Abstract

Japanese firms obtained a dominant share of the U.S. numerical control (NC) machine tool market due to a carefully planned and executed long-term global strategy. Japanese industrial policy was helpful, primarily through MITI encouragement to the industry to refocus product line on new technology machine tools, with funding for joint research and encouragement of mergers and product-line rationalization. In turn, Japan's largest machine tool companies initiated firm-level strategies of continued upgrading of capital equipment through investment, with a concurrent reduction in the use of labor, leading to lowered costs and increased productivity. They evolved into low-cost, high-volume producers and, just as important, introduced new lines of inexpensive, standardized, off-the-shelf NC machine tools particularly suited to the needs of smaller businesses. These machines were then introduced in the U.S., taking advantage of delivery periods of over a year for tools ordered from U.S. manufacturers. By 1986, machine tool imports accounted for over 50% of U.S. demand, even as Japanese manufacturers began establishing a manufacturing presence in the U.S. Possible corporate and U.S. government responses are examined.