MARK 957 ASSIGNMENT 1
Submitted by
Avinash Gaikwad
5072827

The machine tool industry is large and fragmented in its own scope, it manufactures and supplies the machines to cut, shape, and shape metals where a large portion of the manufacturing industries are dependent. The precision in class of the machine tools themselves, their control frameworks and the association encompassing them to a great extent focus the profitability and intensity of designing commercial enterpries.(Marcuse, 2002) The machine tool industry faces two noteworthy difficulties today. One is that about innovation in machine tools has changed its own technology improvements. Over a century of transformative advancement, predominantly including phenomenal technology upgradations and enhanced control of large scale manufacturing, the primary advancement in machine tool industry over two decades has included computerization and automation of small and medium scale enterprises regarding the current scenario of numerical control and different parts of the microelectronic setup. This adjustment in the overall structure of the machines and innovative change is constraining significant changes both inside(internal) of the business and in its association with clients(external). The other issue is that the focused circumstance on the planet where business is evolving quickly, bringing about serious modification issues for most machine tool makers. Despite the fact that this is an industry in which remote exchange has dependably been critical, the rise of new competitors (especially Japan in numerically controlled machine instruments and recently industrialized nations in ordinary machine tools) with new systems and new sorts of specialization has rolled out for radical improvements in the focused circumstance for most machine tool firms.
The machine tools industry is one of the smallest divisions of manufacturing industry in most developed nations. According to Commission of the European Communities, in the United States, it illustrated to just three-tenths of one percent of the estimation of shipments of fabricated components toward the end of the 1970s; in Sweden, it demonstrated to around 0.9 for each penny of worth included and 1.0 percent of employment in manufacturing. In West Germany, one of the world's biggest makers of machine tools per capita, the size of machine tools in manufacturing work does not surpass 1.5 percent. The machine tools industry is exceptionally heterogeneous. The yield comprises of several distinct sorts of items, and the business is comprised of various small manufacturing Enterprises (SME’s). In 1977, there were 1,343 manufacturing units in the United States machine tools industry, with a normal of 62 workers for each unit. In Sweden, there were 129 manufacturing units with a normal of 70 workers each. The normal firm size in West Germany was around 225 representatives in 1980. There were 12 plants in West Germany with more than 1,000 representatives, while there were 10 in the United States, 7 in the United Kingdom, 2 in France, and none in Sweden. (CEC) Given the heterogeneity and nature of the business, why one should study machine tools industry? There are basically two reasons. One reason is that the machine tools industry is significantly more critical than its share of mechanical worth. Machine tools are typically characterized as force driven machines (not hand held) that are utilized to cut, frame or shape metal. Therefore, machine devices speak to the core of creation machines in the entire metalworking industry - the area which as of now contributes around 40 percent of worth included assembling in created mechanical nations which resembles a genuine development in manufacturing in the nearing decades. Furthermore, the part of machine devices is not limited to equipment alone, the entire programming and its association and control of generation hardware, in the metalworking sector is firmly connected to the attributes and utilization of machine tools. In this way, the machine tools industry may be viewed as a "hub" for supplying both generation hardware and ideas (both equipment and programming) to every single metalworking industries, consequently assuming a pivotal part in deciding the execution of vast parts of assembling regarding both efficiency and worldwide intensity. Consequently, by contemplating the improvement of machine device innovation and its application in mechanical procedures, it ought to be conceivable to improve comprehension of the nature and significance of innovation in the designing business. Recent studies have indicated, not slightest in the car business, there are technological up gradations to suspect that there are critical worldwide innovation and in the association of generation and that these may clarify a different perspective of the universal intensity of building businesses. Another reason to study the machine tools industry is that it displays some intriguing issues of its own, in view of financial specialists. It will be seen that the machine tools industry confronts two noteworthy difficulties today. One is that mechanical change in machine tools has changed character as of late. Over a century of transformative advancement, principally including motorization and enhanced control of large scale manufacturing, the principle advancement in machines in the post war period has taken very much an alternate course. The presentation of numerical control are presently opening up regarding the microelectronic setup are compelling significant changes both inside of the business and in its relations with clients. The other issue is that the aggressive circumstance on the planet business is changing quickly, bringing about extreme change issues for most manufacturers. Despite the fact that this is an industry in which outside exchange has dependably been huge, the development of new contenders (especially Japan in numerically controlled machine apparatuses and recently industrialized nations in conventional machine tools) with new systems and new sorts of specialization has rolled out for radical improvements in the aggressive circumstance for most machine device firms. Over the course of fifty years three major technological innovations had a major effect on the machine tool industry. Three radical shifts, lasting about ten years each, can be observed during which the new technologies experienced strong diffusion and were implemented in the factories of the manufacturing industry (H Arnold, 2001). The extent to which the new technologies appeared as a major disruption or a shock to the industry can be expressed in three categories according to the International Journal of the Economics of Business 5, no. 3 (1998).The first shift was the introduction of numerical controls for machine tools in the 1950s and 1960s (H Arnold,2001). From 1959 to 1965 the number of shipments increased over a seven year period by 40% on average, i.e. from about 200 to about 2050, which then stagnated over the following years. Customers belonged to the high-end manufacturing industries like the aviation industry, which had driven the development from the beginning (H Arnold, 2001). According to US Department of Commerce, the total value of shipments kept growing at this pace even after 1965. The second shift was observed in the 1970s and 1980s which was triggered by the demand of microcomputers for numerical controls. Sales of NC machines grew rapidly by about 30 - 40% annually from 1978 to 1984. The third shift of technological innovations continues into to the present. PC based CNC appeared on the scene around 1990. The first models were limited in processing power and memory to capture the data for sophisticated machines. They showed cheaper alternatives for CNC machine retrofits. By 1994 these problems were overtaken by controls’ manufacturers like Siemens and Fanuc. PCs were embedded into CNC units (Chalmers, 1998). The more hardware structured older programming languages are gradually being used by graphical user interfaces (GUI). The machine operator will eventually find himself in a Windows-like PC environment. Manufacturers started to exploit the possibilities of data transmission in local area networks (LAN) and accessing databases. Efforts to innovations will enable a further integration of design and production phase. The information in the early systems flowed one directional from the programmer to the PC, from the PC to the CNC, from the CNC to the machine. Machine tool builders like Yamazaki Mazak Corp.(Japan) started considering PC operating systems like Windows NT as direct operating systems for the CNC unit itself. The PC is equivalent to the CNC and stores information about job schedules, setup instructions, statistical process control data, and machine diagnostics. The next step would be to connect the controls to the Internet according to De Jong, "All Machine Tools are not Created Equal." and make the management of the production process independent of location. The third shift is hit by another altercation in the competitive environment once again - German manufacturers regained ground in international competition, other European manufacturers such as Italian and Spanish companies play a significant role than before. In general a larger group of machine tool builders, will contribute in the international market. The technological development differentiates the market into two segments - the first segment, high-efficiency production; the second, ultra- modern technology (e.g. ultra-high speed, ultra-precision). In the high efficiency segment, in which Japanese manufacturers were able to establish a dominant position, companies from Taiwan, Korea, and China are trying to set foot.
The technological change occurred in three shifts, of which the later shift is still active. PC setup, networking capabilities and the production systems to the Internet have the potential to further upset the current market structure in a way similar to the recent history of the machine tool industry. The introduction of numerical controls was much less an evolutionary process than a series of technology shocks that struck in three shifts. Champion machine tool builders largely failed to judge the innovations. The diminishing market share of champion machine tool builders from their dominant position cannot be attributed to consolidation within the industry. Due to a traditionally confusing diverse product variety, scale effects on the production side are merely present - size counts when it comes to financial issues. The turbulence in the market appeared to have occurred to a large extent due to technological change. The market segments themselves were redefined through convergence of functionalities and the integration of the machine environment into systems. Three categories serve well to identify shifts - changes in the product architecture, changes in competence that lead to competitive advantage, and changes in the value proposition as well as the way the value of the product is perceived. The industry in the UK is an example where technology was not observed carefully enough and where it has not received adequate improvement. The success of the Japanese and the failure of many US companies tell us that focusing systematically on the order-of-magnitude economic gain for the customer is more important than the location of invention. Prominent machine tools builders, however, misunderstood that considering all potential options a customer might desire does not necessarily lead to the customer’s greatest possible benefit.

References
Chalmers, Raymond E. "A Journey to Japan." Manufacturing Engineering 121, no. 3 (1998): 80 – 85
Dorothy E. Jones and Otis Port, "The King of Knockoffs Rushes to Go from Imitation to Innovation," Business Week, Nov 26, 1984 1984, 188 - 192.
DeJong, Colleen A. "All Machine Tools are not Created Equal." Automotive Manufacturing & Production 110, no. 3 (1998): 78 - 81.
Data is taken from USDoC, "Census," (US Department of Commerce, 1959 - 1968)
John Teresko, "Emerging Technologies," Industry Week, Mar 5, 2001 2001, 17 – 19
For a historical account of the phase of technological fervent in the PC industry see Paul Ceruzzi, "From Scientific Instrument to Everyday Appliance: The Emergence of Personal Computers, 1970 - 77," History and Technology 13 (1996): 1-31.
Marcuse, Herbert (2002),”One Dimensional Man: Studies in the Ideology Advanced Industrial Society” Routledge and Kegan Paul, London.
"Objects and Subjects in Technological Interdependence. Towards a framework to monitor innovation," International Journal of the Economics of Business 5, no. 3 (1998): 295 - 309.
Schmookler, J. "Economic Sources of Inventive Activity." The Journal of Economic History 23, no. 1 (1962): 1 - 20.
Raymond E. Chalmers, "A Journey to Japan," Manufacturing Engineering 121, no. 3 (1998): 80 – 85
Keiichi Kawakami and Shinshichi Abe, "Machine Tools Build Prosperity for Related Industries/ Machine Tool Industry in Japan Today," Business Japan 30, no. 8 (1985): 89 - 97.