What Makes the Automation Industry Strategic?

It is often asserted that the machine tool industry, and more broadly, the automation industry,1 is a strategic industry (see Rosenberg 1963, for a historical analysis of the U.S. machine tool industry and Jones 1983, for the present U.K. machine tool industry). More specifically, it is argued that an advanced local automation industry can be conducive to a rapid diffusion of new technology in the engineering industry and, by implication, a positive development of the competitive strength of the engineering industry. Thus, as Jones points out, …the structure and competitiveness of the machine tool industry is very directly related to that of the engineering sector as a whole. Despite the growing degree of intra-industry trade and international specialization, there is still a strong link between a healthy domestic machine tool industry and a competitive engineering industry … countries which are An earlier version of this chapter was published in Economics of Innovation and New Technology, 1 (4), 1991, pp. 257-269.With automation industry we mean the industry which supplies automatic production equipment to the engineering industry. Of course, there exists an industry which supplies such equipment to the process industry as well.dependent on importing the most advanced machine tools experience a certain delay in the diffusion of the latest machining technology (Jones 1983, p. 1).