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DON'T BLAME THE JAPANESE : The Rise of Burgmaster Corp. Was a Typically American Saga--andUnfortunately, So Was Its Fall

July 12, 1987|MAX HOLLAND | Max Holland is a contributing editor of The Nation. His book on Burgmaster will be published next year by the Harvard Business School Press.

MANY PEOPLE COME TO Los Angeles to make movies. Fred Burg came to make machines.

It was 1943, and Burg had a secure, well-paying job as a department store manager in Chicago. But his passion was for things mechanical. Finally, during the Christmas shopping season, Burg got fed up. He uprooted his family to seek work in Los Angeles' booming war economy. He preferred a dirty, noisy factory, if it meant working with machines.

Nothing had fascinated Burg more than machines since he had begun work, at age 10, as a locksmith in his native Czechoslovakia. When he arrived in America in 1911, he landed a job as a lathe operator at an International Harvester plant. His aptitude for machines was exceeded only by his uncommonly inventive mind. Engineering school was out of the question, though, because Burg had to help support his 11 brothers and sisters.

When he moved to Los Angeles, Burg wanted, simply, to get back to machines. And within a year, he patented a tool-holding device and was running a business out of his garage. Over the next two decades, Fred Burg, aided by his son and son-in-law, would build a manufacturing concern--Burgmaster Corp.--that was the largest of its kind west of the Mississippi.

His enterprise bears all the attributes of a typically American vision--the rags-to-riches saga of an immigrant who had a better idea. Yet, four decades after he came to California, the company he founded no longer exists. Though Burgmaster had been one of the most successful and innovative leaders of America's machine tool industry, it couldn't withstand years of foreign competition. In January, 1986, the Burgmaster plant in Gardena and its contents were put up for sale at a public auction. The company's demise was considered proof of America's inability to compete in yet another manufacturing sector.

Yet the story of the rise and fall of Burgmaster is more than the tale of one company. It is a parable of the decimation of U.S. manufacturing--incapable of sustaining innovation and enduring increased competition, unable to integrate in the global economy. It is also the story of a system out of kilter: of a government seemingly incapable of sustaining a sound economy, leading to a climate in which "speculation replaces enterprise," in the words of the economist John Maynard Keynes; of the mismanagement of a capable and willing American work force, of Wall Street's ability to win big even while a company is irrevocably damaged.

THE IDEA THAT put Fred Burg into business for himself was a device, no bigger than a fist, that enabled lathe operators to machine holes with precision much more quickly than had been possible before. He was the inventor, sole manufacturer and salesman of the Tool-flex. When the Army discharged his son Joe and son-in-law Norman Ginsburg in 1945, Fred Burg made them partners.

All three families initially lived in one home, on Detroit Street in Hollywood. The three men made the long drive to the first small shop--at 67th and San Pedro--in one car, ate homemade sandwiches for lunch and worked six-day weeks. Fred Burg was the teacher and salesman, Norman Ginsburg learned how to make the Tool-flex on a lathe and Joe Burg was put to work drafting different designs for the tool holder. Blanche Ginsburg, Fred's daughter, kept the books.

Then one day in 1946, while he was out selling Tool-flexes, Fred Burg had an inspiration. He'd been brooding about the time and space-consuming aspects of drilling holes in metal. The problem was that no drilling machine could perform more than one kind of operation at a time. If five holes of different sizes were needed in a mass-produced part, five machines were required--or five different, time-consuming setups on a single machine. The potential market for a single drilling machine that allowed, in one setup, access to multiple tools--and with no loss in accuracy--was huge.

Burg saw a turret lathe and believed he had the answer. The operator of such a lathe could switch tools simply by rotating the turret, a circular attachment that gripped several tools simultaneously. If the concept could be adapted to drilling machines--no small engineering achievement--then one turret drilling machine could do the work of several.

Burg took the turret off an old lathe and began to build a prototype of his new machine. He couldn't afford to order the necessary castings from a foundry, so he welded pieces of metal together. When finished, the prototype looked like a common drilling machine--except for the turret smack in the middle of the machine, radiating tools in six directions. In late 1946, the first production model of the Burgmaster turret drill was sold to Beckman Instruments, a manufacturer of precision scientific instruments then based in Pasadena.

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