The Machine Tool Industry in 2018

The machine tool industry received some positive news in 2017 as it was the first year to see positive gains in consumption. Reporting firm Statista found that consumption in 2017 was 1.6% more over the previous year. Although this seems like a small blip on the radar, with the constant ups and downs of the machine tools industry, any shift in the right direction is always celebrated.

This is just the beginning, in fact, according to that same report, experts are predicting positive gains in consumption over the next few years which is great news for machine tool lenders and buyers in the U.S. and across the world.

The Top Five Machine Tools Lenders

EDA recently published its annual report on the machine tool industry analyzing the most successful lenders and buyers alike. According to their research, the top five machine tool lenders are the following:

1.     CNC Associates Inc.
2.     Banterra Bank
3.     DMG Mori Seiki USA
4.     Ellison Tech
5.     Hartwig Inc.

All five of these lenders accounted for 42.6% of the total units sold. Of all of the top 20 lenders that EDA followed, they filed a combined 481 new machine tool related financial statements in November 2017.

Number one on this list, CNC Associates, had a great year as they accounted for 15% of the total share with 72 units sold in EDA’s report.

Additionally, industry research firm AMT reported that October 2017 machine tool orders were up 7.6% over October 2016’s numbers.

Who’s Buying?

EDA also compiled a list of the top five buyers in the U.S. as follows:

1.     Kennametal                 Pennsylvania, USA                  16
2.     TE Connectivity           Pennsylvania, USA                   9
3.     Aerofit                          California, USA                         8
4.     C&C Machine Tool       Minnesota, USA                       8
5.     FMI Holdings               Texas, USA                               8

Buyers come from a variety of different industries, and as we mentioned, the success of various manufacturing sectors ultimately drives the success of the machine tools financing market as well.

Explaining the Ups and Downs

Over the last few decades, the machine tools market has seen many changes that seem to happen for no apparent reason. Most recently, IndexBox reported that the value of the entire industry in the U.S. decreased by 4.5% from 2014 to 2015. It can seem hard to determine exactly what is hurting the machine tools industry but many have pointed to a few different ideas.

China’s Expanding Manufacturing Sector

Many analysts believe that China’s increasing hunger for more machine tools largely drives the market and keeps the highs higher than expected and the down periods less devastating than in decades past.

Additionally, more manufacturing overseas, in general, has given the world manufacturing industry a boost. The primary reason that more companies are investing in production abroad can largely be contributed to the near-zero interest rates over the last decade.

Low Interest Rates 

Low interest rates caused many U.S.-based companies to invest in production overseas where the labor is cheaper. This is detrimental to the U.S. market but provides these overseas businesses a boost in their manufacturing and in turn, their machine tools purchases.

We can’t look into a crystal ball to predict exactly what the market will do in 2018, however with industry analysts all predicting an increase in the machine tool consumption and recent shifts in economic policy, expect 2018 to be a good year for the industry.

*Article originally posted on our Voog blog here.