Tech Giants: Starting from Bankrupt Companies

68: Chapter 68: Exploration on the RuinsJuly 4, 2017, 9:00 AM, Shenyang

In Northeast China in July, the mornings still carried a slight chill.

As the convoy entered the main gate of Shenyang Machine Tool, Su Chen glanced at his watch: 9:08 AM. The factory gate was a typical Soviet-style structure—tall, heavy, and imposing. The relief of the red star on the lintel was already peeling, but the four large characters for ’Shenyang Machine Tool’ remained bold and powerful.

Entering the factory grounds felt like stepping back in time.

The first sight was rows of blue-brick factory buildings with old-fashioned sloped tile roofs and tall, narrow windows. White slogans were painted on the walls: ’Go all out, aim high.’ The characters had faded almost beyond recognition. These were among the first workshops built with Soviet aid in 1953.

Driving further, they passed gray prefabricated-panel workshops built in the 1980s. They were boxy and rigid but much larger in scale. The slogans on the walls had changed to ’Time is money, efficiency is life.’

Further in were modern workshops built in 2005—silver-gray steel structures with extensive glass curtain walls, strongly designed. But now, much of the glass was broken, the curtain walls were filthy, and discarded packaging boxes were piled at the entrances.

The factory complex was vast, covering 2.6 square kilometers, equivalent to over three hundred standard soccer fields. The convoy drove for five minutes before reaching the core area.

The leadership team of Shenyang Machine Tool was already waiting in front of the office building. Six people, their average age appearing over fifty, dressed in outdated-style suits, standing stiffly.

After brief pleasantries, the factory director—a deputy department-level cadre surnamed Wang—began the briefing. His report was full of official jargon: ’Under the care of superior leadership... overcoming difficulties... actively promoting reforms...’

Su Chen interrupted him: ’Director Wang, we’d like to see the workshops first. Starting with the oldest.’

Workshop One: The 1953 Legacy

Workshop One was one of the original Soviet-aid buildings. Upon entering, a smell blending machine oil, rust, and dust hit them. The workshop was high, at least fifteen meters, with a wooden truss roof that had turned black. Many of the skylight panes were broken, and sunlight streamed through the holes, forming pillars of light.

A few machines were still operating inside. Not many, about a dozen or so, scattered across the enormous space, making it feel even more cavernous.

Chen Zhiyuan quickly walked over to a boring machine. It was a genuine ’antique’—manufactured in the Soviet Union in 1955. Its body was made of heavy cast iron, painted dark green. The control panel was covered with Russian labels and mechanical knobs.

An Old Master Craftsman was operating it. He looked to be in his sixties, hair completely white, but his movements were still steady. He turned a handwheel, the worktable slowly moved, and the tool tip made contact with the workpiece, emitting a faint cutting sound.

’Master, may I see the part you’re machining?’ Chen Zhiyuan asked.

The old master stopped, removed the part from the chuck, and handed it over. It was a flange, about 300mm in diameter. Chen Zhiyuan took a micrometer from his toolbox and measured it—the bore accuracy barely reached 0.1mm, while Xingchen Heavy Industry’s standard was 0.002mm.

’What is your surname, Master?’ Su Chen asked.

’Liu, Liu Weiguo,’ the old master replied, his voice hoarse. ’Eighth-grade fitter. Started at the factory in 1972. This year... makes forty-five years.’

Forty-five years. Su Chen’s heart clenched. This old master had given the better part of his life to this machine.

’Master Liu, can this machine tool... still be used?’ Lin Wan asked softly.

’It works,’ Liu Weiguo said, patting the machine bed. The cast iron gave a dull thud. ’It’s just old. The guideways are worn, the lead screw has backlash, the spindle runout is large. But I know it well, understand its quirks. I know where to go light, where to go heavy, where to take an extra cut or one less. I have a feel for it.’

He paused, his eyes dimming. ’But the things it makes... the precision isn’t good enough anymore. We used to make production lines for FAW, aircraft parts for Harbin Aircraft. Now... we can only do rough work. And there’s not much rough work left to do.’

Zhao Qing inspected the machine’s condition and returned to whisper to Su Chen: ’Guideway wear exceeds 0.5mm, lead screw backlash is 1.2mm, spindle radial runout is 0.15mm. By standards, this machine should be scrapped. But the old master, relying on feel, manages to keep machining accuracy within 0.1mm—he’s a true craftsman. But it also shows our manufacturing still relies on individual ’feel,’ not scientific ’precision.’’

Su Chen looked at Liu Weiguo. ’Master Liu, if you were given a new CNC machine tool, could you operate it?’

The old man smiled, a bitter smile. ’Learned CNC when I was young, but that was twenty years ago. The new systems now are all in English, German... I can’t read them. The factory organized training, but... my mind can’t keep up.’

He stroked the cold machine. ’This old partner has been here longer than I have. It can still move, but the things it makes... nobody wants them. Same with me. I can still work, but the skills I know... are obsolete.’

Workshop Five: The 2005 Modern Mirage

Workshop Five was built in 2005 and was once hailed as ’the symbol of modernization for China’s machine tool industry.’

Entering the workshop, everyone was stunned.

The workshop was new—steel structure, epoxy flooring, LED lighting—conditions far superior to Workshop One. But it was empty, save for one enormous machine in the very center.

It was a German-made five-axis gantry milling machine. Its body was dark gray, over fifteen meters long and six meters high, like a slumbering steel behemoth. The ’Siemens’ logo on the control cabinet was still clear, but the machine’s surface was covered in a thick layer of dust, with patches of rust visible in places.

Chen Zhiyuan quickly walked over, put on gloves, and began inspecting.

’Guideways rusted... here, and here.’ He pointed at dark red spots on the guideway surfaces. ’The lubrication system is completely dry. The CNC system...’ He opened the control cabinet and pressed the power button—no response.

’Battery depleted,’ Chen Zhiyuan said, his voice pained. ’The CNC system parameters are stored in battery-backed RAM. The battery is dead, all parameters lost—including geometric accuracy compensation values, thermal deformation compensation, backlash compensation. Restoring these requires the original manufacturer’s engineers with specialized equipment to re-measure and input. And the German engineers charge 5,000 euros per day just to show up, and they might not even be willing to come.’

He continued checking. ’Linear scale severely contaminated, the reading head is probably damaged. Spindle cooling system pipes aged and cracked. Hydraulic system... the oil has emulsified and degraded.’

Chen Zhiyuan straightened up, looking at this piece of equipment once worth 800 million rmb, once world-class. His voice trembled. ’To restore it would cost at least 30 million. And even restored, its performance would only be 70% of its peak. Moreover, without sustained funding for maintenance, it would break down again quickly.’

Su Chen asked, ’How long has this equipment been unused?’

Director Wang, standing nearby, answered awkwardly. ’It was shut down in 2014. At the time... funds were tight, maintenance costs were too high, so...’

’So you just let it rust like this?’ Zhao Qing couldn’t help raising his voice. ’Do you know how much value this machine could create per hour? Under normal operation, machining an aircraft engine casing, it could charge 3,000 yuan per hour! Eight hours a day is 24,000, a month is 720,000! And you let it rust here for three years?’

No one answered.

In the corner of the workshop, a pile of items was covered with dust cloths. Su Chen walked over and lifted a corner—it was an unfinished machine tool prototype. The body was mostly formed, but the control system and drive system weren’t installed, like a soulless shell.

’This is...’ Su Chen asked.

’Our self-developed five-axis machine tool prototype,’ a technical vice president finally found a chance to speak. ’Project started in 2012, 3 billion rmb in R&D funding invested, mechanical parts completed in 2015. But the CNC system... we tried using a domestic system, stability wasn’t sufficient. Wanted to use a Siemens system, but they wouldn’t sell the latest 840D, only the previous generation 810D, and at 40% above market price...’

His voice grew quieter. ’So the project... was shelved.’

Chen Zhiyuan inspected the prototype and shook his head. ’Defects in the mechanical design. Column rigidity is insufficient, will vibrate during high-speed cutting. Wrong guideway selection—used ordinary linear guides instead of high-rigidity roller guides. Even with the best system installed, this machine couldn’t meet five-axis accuracy requirements.’

He looked at the technical vice president. ’When was the last time your design team attended an international machine tool exhibition?’

’2010... I think.’

’That explains it,’ Chen Zhiyuan sighed. ’In seven years, international machine tool technology has iterated at least two generations. Using knowledge from seven years ago to design a machine for today—how could it succeed?’

Personnel and Technical Archives: Dilemmas in Two Dimensions

At 11:00 AM, in the factory complex meeting room, Su Chen met with Shenyang Machine Tool’s remaining management team.

Eight people, average age 52. Their resumes were impressive: graduated from some university’s mechanical engineering department, participated in some national key technology project (mostly in the 1990s), received some scientific and technological progress award (usually third prize).

A deputy director in charge of production spoke: ’Mr. Su, the main problem with our Shenyang Machine Tool lies in the market. Competition is too fierce now. German and Japanese products have good quality, and their prices keep dropping. It’s not that we lack technology; it’s that the market doesn’t recognize...’

’No,’ Zhao Qing interrupted directly. ’With all due respect, you have it backwards. Your technology doesn’t meet market requirements, so the market doesn’t recognize you.’

He pulled up photos taken earlier. ’The Soviet boring machine in Workshop One, precision 0.1mm; the German five-axis mill in Workshop Five, abandoned and rusting; the self-developed prototype, with serious design flaws. This isn’t a market problem. It’s a technology problem, a management problem, a mindset problem.’

The meeting room atmosphere grew awkward.

In the afternoon, they visited the technical archives room.

It was in an old three-story building, the wooden stairs creaking underfoot. The archives room was on the top floor, no air conditioning, unbearably stuffy on a July afternoon.

Rows of wooden blueprint cabinets lined the walls, labels on the doors: ’Lathes (1953-1978),’ ’Milling Machines (1958-1985),’ ’Boring Machines (1962-1990)...’

Chen Zhiyuan pulled open a drawer. Inside were rolls of hand-drawn blueprints on old-style tracing paper, now yellowed and brittle. He carefully unrolled one—it was a general assembly drawing for an ordinary lathe designed in 1978. The lines were neat, annotations clear, using third-angle projection (Soviet standard).

’The design concept was advanced for its time,’ Chen Zhiyuan said softly. ’All-gear headstock, six-position tool post, capable of thread cutting. But the problem is—for the next forty years, this drawing was hardly updated. Were processes improved? Materials optimized? Structures strengthened? No. For forty years, relying on this one drawing, they produced tens of thousands of nearly identical lathes.’

He continued searching and found even more shocking facts: Shenyang Machine Tool held 824 nationally authorized patents, but most patent certificates were brand new, indicating they were never actually applied. There were also 37 confidential military process archives, sealed in dedicated security cabinets, the seals intact—meaning these processes never left the archives room to be converted into actual productive capacity.

’A waste of God-given resources,’ Chen Zhiyuan said only four words.

Workers’ Dormitory Area: The Human Element

The final stop of the inspection was the workers’ dormitory area.

It consisted of five old six-story slab buildings from the 1980s. The buildings were dilapidated, balconies enclosed with plastic-steel windows of various colors, clotheslines extending outside hung with laundry.

Hearing that the Spark inspection team had arrived, many workers and family members gathered downstairs. There was no clamor, just quiet watching. Their eyes were complex: expectation, suspicion, numbness, and a hint of hostility—after all, in the eyes of many older workers, a private enterprise coming to acquire a state-owned enterprise meant ’capitalists coming to exploit us.’

An old man stepped out from the crowd. He looked to be in his seventies, back straight, walking with a slight limp.

’Mr. Su, I’m the former factory union chairman, retired, surname Yang,’ the old man said, his voice resonant. ’May I have a few words?’

Su Chen nodded. ’Please, Chairman Yang.’

’I just have one question,’ the old man said, looking Su Chen directly in the eyes. ’Can the factory still be saved?’

Before Su Chen could answer, he continued. ’I entered the factory in 1965, worked until retirement in 2005. Forty years. I saw the factory grow from a few hundred people to over thirty thousand. I saw us build China’s first CNC machine tool. I saw our products exported to over twenty countries. Back then, workers of Shenyang Machine Tool walked with their chests out.’

He pointed around. ’But now? All the young people have left, gone south to work, to deliver food, to drive for ride-hailing apps. My grandson graduated from university last year, studied mechanical engineering. I told him to come back to the factory. He said, ’Grandpa, that factory of yours should have closed down long ago.’’

The old man’s voice choked. ’I said, three generations of our family have worked with machine tools. Your great-grandfather was an apprentice trained by the first batch of Soviet experts. Your grandfather, me, worked my way up to union chairman. Your father is still in the workshop. This is our family’s root. My grandson said, ’If the root is rotten, what’s the point of clinging to it?’’

He grasped Su Chen’s hand, his grip strong. ’Mr. Su, you’re from the south, you’ve seen the wider world. Tell me, can this factory still be saved? Can the root of China’s machine tool industry still be preserved?’

Su Chen looked at the old man’s wrinkled face, at the light in his eyes that had nearly died out but was struggling to rekindle. For a moment, he couldn’t speak.

Behind him, Lin Wan gently nudged him. She was reminding him: Don’t make promises lightly. If you promise, you must deliver.

Su Chen took a deep breath. Instead of answering directly, he asked a question in return. ’Chairman Yang, if the factory needs to change, needs major surgery—maybe some people will have to be let go, maybe old rules decades in the making will have to change—can everyone accept that?’

The old man was silent for a long time. The people around were also silent.

’As long as the factory can live,’ the old man finally said. ’As long as China’s machine tools can still be made, and made well. We... can accept it.’

When they left the dormitory area, dusk was approaching.

The setting sun cast long shadows across the old factory grounds. The pointed roofs of the Soviet-style workshops etched heavy silhouettes against the sky.