Chapter Two PROFILE OF THE INDUSTRY IN MICHIGAN Nearly half of the nation's tool and die plants are located in the East North Central region (See Table II-1) to provide tooling support for the high concentration of metalworking plants there. Of the six leading states in value added by tool and die manufacture, four-Michigan, Ohio, Illinois, and Indiana-are in the East North Central region. As Table II-2 shows, these four states accounted for over 60% of the national industry's value added by manufacture. LEADING STATES ACCORDING TO VALUE ADDED BY MANUFACTURE IN THE TOOL AND DIE INDUSTRY: 1958 AND 1963 The concentration of automotive plants in Michigan has made its tooling industry the largest in the country. In 1963, Michigan had nearly one-fifth of the nation's tool and die firms, employing 26,000 workers— about 28% of the national industry's total-and accounting for 33% of the national industry's value added by manufacture.1 Workers in the Michigan firms were both higher paid and more productive than the national average in 1963. Because of refinements in productivity and increased sales, the higher wages were not especially burdensome for the state's industry." Table II-3 summarizes Michigan's importance in the nation's tool and die industry by the use of several key economic indicators. TABLE II-3 PROPORTION OF THE NATION'S TOOL AND DIE INDUSTRY IN MICHIGAN AS INDICATED BY KEY ECONOMIC STATISTICS DEVELOPMENT OF THE MICHIGAN INDUSTRY While the historical dependence of Michigan's tool and die shops on the automobile industry is apparent, the importance of tool and die ingenuity in the development of the automotive industry in the state is more obscure. At the turn of the century the best mechanical skills were concentrated in the Connecticut Valley, but Michigan had the rare combination of Henry Leland's technical versatility, the faith and diligence of R. E. Olds, and Henry Ford's resourcefulness. Born in Vermont in 1843, Leland had the best manufacturing training available at that time in New England. After working as an apprentice in a Worchester textile mill, he spent three years during the Civil War as a toolmaker in the Federal Arsenal at Springfield, Massachusetts. There Leland saw first-hand the value of precision machining and tooling for interchangeable parts. After the war, he broadened his experience by 1 Derived from Appendix C, Table C-9. 2 A comparison of toolmaker wage rates should consider the varying degrees of skill within this labor category, required by industrial sectors and available in the different geographical areas. moving from one machine shop to another until, nine years later, he went to the Brown and Sharpe Company of Providence-a company famous for its precision tools. In 1890, Leland moved to Detroit and established, in partnership with Faulconer and Norton, a company for manufacturing machine tools. In 1900, when Leland agreed to make automobile engines for R. E. Olds, he was able to double the power of the Olds engine by precision machining without increasing its size. By 1904, Leland was general manager of the new Cadillac Automobile Company where the application of his careful production methods earned the respect of customers and the emulation of his peers. Meanwhile, R. E. Olds, who had been experimenting with cars in Lansing, Michigan, moved to Detroit and established the first factory built solely for manufacturing automobiles. His first cars were too expensive. In 1901 he began producing the famous little runabout with the curved dash and the one-cylinder engine. Olds relied on independent suppliers and used his plant primarily for assembly. The surprising success of the little car helped the early suppliers to establish themselves and drew the attention of investors and prospective customers to the industry. At the same time, Henry Ford, having established the Ford Motor Company in 1903, quickly guessed from events in his own plant that the potential of Leland's interchangeable parts and Olds' assembly methods had yet to be realized. Despite the success of the small, economical cars, most of the auto manufacturers, including Ford's partners, were unwilling to risk everything on the mass production of a single model. At the end of 1907, Ford bought out his partners and hired Walter E. Flanders, a production expert, to retool his factory for the high-speed production of a single model. As is usual when people work without precedents, the men in Ford's factory experimented, devising more efficient tools and rerouting the flow of production, until, in 1909, they produced 10,000 cars selling for $950 apiece. By adapting a production process known as the assembly line-a process already used by some industries but considered impractical for assembling machines as complex as automobiles-Ford was able to assemble an entire car along a coordinated series of conveyors, the shorter lines supplying such things as assembled motors and transmissions to the main line. Six years after he began production of the Model T, Ford manufactured 248,000 cars for $490 apiece. In retrospect, the experimentation and innovation by Detroit manufacturers, coupled with adequate resources and transportation, available skills and a population free from the constraints of tradition in manufacturing and investment, stimulated the expansion of the automotive in 3 For instance, one automotive veteran reported that the Packard Car Company moved from Ohio to Detroit to take advantage of the skilled tradesmen there working on metal castings for the stove industry. dustry. As the sales volume and variety of available models grew, the increase in tooling requirements became phenomenal. GEOGRAPHICAL DEPLOYMENT In late 1964, 840 tool and die firms could be found in 44 of Michigan's 83 counties with most of the industry still clustered around the concentration of automobile plants in Southeastern Michigan. Figure II-1 shows that the three counties of the Detroit metropolitan area contain 593 firms or 70% of the state's industry. Wayne County has 33%; Macomb County 20%; and Oakland County 17%. The largest concentration outside of the Detroit area is in Kent County, which has 45 firms, 5% of the state's total. The remaining 25% is scattered throughout the state with Jackson, Genessee, and Berrien Counties each having approximately 2%. SCALE OF MICHIGAN OPERATIONS Exclusive of the captive shops owned by the automotive manufacturers, the largest tool and die shop in the state employed less than 500 persons in 1964. Only two firms outside the Detroit metropolitan area had 200 or more employees. As Table II-4 shows, 95% of the independent firms employed 100 or less workers, and 30% of the firms fewer than 10. The mean number of employees in the independent shops was approximately 30, a figure somewhat distorted by a few relatively large shops. The median rank of 15 employees is a more descriptive indicator of the typical firm, but is still considerably larger than the national industry's median of 7. Captive shops in Michigan, unlike the independents, are very large, often employing up to 3,000 men. Although tool and die firms in Michigan are larger than the national average, their size is still a major obstacle to technological change. TYPE OF OPERATIONS The Michigan tool and die industry produces a variety of products, yet individual firms tend to restrict their operations. Table II-5 shows the results of a survey of 122 firms asked to categorize their operations as predominantly dies, jigs and fixtures, molds, gages, cutting tools, or specialty services. Seventy-seven percent of the firms said that at least three-fourths of their production was included in the single category they chose. |