Hardinge Inc.

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Hardinge Inc.

1 Hardinge Drive
Elmira, New York 14902-1507
(607) 734-2281
Fax: (607) 732-4925
(800) 843-8801
Web site: http://www.hardinge.com

Public Company
1931 as Hardinge Brothers Inc.
Employees: 1,510
Sales: $246.6 million (1997)
Stock Exchanges: NASDAQ
Ticker Symbol: HDNG
SICs: 3541 Machine Tools, Metal Cutting Types; 3545 Machine Tool Accessories; 3546 Power-Driven Handtools; 3599 Industrial Machinery, Not Elsewhere Classified

Hardinge Inc., located in the city of Elmira, in Chemung County, New York, which is on the south-central border of upstate New York, was founded more than 100 years ago. The company is an international leader in the machine tool industry, designing, manufacturing, and selling metal cutting lathes, grinding machines, EDM machines, machining centers, turning machines, and related tooling and accessories throughout the world. The majority of Hardinges sales are made principally in the United States and Western Europe, but Hardinge also numbers customers in Canada, China, Mexico, Japan, Australia, and other countries. A substantial portion of the companys sales are to small- and medium-sized independent job shops, which in turn sell machined parts to their industrial customers. The company also offers option packages with each of its machines to meet specific customer requirements and turnkey services through which it will engineer complete systems for customers. The company has subsidiaries located in Canada, China, Germany, Spain, and the United Kingdom, with distributors located worldwide.

The company markets its machine tools under the Hardinge and Hardinge Super Precision names directly to manufacturers in the demanding industries of automotive, aerospace, communications, computers, dental equipment, electronics, medical equipment, and photographic equipment, as well as in the construction equipment, defense, energy, farm equipment, recreational equipment, and transportation industries. Major competitors have included Bridgeport Machines Inc., Cincinnati Milacron, Giddings & Lewis, Hurco Companies, Monarch Machine Tool Co., and Newcor Inc.

Early Days, 18901930s

Hardinge Brothers was founded in 1890 and organized in Illinois, where it began manufacturing industrial-use, superprecision, and general precision turning machine tools.

There are two principal methods for producing a metal part or finished product: metal cutting and metal forming. All of the machines produced by the company are metal cutting machines.

Turning machines, commonly known as lathes, are one of the most commonly used power-driven machine tools used to remove material from a rough-formed part by moving multiple cutting tools arranged on a turret assembly against the surface of a part rotating at very high speeds in a spindle mechanism. The multi-directional movement of the cutting tools allows the part to be shaped to the desired dimensions. On parts produced on Hardinge machines, those dimensions are often measured in millionths of inches. Hardinge produces: horizontal turning machines, where the spindle is aligned horizontally to the base of the machine; vertical turning machines, where the spindle is aligned perpendicularly to the base; and Swiss-type lathes, where rotating bar stock is fed through a bushing past stationary turning tools. Each of these designs provides unique advantages to the user.

The company was reincorporated in New York in March 1931, as Hardinge Brothers Inc., a successor to the previous company. Several years later, in December 1937, Hardinge Brothers Inc. merged with Morrison Machine Products Inc., itself founded in December 1925, but kept the Hardinge name.

The company established Hardinge Machine Tools Ltd. (HMT) in the United Kingdom in 1939. HMT became a wholly owned subsidiary of the company in 1981 when it redeemed the shares previously held by other investors.

Mid-Stride, 1940s70s

In 1958, the company established a subsidiary called Canadian Hardinge Machine Tools Ltd., located near Toronto, Ontario.

In the late 1970s, the company began producing computer numerically controlled (CNC) machines and machining centers, which used commands from an on-board computer to control the movement of cutting tools and rotation speeds of the part being produced. The computer control enabled the operator to program operations such as part rotation, tooling selection, and tooling movement for a specific part, and then store that program in memory for future use. The machine would be able to produce parts while left unattended when connected to automatic bar-feeding or robotics equipment designed to supply raw materials. Because of this ability, as well as superior speed of operation, CNC machines are able to produce the same amount of work as several manually controlled machines, as well as reduce the number of operators required. Since the introduction of CNC turning machines, continual advances in computer control technology have allowed for easier programming and additional machine capabilities.

Fight for Survival, 1980s

The decade of the 1980s was a fight for survival in the turning industry. According to the U.S. Census Bureau, in 1982 there were 865 metal cutting machine tool companies in the United States operating 942 manufacturing facilities. By 1986, foreign machine tool manufacturers accounted for more than 66 percent of the U.S. market for horizontal CNC lathes, forcing the U.S. government to negotiate Voluntary Restraint Agreements (VRAs) with Japan (57 percent) and Taiwan (three percent), which were effective from January 1987 through December 1993, limiting Japanese and Taiwanese manufacturers to their 1981 market share levels of various machine tools, By 1992, the number of American metal cutting machine tool companies had declined to 393 operating 423 manufacturing facilities and, by 1994, imports once again accounted for an estimated 66 percent of U.S. sales of horizontal CNC lathesin addition to huge sections of CNC machining center (51 percent), vertical CNC lathe (79 percent), manual lathe (69 percent), and grinding machine (55 percent) sales.

In 1987, the company started implementation of Total Quality at its facilities. The process for Hardinge involved three principles: 1) Meet the Requirements; 2) Manage by Prevention; and 3) Error Free Work, resulting in continuous improvement in all areas of the company. Also that year, the company created a subsidiary called Hardinge GmbH, located in Germany.

Roaring into the 1990s

The first several years of the 1990s were decent, but not great, for the company, with revenue for 1990 reaching $102.9 million and net income reaching $4.6 million. The following year, revenues dropped to $82.6 million, with net income slipping to $2.7 million. In 1992, revenue reached $84.8 million, with a net loss of $1.2 million. From 1993 to 1998, the company would introduce 21 new machine models across its product line, bouncing back with total revenues in 1993 climbing again to $98.4 million, with a net income of $5.2 million.

In 1994, the company expanded its machine tool line to include CNC vertical turning machines and vertical machining centers, the first sales of which occurred during the first quarter of 1995. Prior to that, all of the companys turning machines were horizontal, which meant that the spindle holding the rotating part and the turret holding the cutting tools were arranged on a horizontal plane. On a vertical turning machine, the spindle and turret are aligned on a vertical plane, with the spindle on the bottom, allowing the customer to produce larger, heavier, and more oddly shaped parts on a machine that uses less floor space when compared to a traditional horizontal turning machine.

A vertical machining center cuts material differently than a turning machine. These machines were designed to remove material from stationary, prismatic (box-like) parts, usually held in a vise on a table, of various shapes with rotating tools capable of milling, drilling, tapping, reaming, and routing. The table is also able to move in various planes. Machining centers have mechanisms that automatically change tools based on commands from a built-in computer control without the assistance of an operator. Machining centers were generally purchased by the same customers as turning machines and were marketed by the company on the basis that a customer would be able to obtain machining centers with the same quality and reliability as the companys turning machines and would be able to obtain its turning machines and machining centers from a single supplier.

In 1994, revenue and net income reached $117.3 million and $6.7 million, respectively, with the machine tool industry in the United States estimated at $5.2 billion, of which $3.6 billion (69 percent) was in the metal cutting category.

The companys name was changed from Hardinge Brothers Inc. to Hardinge Inc. in May 1995. The company further extended its machine offerings into the grinding machine sector of the metal-cutting machine tool industry in November 1995 with the acquisition of St. Gallen, Switzerland-based L. Kellenberger & Co. AG for approximately $19 million.

Company Perspectives:

Hardinge Inc. designs, manufactures and sells metal cutting lathes, machining centers, and related tooling and accessories of the highest precision and reliability generally available in the market.

Founded in 1917, Kellenberger designed, manufactured, and sold high-precision manual and CNC straight, angular, and universal cylindrical grinders with the highest degree of precision and reliability available in the market. The grinding machines of Kellenberger were used to grind the inside and outside diameters of round, cylindrical parts. Such grinding machines were typically used to provide for a more exact finish on a part partially completed on a lathe. The grinding machines of Kellenberger were manufactured in both CNC and manually controlled models, were generally purchased by the same type of customers as other Hardinge equipment, and furthered the ability of the company to be a sole source supplier for its customers.

During 1997, Kellenberger and Hardinge combined their respective skills to introduce a new jointly developed line of grinders, the Kel-Vision. Revenue for the year hit $180.6 million, with a net income of $14.9 million.

During 1996, the company took yet another step to address a new market segment with the introduction of its Cobra 42 CNC Lathe. A basic, no frills, yet very reliable and accurate lathe, the Cobra provided a relatively inexpensive product offering for potential customers with limited financial resources. Additional models were added to this product line in 1997. Further refining its ability to provide products aimed at particular types of customer applications, Hardinge also introduced two new long bed lathes in 1996, specially designed to manufacture parts of greater length than would normally be possible using smaller, more conventional lathes.

By August, the turning industry was growing again due to the adoption of total quality management and successful turning machinery manufacturers were focusing on self-managed work teams, continuous learning, transformational leadership, and customer satisfaction, and looking forward to the utilization of artificial intelligence and investments in technology and flexible manufacturing.

That year, the company established its Hardinge Shanghai Company Ltd. subsidiary near the city of Shanghai in The Peoples Republic of China. The facility was created to assemble machinery for deliveries to customers located throughout Asia.

Additionally, the company received its third consecutive Supplier of the Year Award from General Motors; was honored as one of the top 50 companies in America by The National Association of Manufacturers; and total revenue for the company reached $220 million, with a net income of $17.3 million.

In April 1997, the company entered the market for electrical discharge machines (EDM) with its acquisition of privately held, Urbana, Illinois-based Hansvedt Industries Inc., the largest manufacturer of EDMs and related equipment in the United States, via a stock purchase. The acquisition of the $8 million company added another high-quality new member to the growing Hardinge family of metal cutting machines.

EDMs are used to produce complex metal parts through a process of erosion with electricity using either a cutting wire or electrode, essentially, removing metal with sparks. Many of the same customers who purchased other Hardinge products also purchased EDMs, adding a new dimension to the companys product lines without moving beyond its core businesses, and broadening the market for Hansvedt products to be sold outside the United States for the first time.

In May 1997, the company released the new Kellenberger KEL-VISION URS Universal and RS Angular OD Cylindrical Grinders for precision grinding of medium to small lot sizes. In June, the company opened new facilities in both Germany and Britain to expand sales support and customer service capabilities in the two countries, and to increase the amount of space available for the display and demonstration of products. That month also featured the introduction of Hardinges second generation CONQUEST Swiss-Turn CNC lathes, for turning, milling, drilling, and threading for high-speed production of complex parts for industries such as aerospace, computer, medical, precision instruments, and audio/video equipment.

August of that year saw the company open a Tech Center in Charlotte, North Carolina to provide improved customer support. Additionally, the center was created to provide live demonstrations of machines, support customers specific applications requests, provide direct service support, and conduct on-site programmers and hands-on training classes. Also that month, the company introduced the CONQUEST GT27 Precision Gang Tool Lathe, a product which provided precise, JIT (just-in-time) machining and an exclusive interchangeable pretooled top plate, each holding up to ten tools, which are able to be removed and interchanged within .0002 in under one minute. Additionally, General Motors Corporation bestowed the company with its third consecutive Supplier of the Year Award, chosen on the basis of quality, service, and price. Net sales for 1997 reached $247 million, with net income inching up to $17.9 million.

In April 1998, the companys common stock split three-for-two. In June, the company opened a Tech Center in Cleveland, Ohio. That month also saw the addition of a new 12-inch, 3-jaw power chuck to the companys lineup of Sure-Grip Power Jaw Chucks.

By the end of 1998, the company was looking ahead to improving uptime, just-in-time, faster cycle time, waste reduction, setup reduction, lot-size reduction, multipurpose machines and tooling, CNC, hard turning, 24-hour production, product life cycle management, and vertical integration, so that it could continue to be a profitable company well into the future.

Principal Subsidiaries

Canadian Hardinge Machine Tools Ltd. (Canada); Hansvedt Industries Inc.; Hardinge GmbH (Germany); Hardinge Machine Tools Ltd. (U.K.); Hardinge Shanghai Company Ltd. (China); L. Kellenberger & Co. AG (Switzerland); Kellenberger Incorporated.

Further Reading

Agan, Robert E., Making a Living in the Turning World, Tooling & Production, August 1996, p. 107.

Hardinge Inc., New York Times, April 24, 1998, p. C5(N)/D5(L).

Hardinge Inc., Wall Street Journal, February 3, 1998, p. B10(E).

Hardinge Inc., Wall Street Journal, April 28, 1998, p. B17(W)/B19(E).

Hardinge Reports Increased Sales, Increased Earnings in First Quarter of 1998, PR Newswire, April 23, 1998 p. 0423CGTH005.

Lathe Design Meets High Volume Demands, Tooling & Production, December 1997, p. 79.

Daryl F. Mallett