9314639 Kapoor One of the most important and basic industries for any industrialized country is the "Machine Tool Industry". Machine Tools are not only the most basic foundation of any manufacturing industry, but also one of the most reliable indexes of industrial economy since the demand and supply of machine tools directly relate to state of the industrial needs. The U.S. has been the leading country of machine tools in the world since World War II. However, recently the U.S. is fourth in the world machine tool production after Japan, Germany, and U.S.S.R. The increasing trends toward "integrated flexibility" in production systems suggests future machining system must blur the boundaries between "operation" and "operation planning", between "material handling" and "material processing", and between "the so-call "agile manufacturing" and "mass manufacturing." An Industry/University Cooperative Research Center for Machine-Tool System Research at the University of Illinois - Urbana has been established to address these issues. The initial research agenda of machine tool system research Center will address: 1.) system/planning and control; 2.) machine tool structure; 3.) process development and innovation. A new initiative "SMARTCUTS" is to design, build, and test a future generation machine tool system that represents a major step forward in the advancement of machining technology. Currently, there are 8 company sponsors involved in Center's research projects and committing approximately $340,000/year. The Principle Investigator/Center Director and his colleagues at the University of Illinois - Urbana have the knowledge and facilities to run this Center. The Program Manager recommends the University of Illinois, Champaign be awarded $50,000 for the first year of a five-year continuing award. Near the end of each 12 month period the Program Director and/or the Division Director of the Engineering Education Centers Division will review the progress of the Center on a number of criteria, including the following: 1.) the extent to which the university/industry interaction is developing; 2.) the extent to which the support base is developing; 3.) the extent to which a robust research program is developing. If the review is satisfactory, the Program Director will recommend support for the next period of this continuing award.