Technological discontinuity and competitive strategy—revival through FMS for the European machine tool industry?

Abstract

The machine tool industry is very small in relationship to the whole of industry. According to Jones [I]. it accounts for between one and three percent of those employed in manufacturing industry in the developed countries. However, the machine tool industry has a proportionally greater impact on industrial development because it is an important mechanism for the transmission and diffusion of the latest machining technology throughout industry [2]. As the MTTA [3, p. 21 puts it: “No modem product exists without machine tools, if not directly involved then certainly only one remove away.” It is this centrality of the machine tool in modem industry, as well as its role as a generator and transmitter of new technology, which is the core of its strategic function in industrialized countries and the main reason why many governments intervene in the market and foster the local machine tool industry. This paper deals with the relationship between radical (or major) technical change and economic performance in this strategic industry. The machine tool industry experienced large structural changes in the second half of the 1970s and in the early 1980s. In this period, some Japanese machine tool firms perceived the opportunities opened up by microelectronics technology and set in motion a process whereby numerically controlled machine tools came to substitute for conventional machine tools on a large scale. In the process, Japanese firms gained very large market shares in the machine tool industry at the expense of the U.S. industry, which was nearly annihilated and the European industry, which was given a severe blow. However, a new substitute, flexible manufacturing systems (FMSs), is now gaining importance in the machine tool industry. In particular, in the segment of machining *This paper was written within the framework of a larger project entitled “Sweden’s technological system