This article examines the problems of the machine tool industry in Britain by contrasting its performance and structure with the corresponding industry in Germany and the United States. The industry is one in which Britain's productivity, export performance and technology have lagged behind Germany and the United States since before the Second World War; these aspects are discussed in the first half of the article. The latter half considers how Britain's deficiencies in technical skills have affected the machine tool industry; the engineering industries as a whole are of course affected in varying degrees by similar factors.