Come Together - acquisitions and partnerships among machine tool companies - Brief Article

Machine tool companies are buying one another. Machine tool companies are partnering with one another. This activity may seem unsettling . . . as if the number of players in the industry is in decline. However, the more important consideration is the potential of this consolidation and partnering to augment the productive capacity of shops. Viewed in this light, what we are seeing today represents a natural development from the very premise on which the machine tool industry was founded. This trend of consolidation is one we should have seen coming, oh, 100 or so years ago.

Information technology at least partly explains why this coming together seems to have picked up in the last few years. With computers moving electrons in place of humans moving paper, organizations are easier to integrate. This is true outside the machine tool industry, as well. Try to name an industry today that's not consolidating.

Among machine tool companies, strategic purchases or partnerships can help end users by saving them from having to deal with multiple sources. A recent partnership provides an example. A lathe maker, a machining center maker, and a robot maker all recently announced they would partner to offer complete cells to the wheel-making industry through a single point of contact. Presumably, a given manufacturer of wheels might have chosen equipment comparable to what these three companies have to offer anyway. But the partnership saves this manufacturer the time and effort necessary to deal with three different suppliers. The wheel maker gets to offload that hassle

Compare this benefit to the reason the machine tool industry got its start in the first place. Over a century ago, manufacturers routinely created for themselves the machinery needed to make their own products. Machine tool companies offered what was a novel idea at the time--the promise to let manufacturers outsource machine production.

Now, by achieving consolidated sources for related equipment, some machine tool companies are taking another step in the same direction. In addition to producing the machines, these companies now can also offer to eliminate some of the management burden associated with having a variety of machine tools in a single shop. In other words, this is one more way machine tool companies let shops devote less resources to determining how they will produce . . . and more resources simply to producing