Look around the room. Everything in it is made by a machine tool: the desk, the paper, the light fixture. Your garage is full of items cranked out by machine tools, too: the lawnmower, the car, the bike. Nothing can be made nowadays without some factory machine to assemble or form its parts.
Machine-tool makers are just now beginning a long hike out of their worst recession in postwar history. But they may never scale the sales peaks conquered in years past.
Imports are battering away at them. Some traditionally big-spending customers aren't likely to be so free with their dollars in years ahead. And there is a new mountain to climb - technology. The ability to master such emerging fields as robotics could make or break some firms.
From an economic standpoint, machine tools don't amount to much. In 1982 the industry's entire output of $3.6 billion was about equal to the sales of the relish and ketchup maker, H. J. Heinz. But this is the building-block industry for industrial America. Some industry observers see it as so essential that they worry that problems affecting machine tools - their loss of business to Japanese imports, especially - ultimately affect US national security.
The last recession ground this small industry to pieces. Since 1981 employment has dropped 40 percent and shipments 66 percent. Recovery comes later to machine-tool builders than to the rest of industry. They don't benefit until other manufacturers have gained enough strength to order new machine tools for factory expansion and improvement.
Finally, the ordering has begun. The smell of sulfur permeates tooling factories again as part of the manufacturing process. But analysts and machine-tool companies admit business isn't likely to repeat the record levels of 1980 and 1981. Their reasons: competition from cheaper imports, tighter money , and customers (such as steel and oil companies) whose own business is suffering.
Automobile and steel industry complaints about imports are a pussycat meow compared with the roar coming from the National Machine Tool Builder's Association. At the same time, US exports of machine tools have drastically fallen off and prices are marshmallow soft.
Not only are these companies tangling with imports and recession, but they also face a whole new way of doing business. Technology is changing their products - and the way they approach their customers.
Looked at in isolation, new-orders numbers are impressive. Christine Chien, a Prudential-Bache Securities analyst who tracks the industry, estimates that new-machine-tool orders were up 10 percent for 1983, and that they will jump 70 percent this year. Seventy percent may sound like a lot, but analysts emphasize that it's a rise from a historic low.
''The upturn in this recovery will be much more gradual,'' says Ms. Chien. ''Capital spending will not be as strong as the 1979 recovery.''
In 1979 machine tools got a terrific boost from capital spending in the automobile industry, which undertook major factory retooling. ''(The auto industry) tried to accomplish what the Europeans had done over a span of 10 to 15 years. That's why the machine-tool industry reached new highs,'' Chien explains.
Many of the old reliable customers, moreover, are not in a position to order new tools. ''Certain major machine-tool users - the farm equipment, oil field services, and construction machinery sectors - may not need new machine tools for a while,'' states a Value Line Investment Survey report. It can take five to 12 months for a machine-tool company to deliver an order, meaning payment lags that long, too.
The machine-tool industry provides downstream factories with the stamping, lifting, rolling, and conveying systems that automate manufacturing. But most of these machine tools, especially those that are custom-built, are painstakingly assembled by hand from huge chunks of metal parts.
James Gray, president of the National Machine Tool Builders' Association, again and again comes back to imports as the real deterrent to full recovery: ''The only thing that will get this industry back to levels of the past is some kind of relief from the (barrage) of machine-tool imports,'' he says. Imports now account for an estimated 42 percent of shipments, and Japan is targeting standard products, including lathes and machine centers (one machine with many tools that can cut or form a number of shapes).
The machine-tool industry ''is losing market share to an industry in a country, Japan, that has lower wage and compensation levels, lower interest rates, and a form of government-industry cooperation that is geared to an 'export or perish' economy,'' states a soon-to-be-published study by the National Research Council. The order time for Japanese machine tools is also quicker, service is better, and prices lower, according to Harald Malmgren, an international trade consultant and former government trade official.
Imports endanger US national security, says the industry association, which has now filed for import restrictions with the Commerce Department on those grounds.
It's naive to believe, says Mr. Gray, that in time of war - when machine tool demand surges - the US could continue to safely import this proportion of tools by air and sea from Japan and Europe. The Secretary of Commerce must make a recommendation to President Reagan by March 10.
Were US machine-tool builders caught off guard? One Washington attorney following the issue says the US decline ''couldn't have been prevented. It happened relatively quickly. It's something that could only have been prevented if they could have seen 10 years ahead.''
At the same time, critics who say success from 1974 to '81 blinded the industry to Japan and the globalization of the machine-tool trade. Record sales also distracted many companies from technological improvement and cost control in their own plants. The National Research Council reports that manufacturing and production technology in US machine-tool companies is ''significantly below the state of the art attained by leading international competitors.''
Today the companies that turn out machine tools are cutting costs, modernizing, and becoming better marketers. They are now trying to create the ''whole factory solution,'' by building not just one machine to make one car part, for instance, but a whole machine system to make the entire engine.
The buzzword now is ''flexible manufacturing,'' which, sticking to the car example, can turn out both small and large cars, not limited to a single design. Flexible manufacturing implies use of industrial robots to place, weld, and move parts. In Japan, it has resulted in peopleless factories. This kind of precise automation produces a higher quality car, and, theoretically at least, a less expensive one.
Cross & Trecker Corporation is one company knee-deep in this transition. It has put machine-tool research and development at the top of the priority list. ''R&D was the only cost in the company that was not reduced,'' says Richard Priebe, spokesman for this major player in the industry. The Bloomfield Hills, Mich., manufacturer doubled its computer-aided-design (CAD) machines last year and will do so again this year. CAD helps engineers design products faster and more efficiently. Three Cross & Trecker plants have also closed and as many operations as possible are being transferred from its Michigan plant to its most automated facility.
''It's a tough market. Manufacturers won't go down paths unfamiliar to them unless they can see returns. This means getting together with the customer and selling not just products, but engineered solutions - and that's a whole different ball game,'' says Mr. Priebe.
Big companies that aren't traditional toolmakers (like Westinghouse, IBM, and General Electric) now are competing in the supply of machine controls, computers , and robots. Selling ''solutions'' and automating factories takes capital, which only the big toolmakers have. The smaller companies could become mere suppliers to the larger ones.
''As technology becomes more and more important, and it becomes more difficult to compete, those without the capital resources won't make it unless they are in a specialized niche,'' explains John Reading of Cincinnati Milicron, a robotics and machine-tool leader.