\'s time ! \"!
Now, we can raise the price and make ten times the profit so that the opportunity will be lost.
\"I admit a lot of them are in debt and they have to use those profits to try again to get solvency.
But if this boom continues for another year, then more people will be able to invest and if they do, they will have a fair chance.
But overseas mentality is a real challenge.
Not only Japan, but also Germany is investing heavily here.
When all these investments are completed, these foreign builders will have very productive factories here.
If factories in the United States have not been improved by then, they will not be competitive at all.
Gail admits the machine is possible.
As the automotive industry has done, the tool industry will over-build capacity.
\"If so, the most productive plant will be the first to die.
I always compare machine tools and cars. -
We are only five years behind the car cycle.
Car companies know they have to compete, but they can\'t sell anything because of the bad market.
So their strategy is rebate and 0.
It does stimulate demand and create profits.
Some people, like Ford, drive their cars back to their factory.
GM put it elsewhere.
Ford is much better now. -
Their capacity levels may be much lower than that of GM, and they will still break even.
Milarone\'s Cole is wary of European manufacturing.
\"While this year\'s business is good for everyone, the recovery should have come long ago, but it is far from good enough.
We are very sad that this year, the United States will spend less on metal processing than Germany, Germany\'s economy is much smaller.
The Germans and Japanese have invested a lot more in production equipment than we do here.
We still don\'t put our money into the necessary capital instruments and production equipment in the future.
Cole believes VRAs came too late and has taken some measures to stimulate foreign investment, especially in Japan.
\"Unlike the post-70 s, our competition today is mainly foreign --Based on the company.
Old machines in America
Tool companies are gone, and companies like emilacron have only a relatively small number left.
The rest were bought or died by foreign companies.
The tragedy is that 232 of petitions were not accepted in their early 80 s.
\"Positive trends, but VRAs helped, and its sponsor, NMTBA, insisted that market share was falling out of the seven target categories that peaked in 87 and began to slow down
Although they acknowledged the exchange
NMTBA can show that the market share of VRA has declined
Limit items, not increaseVRAitems.
In their view, this refutes the argument of the exchange --
Rating is more important.
Equally important is domestic
Action plan announced by DOC
VRAs was used as an opportunity window for the domestic industry to be more competitive, and NMTBA believes that this was confirmed by their semi-annual internal member survey: in 88, 82% of respondents said, in the past six months, they have purchased new machines and equipment or implemented improved production methods;
55% said they launched new products;
70% improve existing products or product lines;
R & D expenditure increased by 43%.
These percentages have steadily increased since VRAs began.
So for NMTBA, at least that shows the domestic machine
The tool industry is taking advantage of this opportunity to become more competitive.