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Merger of Lamb Technicon, Cincinnati machine will be sweeping, lengthy. (Unova Unifies).

At IMTS, Unova business units unveiled horizontal-machining-center technology developed in Germany, in Michigan, and in Ohio.

Even though the machines are aimed at different customers, and notwithstanding that the developers did in fact talk to one another, there were inevitable redundancies. That duplication of effort, according to Dan Janka, president of Cincinnati Machine U.S. (Cincinnati, Ohio), is one of the drivers behind the upcoming merger of his company with Lamb Technicon (Warren, Mich.) both owned by Unova, Inc. (Woodland Hills, Calif.).

The other major driver, of course, is the collapsed market for machine tools. The merger will result in layoffs of at least 15% and in reduced capacity throughout the corporation.

The merger plan, started well before the Chicago show, was told to Unova employees and announced by the corporation ( on Oct. 1. It's expected that it won't be fully complete until the fourth quarter of 2003.

Janka will be at the center of the coming maelstrom along with his boss, Jim Herrman, who is a corporate senior vice president and the group executive for Unova's Industrial Automation Systems Group. That group comprises the so-called Integrated Production Systems segment (Lamb Technicon [machining and assembly], Honsberg Lamb, and Landis Gardner) as well as the so-called Advanced Manufacturing Equipment segment (Cincinnati Machine).

The Industrial Automation Systems group accounted for 2001 revenues of $875-million, or 57% of the Unova corporate total (the other 43% came from bar-code and wireless networking).

So far this year IAS group sales have been shrinking dramatically from already low levels. Revenues during the first half hit $309-million, down 32% from the first half of 2001. Within IAS, Cincinnati Machine, the AME segment, has been hit harder, down 38% from year-ago levels, compared to the rest of IAS, which is down 30%. And Cincinnati continues to lose money, dropping another $5.7-million in the first half.

(Not included in the merger is Unova's grinding-machine operations headquartered in Waynesboro, Pa. These include the Landis, Gardner Abrasives, and Landis Lund brands. They were substantially consolidated themselves some 2 1/2 years ago.)

There's not yet a new name for the emerging company. (A quick decision on a name may not be a priority: Back in 1997 when the corporation was itself spun off from Western Atlas, it took months to come up with "Unova.") Managers are, however, keenly aware of the tradition and loyalty involved with both "Cincinnati" and "Lamb," so it's likely that the new entity will be dubbed with some combination of those names.

Unova managers stress that a great many details are yet to be worked out. However, several specifics have been announced.

[paragraph] Production of horizontal-spindle machining centers and cellular systems, now in Cincinnati, will be moved to Michigan, and design responsibility for those products will be merged with Lamb. Three Detroit-area sites are possibilities for production: the newer Chesterfield Township, Mich., plant that now houses Lamb Body & Assembly; the headquarters plant of Lamb Technicon in Warren, Mich.; or the Lamb Canada factory across the river in Windsor, Ontario.

[paragraph] Design and production of aerospace machines will remain in Cincinnati, Ohio. This includes the five-axis profilers, the sophisticated high-speed machines, and the composites equipment like tape layers and filament winders.

[paragraph] Production of those aerospace-industry products will eventually move from the 91-year-old Marburg Avenue address in the Oakley neighborhood of Cincinnati to newer and more cost-efficient quarters. The 50-acre Oakley campus with its 1.3-million sq. ft. under roof has already been parceled into segments that in some cases have been leased or sold, creating what Dan Janka calls islands of usable space separated by other islands of inefficiency. Insiders say that operating Oakley costs the Unova business segment in excess of $13-million per year in taxes, utilities, and depreciation costs.

[paragraph] Cincinnati Plus, the aftermarket services unit that provides spare parts for Cincinnati machines, will likewise remain in the southern Ohio area but move from Oakley.

[paragraph] Production of Cincinnati's vertical-spindle machining centers and turning centers will remain in the United Kingdom. The Birmingham, England, plant had been on the market for the past several months, but selling it is "no longer an active situation at this time."

[paragraph] The Birmingham, England, plant and Lamb Technicon's operations 100 miles due east in Mildenhall, England, will be integrated into a unified management structure. Cincinnati U.K. products will continue to be sold through the existing global distribution channel.

[paragraph] Lamb's Honsberg operations in Remscheid, Germany, will reduce its existing capacity. The unit is also seen as an additional opportunity to promote Cincinnati-brand equipment within the German market.

[paragraph] Lamb Technicon will consolidate its Metalcutting and its Body & Assembly Systems operations to facilities in the Detroit area. Excess facilities will be sold or subleased. Affected plants are likely to include McNamara Design in Sterling Heights, Mich.; Lamb Marysville, in Marysville, Mich.; and Lamb Lake Orion in Orion, Mich.
 Because of the long history of Cincinnati Machine in the southern-Ohio
 area, sentiments about a move run high.

So it caused no small amount of concern when, during announcement of the upcoming changes to workers at the Oakley complex, a local Cincinnati radio station got it wrong and erroneously reported that the company was closing, with a loss of 850plus jobs.

Cincinnati Machine traces its roots back to 1884, when privately owned Cincinnati Screw & Tap incorporated a new firm to raise capital to build milling machines. That company became Cincinnati Milling Machine Co. and following World War I merged as the largest machine-tool builder in the world. It was dubbed The Mill, a moniker that lasted through the 1970 name change to Cincinnati Milacron Inc. When in 1998 Cincinnati Milacron sold the machine-tool business to Unova, the appellation The Mill stayed with the newly formed Cincinnati Machine entity.

The upcoming merger between Cincinnati Machine and Lamb Technicon is "somewhat overdue" but "generally positive," in the opinion of Eli Lusgarten, a VP at investment firm J.W. Wainwright & Co., Inc. (New York, N.Y.) who follows Unova. The analyst sees the combination as a win/win situation for both sides of the new company.

Lusgarten also envisions a possible cultural clash. The Lamb/ Cincinnati combination is somewhat reminiscent of the 1979 joining of auto-transfer-line builder Cross Co. with machining-center specialist Kearney & Trecker. That union, like the present one, was supposed to cross-pollinate ideas. But the analyst warns against making too much of the comparison: Two decades later the commodity-machine-tool business is much changed from the market K&T knew well. Lusgarten further applauds the decision to keep the specialty-aerospace business within the Cincinnati, Ohio, skills base.
 The new company "lets us pursue new opportunities that were unavailable to
 separate organizations," says Unova senior VIP Jim Herrman.

He and others at the company talk about incremental growth from introducing new concepts to each other company's customer base.

While they seem sober about the decision to further downsize and ready to face the upcoming turmoil of several moves, managers at Cincinnati Machine are upbeat about prospects for the company's future recovery. IMTS proved to be a "tremendous" lead-generating show for the Mill, and if booth attendance was down compared to previous shows, "the people who did attend were the decision-makers," according to Janka. "They were mapping out their future spending, and it included equipment from Cincinnati Machine."

Lamb Technicon, Warren, Mich. 810-497-6000.

Cincinnati Machine, Cincinnati, Ohio. 513-841-8100.
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Publication:Metalworking Insiders' Report
Geographic Code:1U3MI
Date:Oct 4, 2002
Previous Article:In Japan, August orders dip, also in advance of major Machine-Tool show.
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