Recently, I spent a nice few hours with Rory Gintert, head of DMC America Inc., a large, successful Korean machine tool builder just starting to sell machines under its own name in America. Gintert showed us a beautiful array of sophisticated CNC machines at their newly finished facility in South Elgin, Illinois.
How is it that such a large and ambitious machine tool builder like DMC is unknown here?
DMC has been building bread and butter machines for Doosan, Hyundai and Samsung for many years. It kept them busy as they built out their own product line in Asia. Now they want to play in the same arena with the big boys who had previously been their customers and put their own brand and colors on the machines. Gintert is signing up distributors all over North America, with the advantage of having worked in the machine tool industry for 28 years, including a long stint with the Haas Factory Outlet in southern Wisconsin.
Most people do not know that big name machine tool companies often outsource their production to lesser known yet capable firms with extra capacity. I learned this a decade ago when I found out that ZPS, the Italian owned Czech builder of the Euroturn (ZPS, Mori-Say) Multi-spindle screw machines, produced quite a few lathes for Okuma in the Czech Republic. Such reciprocal agreements are fairly common in Asia.
Talking to Rory Gintert got me wondering who the big dogs really are in the machine tool world.
According to the Metalworking Insiders’ Report newsletter, the Shenyang Group of China leads the pack with slightly larger sales than Trumpf of Germany, the king of sheet metal and laser, though Trumpf is bigger in total sales. Shenyang’s major brands are SMTCL, Scheiss, ZJ and Fiyang. (I hadn’t heard of them all either).
Gildemeister ranks third, and Yamazaki Mazak fourth. Mori-Seiki is ninth and Okuma, tenth. Haas is 16th with just under $1 billion in sales behind Hyundai and Doosan. Citizen-Cincom, which owns Miyano, showed $675 million in revenue.
I read a slightly disturbing piece in Bloomberg BusinessWeek about the importance of subprime loans in the current car buying boom, which has almost reached the sacred 16 million unit mark.
Yield starved investors have developed a healthy appetite for subprime auto loans, packaged together and sold as bonds. Car dealers and makers are loving it. This year, investors have bought $17.2 billion. Chrysler has been the big winner with 58% of the loans taken out to purchase Dodge brand vehicles above 4.2% APR according to Edmunds.com. The average Dodge loan carried is 7.4%, and 23% of loans had APRs over 10%. Chrysler has had 43 straight months of rising sales. The company board is eyeing a public offering.
This is how the Fed has helped out business. I’m not knocking it, but if and when Janet Yellin and the Fed allows rates to rise, Chrysler may feel it the hardest.
Question: Would you care if your Ford was made in a Chrysler plant?
Doesn’t matter, I wouldn’t buy either of them.
Yes it does matter – as the bottom line is all the earnings/ profits, from machine sales by foreign machine tool builders that invade the U.S. market do not stary in the U.S. They go back to the home country to be re-invested.
And often, if not always, there is no fair or recprical trade – as is the case with Japan and other Asian countries.
It is time we woke up and place trade restrictions on those nations that use the U.S as a dumping ground, undercutting the market for self-serving reasons
Respectfully submitted by
Albert B. Albrecht
Author: The American Machine Tool Industry, Its History, Growth, & Decline
To those questioning why the US govt is not leveling tariffs or a ‘penalty tax’ on foreign machine tools please give me some examples of American machine tool companies that are hurt because the government is not ‘sticking up’ for them?
If a job shop buys a foreign piece of equipment I do not see this as any different then a consumer buying a BMW or a Honda in America -free markets mean choices and jobs in our local economy.
The Tornos or Tsugami used in America employs fellow citizens, and a duty fee is payable to the US government before these machines can be sold in the US. Over the life of the equipment money is being generated and recirculated in the US by these American end users.
Also sales and service people are needed by most any foreign company to offer their vehicles or machine tools for sale in the US – claiming all the money is funneled back to the nonreciprocating foreign country is a weak argument to impose penalties on foreign products.
In the beginning Henry Ford hired the Dodge brothers to make plants and cars. Today it seems each car manufacturer has a few nitches and that means profits, whether thats through put, electronics, patents, or engines, something leads the way. If cars would be better and cheaper, then I am all for it. As for me, those two are the main ones I buy. I do love my 1 Ton mega cab, Cummins deisel, good stuff.
Reliability, parts and service are the key issues.
Ditto to what Robert wrote.
Also, you may want to check the information from Metalworkers’ Inside Report. It must be dated from before Gildemeister and Mori Seiki became one company on Oct 1st
K.j. (Johnny) Seo, President of DMC America spent many years with Daewoo and made Daewoo in the US what they are today. Johnny left after Doosan bought Daewoo. DMC is a pure machine tool builder, managed by machine tool people. They have a long history of manufacturing machine components like hydraulic units and chip conveyors for builders.
I don’t care where it’s built as much as I do care whether American companies are getting a fair playing field. Oversees companys should not have an edge over US companies and should be taxed to bring cost of machines equal to US in the US. That way we are competing by quality not price.
I agree with K Stratton, our government is dire need of money this tax would only help balance the budget along with putting us on a level playing field. What is wrong with our congress men?? Come on people!!!
American’s in the machine tool industry get upset that American builders are few and far between. Many arguments about buying American made and implementing sanctions is way overblown. Technology has driven globalization to where it has never been or thought about going. American’s and every other nation in the world has a choice. The Asian’s made the choice to pick winners and losers to driver their economy and not open their borders to us freely. That worked temporarily. So they build majority of the machine tools, who cares. It is proven throughout history that free trade is the only stable choice for improved lifestyle over time. The government can intervene and try to force the hand of the market but long-term it can not sustain it, only the free market gives you the best chance. Nothing is perfect but you want the lesser of evils. Sound government fiscal and monetary policy, free trade, and a fair tax system creates an economic system that can consistently sustain growth. At the end of the day it doesn’t matter who makes it. The market sorts out who survives. So the US doesn’t build machinery as much, we just find something better to do.
Return to Prosperity by A. Laffer and S Moore
The Choice by Russel Roberts
i didnt do my homework and ended up with the first unit of a machine from korea. within 2 years, electrical lines were breaking because the wire became brittle from the oil, i had push to connect air lines popping. i have had air lines like this in my shop for over 20 years and never had a problem. the turret was out of the machine 3 times in the first year and the last time, they forgot to tighten the gib on the x axis. yes it matters where the machine comes from. the price is low for a reason. you get what you pay for. i wont ever make that mistake again.