Capital Goods Makers Face More Hard Times --- Machinery Outlays Don't Grow Fast Enough for Industry
SIDNEY, Ohio -- Monarch Machine Tool Co. has about 340 employees at its main lathe plant here. That is fewer than half the 900 who worked here in 1981 and less than a third of the 1,200 that the plant employs when operating two work shifts.</br></br>"We're getting an order here and an order there," says Kermit T. Kuck, chairman and chief executive officer. "But the market is extremely competitive," and discounts of 30% to 40% are common.</br></br>In Minster, about 20 miles to the northwest, Minster Machine Co.'s exports are down to 2% of sales from about 20% in the mid-1970s, says Harold J. Winch, chairman and president of the closely held producer of metal-forming presses. Meanwhile, imported presses from Japan, Brazil and Europe are obtaining more of the U.S. market. Minster's employment of 680 is down 30% from 1981 pre-recession levels, Mr. Winch says, and unless orders improve quickly, "we will be cutting back next year."</br></br>Monarch, founded 75 years ago, and Minster, which began as a blacksmith shop in 1897, both are respected names in factory machinery. The tough going they're encountering after nearly three years of a U.S. economic recovery illustrates the predicament of many producers of factory machinery, construction equipment and other traditional capital goods.</br></br>Many makers of capital goods haven't fully recovered from a recession that extended from 1979 through 1983 for some equipment producers. They are faced with both lower U.S. capital investment than they had anticipated and increased foreign competition. Their outlook appears to be darkening instead of improving.