Thursday, September 6, 2007

"Precision City" : Dayton and the Tool & Die Industry

One has to be impressed by the resilience of the local tool & die industry. Metalworking of various types has long been a big part of Dayton manufacturing, and machine shop work was one of the very earliest industries of Dayton, with the first machine shops being mentioned in the 1830s & 40s.

Precision machining and manufacturing became such an important part of local industrial scene that the city was nicknamed “Precision City” in the first half of the 20th century. Today Dayton is supposedly one of the top five locations in the USA for tool and die work.

The industry is not very visible due to its structure. It is a network of smaller shops, usually family owned, which are not as “visible” as big mass-assembly companies such as Delphi or GM. Yet you can see these small factories around town, with a bit of a concentration on the north side.

News reports in the later 1990s indicated that the Asians were targeting this line of business, and then the recession came. One would have expected the tool & die industry to be hit hard along with other types of manufacturing, which was the case, according to this graph based on numbers from the census County Business Patterns (for Montgomery County):

Yet the recent reports in the Dayton Daily News indicates the industry is on the rebound. The report was on the troubles the industry has in recruiting apprentices to refill the ranks of retiring tool & die makers, and on a minority recruitment program.

Apparently the industry in Dayton was somewhat insular, with new workers being recruited through an informal network of friends and family of tool & die makers. It seems this network isn’t generating enough new apprentices to replace retirees, so the industry is turning to a minority recruitment program as well as a training program at Sinclair, Step II. Step II dates back to 1994, and is a nationally known intensive training program intended to prepare apprentices for the industry.

(Sinclair also has the Top Gun program to improve the skills of machinists as a way to improve the competitiveness of the local industry)

This is an area where education is important. Though this is factory work of sorts it is skilled labor, requiring good math and geometry skills. If the local schools don’t teach math well, particularly schools that serve the minorities the industry is trying to attract, this will mean a smaller pool of potential workers.

What is interesting is that even with foreign competition there is still a demand for new workers in this field


D. Greene said...

Great write-up. I think one of the reasons industry like this has not been completely outsourced is because the specialty nature of the industry. Very specific requirements are best communicated to people that work in the same language as you, who are right next door. This reduces shipping time, quality control, and communication issues dramatically. When quick turnaround is needed, you can have something delivered that day instead of waiting for it to arrive via a plane or boat. To bolster the point it is worth noting that in Hillsdale County, Michigan, the poorest county in the state with the most stagnant economy and highest unemployment, the tool and die industry has held on even there.

Besides the ones I already mentioned, there are other incentives to keep manufacturing in the USA

Texas Instruments, for example, built a new factory in Texas on green technology that saves millions a year in energy expenses to make up for the costs they would have saved by outsourcing. The benefit is their corporate HQ is a hop away, and so the engineers can communicate with the manufacturing arm instantly.

Another thing to note is that U.S. manufacturing output as a percentage of global production has held steady for the past ten years at around 25%. Even though manufacturing employment has dropped dramatically, thanks (or no thanks) to automation and robotics, actual output has stayed level.

I was also reading in the Economist (print edition, I have no link) that outsourcing to India is on the downtick. This is partly because of political problems in the re-development of Mumbai and other municipalities, but also because real wages in India are rising, making outsourcing less affordable.

Foreverglow said...

Definitely an interesting read. I know a handful of machinists myself. Thanks Jeff.

Jeffrey said...

I recall reading in the buisiness press that either Taiwan or PRC (or both) were targeting the tool & die industry in the mid to late 1990s. So I think some buisiness has been lost to there, but, as you note, there are barriers to offshoring.

One of the reasons behind the local T&D buisness group partnering with Sinclair to se up these training programs was to improve skills so they can beat the Chinese on quality and skill. I think there was some buisness skills training involved, too.

One thing I like about this industry is that it seems to be fairly entrepeneurial and small, which means it could be pretty flexible, too.

I'll be posting more on Dayton manufacturing later on. There's some interesting things going on in that sector.


Thanks, Foreverglow. I have some machinists and tool & die makers in my family, hence a bit of personal interest in the industry.

metromark said...

I'm often asked at the park why is it Dayton has been a center of creativity and innovation. There's no one magic answer to this question, but one of Dayton's strengths has been its tool and die tradition. Dayton started out in the early to mid-nineteenth century as a manufacturer of farming implements and railroad cars (even before the rails actually reached Dayton!)These industries helped spawn the community of tool and die makers. As Jeffrey mentioned, this group has always been independent and entrepreneurial, always looking for a way to build a better mousetrap. A look at the census and property records on Dayton's west side reveal that the Wright Brothers' neighbors were mostly small shopkeepers, employees of tool and die firms, and small-time inventors. I think an argument can be made that the Wrights received much of their intellectual and emotional support from their neighbors as well as from their family. And these people are survivors. Being usually small firms, they can adapt to changing conditions fairly easily. They saw the writing on the wall in the early 90s concerning the automotive industry in this country and adapted by shifting the percentage of their business from primarily automotive to a more diverse group of customers. I also have friends and family in the business, and they're not sweating the downturn in the American automobile industry.

Jeffrey said...

Mike, that was an enlightening bit of info on the social context of the Wright Brothers.

Also, I wasn't aware that census records are still availble at that level of geographical and social detail going that far back.

For the early history of machine shops in Dayton, one thing I found out is that the very first ones, from the 1830s, were associated with other industry. For example some of the first true factorys in Dayton were cotton mills(!) and a gun barrel factory. These enterprises had machine shops associated with them to build, repair and fabricate parts for their production machinery.

Although cotton spinning and firearms making soon disappeared from Dayton I suspect the early mechanics, and their skill in metalwork, remained. Perhaps this was one of foundations for the move into ag implements, engine & boiler making and other metalworking trades in the 1840s and 50s.

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