ABSTRACT
After outpacing the world in the 1950s and early 1960s, the U.S. machine-tool
industry entered a “death spiral” precipitated by managerial deficiencies, cor-
porate reorganizations, and heightened international competition. Japanese and
German machine-tool builders presented a concerted challenge for global market
share and greater access to the extremely large U.S. market. This had very adverse
consequences for the Connecticut River Valley. In an astonishing role reversal,
the country became the world’s largest importer of machine tools, while goods
producers lost their early access to top-notch conventional and state-of-the-art
machine tools and the notable competitive advantages they conveyed. The story
of valleywide degeneration reveals the role played by a series of forces that
have come to typify globalization. These include outsourcing, capital flight, and
consolidation of ownership by takeover. Attention focuses on the impact of these
forces on the valley’s viability through a series of firm-specific case studies and
an analysis of what happened to the computer numerical-control sector of the
machine-tool industry.
