American Tragedy
An American Tragedy: How a Good Company Died
The Rust Belt is back. So say bullish observers as U.S. exports surge, long-moribund industries glow with newfound profits, and unemployment dips to lows not seen in a decade. But in the smokestack citadels, there’s disquiet. Too many machine-tool and auto parts factories are silent; too many U.S. industries still can’t hold their own.
What went wrong since the heyday of the 1960s? That’s the issue Max Holland, a contributing editor of The Nation, takes up in his nutsy-boltsy but fascinating study, When the Machine Stopped.*
The focus of the story is Burgmaster Corp., a Los Angeles–area machine-tool maker founded in 1944 by Czechoslovakian immigrant Fred Burg. Holland’s father worked there for 29 years, and the author interviewed 22 former employees. His shop-floor view of this small company is a refreshing change from academic treatises on why America can’t compete.
The discussions of spindles and numerical control can be tough going. But Holland compensates by conveying the excitement and innovation of the company’s early days and the disgust and cynicism accompanying its decline. Moreover, the fate of Burgmaster and its brethren is crucial to the U.S. industrial economy: Any manufactured item is either made by a machine tool or by a machine made by a machine tool.
Producing innovative turret drills used in a wide variety of metal working tasks, Burgmaster was a thriving enterprise by 1965, when annual sales amounted to about $8 million. The company needed backing to expand, however, so it sold out to Buffalo-based conglomerate Houdaille Industries Inc. Houdaille was in turn purchased in a 1979 leveraged buyout (LBO) led by Kohlberg Kravis Roberts & Co. By 1982, when debt, competition, and a sickly machine-tool market had battered Burgmaster badly, Houdaille went to Washington with a petition to withhold the investment tax credit for certain Japanese-made machine tools.
Thanks to deft lobbying, the Senate
The Rust Belt is back. So say bullish observers as U.S. exports surge, long-moribund industries glow with newfound profits, and unemployment dips to lows not seen in a decade. But in the smokestack citadels, there’s disquiet. Too many machine-tool and auto parts factories are silent; too many U.S. industries still can’t hold their own.
What went wrong since the heyday of the 1960s? That’s the issue Max Holland, a contributing editor of The Nation, takes up in his nutsy-boltsy but fascinating study, When the Machine Stopped.*
The focus of the story is Burgmaster Corp., a Los Angeles–area machine-tool maker founded in 1944 by Czechoslovakian immigrant Fred Burg. Holland’s father worked there for 29 years, and the author interviewed 22 former employees. His shop-floor view of this small company is a refreshing change from academic treatises on why America can’t compete.
The discussions of spindles and numerical control can be tough going. But Holland compensates by conveying the excitement and innovation of the company’s early days and the disgust and cynicism accompanying its decline. Moreover, the fate of Burgmaster and its brethren is crucial to the U.S. industrial economy: Any manufactured item is either made by a machine tool or by a machine made by a machine tool.
Producing innovative turret drills used in a wide variety of metal working tasks, Burgmaster was a thriving enterprise by 1965, when annual sales amounted to about $8 million. The company needed backing to expand, however, so it sold out to Buffalo-based conglomerate Houdaille Industries Inc. Houdaille was in turn purchased in a 1979 leveraged buyout (LBO) led by Kohlberg Kravis Roberts & Co. By 1982, when debt, competition, and a sickly machine-tool market had battered Burgmaster badly, Houdaille went to Washington with a petition to withhold the investment tax credit for certain Japanese-made machine tools.
Thanks to deft lobbying, the Senate