The Global Economy’s 2-Way Street

Don’t we make anything in America anymore?

That’s a frequent, not-so-rhetorical question when talking about a manufacturing sector that has shed a net 3 million jobs in the last four years.

More and more, we hear of U.S. companies making things in China and India and other far-flung places. The statistics are formidable: U.S. industry invested $151 billion overseas last year, according to the Commerce Department. It’s an easy factoid to wring our hands about -- and for political candidates to seize upon.

But to really understand what’s happening with the global economy, it’s important to remember that the flow of investment is not one-way.

Foreign companies poured $29.7 billion into the U.S. last year. And cumulatively, foreign-owned U.S. factories and office buildings, oil wells and distribution centers are now equal in value -- at $2 trillion -- to the overseas assets owned by U.S. firms. Xenophobes may recoil. But these investments sustain and create jobs for Americans, and they boost U.S. output.

At times, foreign owners do something even more remarkable: They help preserve the legacy of some of the most storied names in American industry.

Beginning in 1903, when it won a large contract from General Electric Co., Ingersoll Milling Machine Co. rode the ups and downs of the larger economy. The Rockford, Ill., company boomed during World War I by building 50-caliber machine guns, flourished through the 1920s by serving the auto industry, and then nearly collapsed during the Great Depression.

But Ingersoll rebounded during World War II, and in 1953 it built the largest milling machine anywhere -- 133 feet long and 500 tons. In the late ‘50s, the Rockford plant stood among the most modern machining shops in the world.

By the ‘60s, the company was eyeing opportunities abroad -- a reminder that the notion of a “global economy” was hardly invented yesterday. Ingersoll helped build a cutting-tool plant in West Germany and erected a factory in England. Later, it bought up two German firms.

But over time, Ingersoll faltered, beset by management turmoil and a heavy diet of debt. Last year, it landed in U.S. Bankruptcy Court.

And who swooped in to pick up the pieces? A trio of companies -- one from Italy, one from China and one from Israel.

Camozzi of Italy, which bought Ingersoll Machine Tools, has already returned the operation to profitability. It didn’t do that by laying off workers but by adapting its machining products to different uses for makers of aircraft, automobiles and heavy construction equipment.

“We make the product fit you, just as a tailor in Milan will make the suit fit you,” says Tino Oldani, who heads the Rockford operation for Camozzi, a 35-year-old family company based in Brescia, in northern Italy’s renowned industrial region.

Recently, the company secured a contract to supply Boeing Co.’s Wichita, Kan., plant with machine tools for production of the 7E7 jetliner. In turn, Camozzi Ingersoll is looking to hire more skilled machine designers and engineers, which would increase its payroll of 230.

So why does Camozzi want to make things in the U.S. when American manufacturers are complaining of high costs and fleeing?

As Oldani sees it, the U.S. offers an excellent supplier base -- one efficient and reliable enough to offset cost advantages offered by cheaper locales overseas. To that end, he has spread subcontracting work to many small firms around Rockford.

Yet he’s also worried about how long this supply chain will remain strong. Every time a big U.S. company moves production out of the country, he warns, “they are killing thousands of these small subcontractors.”

Oldani, who came to the U.S. 21 years ago and started his own machinery distribution firm, also frets about corporate America’s preoccupation with short-term financial results and its lack of focus on long-term issues such as properly training its workforce.

“We don’t run our business by CFOs,” he says. “Myself and the Camozzi family are not planning to make a lot of money and get out of here. We are investing in young engineers, and our present growth is dwarfed by the unavailability of talented personnel.”

Of course, foreign investors don’t all have the same agenda.

Consider Dalian Machine Tool Group Co. of China, which took over Ingersoll Production Systems, a maker of automotive equipment. Why did one of China’s largest auto parts manufacturers, with about $400 million in revenue, acquire a troubled $50-million enterprise in Rockford?

“Frankly, for the technology,” says Phil James, head of the U.S. operation. “We are transferring technology back to China to help Dalian” prosper.

For some, the specter of sending know-how abroad is perfectly frightening. They look at it as if it’s a zero-sum game, with the U.S. losing everything and gaining nothing. But the reality is that Dalian Ingersoll is expanding in the American heartland, where it supplies General Motors Corp. and Ford Motor Co. The company has added 80 employees in Illinois and Michigan -- and it’s determined to grow much more.

“China imports $4 billion a year in machinery, but the U.S. gets only 6% of the business,” James notes. “That’s pathetic, and we can do better.”

Finally, there’s Iscar, which purchased Ingersoll Cutting Tools. Iscar, headquartered in the Galilee region of Israel, boasts metalworking outlets in five U.S. locations as well as in 51 other countries. In Rockford, it has increased sales and employee numbers.

Understandably, the city fathers of Rockford have welcomed their foreign investors. When Camozzi bought the last bankrupt segment of Ingersoll in October, the local congressman, Rep. Donald A. Manzullo (R.-Ill.), hailed the newcomers for putting “many Rockford workers back on the job while providing tremendous opportunities for others in the future.”

Manzullo has no intention of letting anti-foreign sentiment kill his district’s golden goose.

Last year, as complex legislation was being prepared in Washington to respond to European Union objections over U.S. export subsidies, a clause was inserted to deny favorable tax breaks to foreign-owned companies operating in the U.S. Manzullo led an effort to have the provision removed.

Meanwhile, to attract more foreign investors, Rockford is trying to hold up its end of the bargain. It opened a center called Eigerlab for teaching advanced machining. The idea is to foster new companies that can supply bigger firms relocating to the area. One of its fledgling companies, Atometric Inc., is developing micron-size machines for use in biomedicine and computer systems.

The firm is led by the former engineering vice president of Ingersoll Milling Machine. “The world has changed,” says Tom McDunn, another former Ingersoll executive who is running Eigerlab. “And we have to change with it.”

What are we making in America today? We’re making the transition to a global economy that’s truly seamless.

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James Flanigan can be reached at jim.flanigan@latimes.com.