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The `flexible factory' reshapes American industry

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By contrast, 40 percent of all CNC machines in Japan have gone to small and medium-sized companies, Dr. Jaikumar says. In 1980, Japan's equipmentmakers established Japan Robot Lease Company to get automated machine tools and robots into small factories. The government also provides low-interest loans for the venture.

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The US government does not have an equivalent program. ``This administration resists anything that sounds like industrial policy,'' notes Mr. Simpson.

Still, his center at the National Bureau of Standards has assembled a prototype for what the small machine shop will look like in the year 2000. A bill before Congress would set up these prototypes around the country to let managers of small companies see the new technology.

With or without government help, small companies may be forced to buy flexible manufacturing systems.

For Chad Frost, the impetus came from the Japanese. Ten years ago, Mr. Frost had a thriving business making bearing rings and other parts for conveyor machines. But the recession in the early '80s cut demand for conveyer parts, and a price war with a Japanese-backed firm left Frost fighting for its life.

So Mr. Frost, great-grandson of the company's founder and now the firm's president, decided to diversify so the company was not so dependent on one business. Frost borrowed $5.1 million, nearly half a year's sales, to get flexible machines that could be adjusted by a computer to cut round shapes of any dimension.

He trimmed costs by 30 percent, prices by a quarter, and the Japanese-backed firm pulled out of the competition. Moreover, when Frost's core business is sluggish, as it is today, it can make axels for cars and trucks, which it could not make before. ``Our definition of our business has changed,'' he says.

New set of rules

For other job shops, the pressure to automate is coming from their large American customers, particularly the automakers, aerospace companies, and the Department of Defense.

When large customers computerized, they made a new set of rules. For example, many large companies now use ``just in time'' production techniques, which means they make smaller orders, and on much shorter notice. Producing small quantities is inefficient and expensive on traditional machinery. Antiquated job shops face an unpleasant choice: Settle for lower (or negative) profits, or spend the money on flexible systems, which can make small quantities more cheaply.

In addition, many big companies use computers to redraw their designs on a computer screen. Increasingly, large customers, particularly General Motors, require their parts suppliers to have computers that can run the same programs. The supplier can plug in the new design and make parts to fit it.

Robert Haas, whose company makes molds for car transmissions, finally bowed to the pressure a few years ago. He bought computer-aided design equipment that could ``talk'' with his customers' computers.

Whenever they redesign their products on their computers, he says, ``they construct a data base, send it to us, and I program the machine tools to make the molds.'' It was so much easier for customers to work with his computers, he says, that ``I insulated myself from the competition,'' including his fiercest rivals, the Canadians.

Temporarily, at least: Ten of his competitors have bought similar equipment. -30-{et