A tale of two companies
In this old New England manufacturing plant, production machinery has been pushed off to one side of the factory floor. Left idle, it stands there gathering dust.
This is the Jones & Lamson Machine Company. For a hundred years it has been making lathes for other factories to use on their production lines. It has fathered two other machine-tool companies in the area, now known as Vermont's Precision Valley. But J&L is closing down manufacturing operations and now will only assemble lathes. The idle machinery, used to manufacture lathes, will be shipped to another plant that can make lathes more efficiently.
Business was booming through 1980, says Floyd Hewett, who is managing J&L's shrinkage. Then, ''all of a sudden, along comes the recession, along comes Japan , and the whole thing comes down hard and fast.'' Lathes have been particulary hard hit by imports. In 1982, imports reached 50 percent of lathes used in the United States. The work force at J&L, which numbered nearly 1,200 in 1981, is now closer to 200.
Across the Connecticut River in Keene, N.H., the atmosphere is more upbeat. Kingsbury Machine Tool Corporation has had its share of layoffs and sliding revenues too, but it's still going to make a small profit. ''We think we've weathered the recession a lot better'' than most machine-tool makers, comments James Koontz, president of Kingsbury. Management is the key
This is largely due to its products: rebuilt and custom-made machine tools for industries like automobile and sewing machine manufacturers. Fortunately, custom-made machines aren't being targeted by Japan right now, says Mr. Koontz. And, because ''customers are afraid to make long-term commitments,'' they have turned to Kingsbury to rebuild and update their old machines. Kingsbury hasn't gotten much new-machine business, but it did capture the rebuild business, which accounted for almost 80 percent of new orders in 1982.
In this industry, the product a company makes has a lot to do with its present status and future. But management is the key difference in the well-being of these two companies. Jones & Lamson is owned by a $3 billion corporation, Textron Inc. Kingsbury is one of the largest privately held machine-tool companies.
Right now, corporations that have machine divisions are busy closing inefficient plants, combining operations, and dropping the slowest product lines. Textron is no exception.
The J&L miniaturization is part of Textron's reconsolidation in the Waterbury Farrel division. The three locations of Waterbury Farrel, including J&L, are operating at a total capacity of only 27 percent. ''Prospects for the future do not indicate we'll get anywhere near 100 percent,'' says Mr. Hewett. So, it's been decided that manufacturing operations will be moved from J&L's location in Springfield, Vt., to the division's Cheshire, Conn., location.
''It was good business thinking to reduce our manufacturing. We had the least efficient layout and equipment,'' says Hewett. Though Textron's consolidation pares J&L down to a design, assembly, and sales company, ''we would have been out of business a long time ago if we were privately held,'' says Mr. Hewett.
At Kingsbury, Mr. Koontz believes it's just that factor - being privately held - that has strengthened the backbone of his company. ''We aren't trying to justify our decisions to a bunch of stockholders,'' he explains. ''We're willing to take a little less profit'' to prepare for the long term. Eight years ago, for instance, Kingsbury started up an assembly division to produce machine systems that automate assembly. They don't look like industrial robots, but in effect they are. Computer-aided design helps
Kingsbury also decided to go with the latest cost control and productivity methods. Their engineers use computers for design work. Workers are trying to keep materials inventories slim. (At Jones & Lamson, the design room is still full of drafting tables, and the company is working on a feasibility study for computer-aided-design.)
With the help of computer-aided-design, inventory changes, and better control of the flow of parts to each product, Kingsbury is able to manufacture and deliver a custom-made machine in six to seven months - compared with 12 to 15 months five years ago.
But neither firm has yet noticed improvement in orders, and payments follow orders by up to a year.
''In '84,'' says Mr. Koontz, ''we will see the real fallout: 1983 was tough, 1984 will be tougher.''