3/83 MACHINE TOOLS

The US government is planning on asking the Japanese government to restrain exports of Japanese machine tools to the US, in order to permit the US machine tool industry to recover. Houdaille Industries last year asked the US government to remove Japanese made numerically controlled machine tools from items eligible for US government tax credits based on the 1971 tax law. The US government is divided between those who would like to apply article 201 (import relief) of the 1974 Trade Act, or Article 301 (unfair trade practices) and is now thought to be favoring export restraints much like the Japanese government made with the EC. The US machine tool industry is in bad shape. Cincinnati Milacron is expected to have a deficit of $2.5 million in the fourth quarter of 1982 and has cut its employees' salaries by 8% (management 10%). Acme has laid off 1000 white collar workers and reduced hourly wages for blue collar worker' s to $8.25 from .$10.50. Further reductions are planned, however. The company can thus break even at sales of $200 million/year, but this is 1/2 of 1980 and 1981 sales of $400 million. Houdaille Industries has laid off 1/3 of its employees. The US machine tool industry's order backlog had fallen 55%. in December, 1982, from the year earlier. Sales have fallen from $5.1 billion in 1981 to $3.6 billion in 1982 and are expected to reach $2.5 billion in 1983. Although American machine tool makers ruled the roost 20 rears ago, imports now take up 41% of total US sales and the imports are twice the level of exports, as foreigners, particularly the Japanese, caught up technologically. In response to increasing restraints on Japanese exports of machine tools, Japanese makers are increasingly moving to produce in the US and Europe. Okuma Machinery Works in January 1983 reached an agreement with Danly Machine Corp. of the US for assembly of machining centers with parts supplied from Japan. It may eventually grant the company a license to produce for sales in the US. Toyoda Machine Works last year made Bendix Corp. its exclusive sales distributor in North America. Yamazaki Machinery Works has sent a group to study plant sites in Britain, Belgium, and West Germany to produce NC lathes and machining centers. The company has had an assembly plant in the US using Japanese supplied parts since 1975.

THE JAPAN LAWLETTER. March, 1983. By Roderick Seeman