A Model For The 21st Century Builder?

For me, the first thing about Dr. Kapitza that stands out is his passion for the machine tool business. Whether you manufacture machining centers or multi-spindle screw machines, a machine tool business cannot be run from a textbook. It takes an understanding of the volatile cycles, which are endemic to the business, coupled with confidence in the company's core technology to see each valley through to the next peak. Few machine tool CEO's survive beyond more than one of these cycles. For most executives, it's simply not worth the anxiety.

Dr. Kapitza begins our discussion by outlining some fundamental components necessary for a manufacturer of machine tools to play a significant and profitable role in the global metalworking economy. A company must have significant critical mass to participate in foreign markets. This is one reason DMG reacquired Gital (Gildemeister Italiano) to expand its turning line into the mass market for precision turned parts. Participation means investment, according to Dr. Kapitza. It is not sufficient to merely sell into a market. One must "be there" with facilities and personnel.

This participation dovetails into DMG's philosophy of long term relationships with the market. Once a machine is sold, that transaction represents only the beginning of the deal, Dr. Kapitza emphasizes. "We are looking at the machine tool's life cycle in total. It is no longer acceptable to simply install a machine, get it running and then walk away. Moreover, it's bad business, too, because the installed base of machine tools is a source of revenue for the builder over the useful life of the machine. Shops are looking to flatten their organizations. The machine tool builder of the future will need to help supply the services that are no longer on staff at the customer's shop. Training, service, parts and programming services are among the revenue sources that can be tapped into if the company has market presence with staffing to support its sales."

Technological differentiation is another difficult hurdle for capital equipment manufacturers. Most industries live at a level of technological similarity. Occasionally a company will break out and do something different. If it is successful, the industry will usually follow in time. Linear motor technology is an example of Dr. Kapitza's efforts to move DMG out of the herd. At this fall's EMO show in Hanover, Germany, ten new machines equipped with linear motor drive systems will be introduced. Platforms designed around linear motors are machining centers, horizontal turning centers and inverted vertical turning centers. A Swiss-type screw machine with linear motors is in the works.

It's about economy of scale, says Dr. Kapitza. To get the unit price of linear motors down to acceptable levels, DMG must implement them on many machines. Eventually, he sees the industry following and the unit price declining further. "Somebody has to be first," he says.

On the CNC side of the equation, Dr. Kapitza states it succinctly. "If it doesn't have Intel inside, we won't buy it. If it doesn't have Bill Gates on the outside, I'm not interested." DMG is focused exclusively on open architecture controls for all of its machine tool lines. Having Internet capability on the machine tool CNC is a critical technological necessity to enable the company to tap into the service end of the business. "Take training for example," says Dr. Kapitza. "Traditionally, a customer sends his people to a facility for one or two weeks to learn about a new machine. Using the Internet, we don't have to move the people, we move the training. This is being done now, and we see it becoming very important in the future."

Breadth of product offerings, investment in global markets and technological differentiation describe the machine tool company of the 21st century as seen by Dr. Kapitza. It's part vision and part recognizing the direction things are going.