A Congressional subcommittee recently warned that it may consider the need for "appropriate action" against the nation's Big Three automakers unless they halt the expansion of inhouse tooling and die-making facilities within their manufacturing plants.
Such buildups of captive operations, the subcommittee claimed, are detrimental to hundreds of small businesses in the tool and die industry which have traditionally provided this service on a contract basis.
According to a report issued by the House Subcommittee on Special Small Business Problems, "The reliance and interdependence of the tool and die industry and the automotive industry is readily discernible upon the recognition that 35 percent of the tool and die industry relies for its existence almost completely on the automotive industry."
Referring to the threat to this historic relationship implied by the recent build-up of captive or inhouse tool and die facilities among the Big Three automakers, the Subcommittee warned that "the loss of a substantial portion of this (tool and die) industry would have far-reaching effects on the ability of this country's consumer goods manufacturers to supply today's basic needs."
The report, including the sub-committee's recommendations for solutions to this and other problems, is the culmination of a year-long series of hearings called by the House Small Business Committee to investigate problems within the $2.5 billion-a-year tool and die industry.
In its criticism of the expansion of captive facilities in the automotive industry, the subcommittee report reaffirmed the testimony of key hearings witnesses from the industry's national trade organization, the National Tool, Die and Precision Machining Association.
NTDPMA witnesses at the 1969 hearings maintained that the auto industry was continuing its increase of captive or inhouse tooling facilities despite the fact that such a practice was clearly economically unjustified and presented a threat to small business in the tool and die industry.
In reference to the traditional reliance of small businesses in the tool and die industry to the automotive industry, the report noted that, "The subcommittee feels that this historic relationship must continue to exist not only to assure the continued survival of the small tool and die businessman but also for this country to maintain this needed critical capacity in time of national emergency."
The subcommittee noted that significant changes have already been brought about as a result of its recent hearings on tool and die industry problems. Most notably, the report stated, representatives of the auto industry have now agreed to meet periodically with the tool and die industry to provide projections of future tooling needs and share in new technological innovations. The subcommittee report recommended that such meetings should continue on a regular basis.
Despite criticism from some quarters that the tool and die industry was lagging behind in technological development in the area of numerically controlled equipment, the subcommittee report stated emphatically that "assurances were given by the automotive manufacturers that use of numerical control equipment does not appear at this time to be of significant importance to their relationships with the tool and die industry."
Further the report stated, "…if and when the use of this type of equipment becomes profitable, they will provide either the information or the tapes necessary to produce needed automotive tools and dies."
The subcommittee also sharply criticized the Depart of Defense for allowing government-owned machine tools to be used by prime contractors for commercial work in competition with private enterprise.
According to a report issued by the House Subcommittee on Special Small Business Problems, "by allowing prime contractors to perform substantial commercial work on DOD-owned machines, the Government, in effect, becomes a third party in distorting a truly competitive free economy."
The report, including the subcommittee's recommendations on this and other problems, also results from the year-long series of hearings called by the subcommittee to investigate problems within the tool and die industry.
In its criticism of the Defense Department's leasing policies for government-owned machine tools, the subcommittee report reaffirmed the testimony of key hearing witnesses from the industry's trade organization, the National Tool, Die and Precision Machining Association.
"The subcommittee is somewhat dismayed to find that, while the Department of Defense voices an opposition to continued leasing of DOD-owned machine tools, such leasing continues to increase," the report notes.
NTDPMA witnesses at the 1969 hearings maintained that the contract tool and die industry was being severely impaired by competition from prime government contractors who utilized government machine tools for commercial work. The independents claimed that such machine tools were available to primes at leasing rates far lower than the prevailing commercial market and under arrangements which absolved any risk factor for the prime contractor.
