1) What forces are motivating Giddings & Lewis's interest in Cross Trecker?
There were several motivating factors for Giddings & Lewis's interest in Cross Trecker.
The US Machine Tool Industry was undergoing significant changes in the markets that Giddings & Lewis had dominated for several years. In 1985 Japan was selling machining centers to many U.S. customers at prices that were as low as half that of U.S. firms. Also, U.S. auto manufactures investments had fallen well below previous historic levels.
This combination of the depressed machine tool market and the 50% market share claimed by imports proved devastating to smaller U.S. machine tool makers. These smaller companies could not keep up with the rising development cost needed to compete with Japanese standards.
Giddings & Lewis recognized that if they were to survive they would have to grow their business. Many of the larger machine tool makers were successful in offering flexible machining centers that were custom engineered for the customer. Cross Trecker was well known for their name in transfer lines, milling machines and machining centers and provided an opportunity in this area if acquired.
Thus, acquiring them would make Giddings & Lewis a "full-line" machine tool company and would give them established alliances and production facilities in Japan and Europe to help them better compete. Additionally, an acquisition of Cross & Trecker by Giddings & Lewis would make Giddings & Lewis one of the top five machine tool companies in the world and provide a complete line of available machines. Access to the European markets and an already established presence would also come as a benefit for Giddings & ...