Here is a report on the findings of the 2006 World Machine Tool Output & Consumption Survey.
Last year, metalworking factories in the United States consumed $5.8 billion in new machine tools. That represents a 14 percent increase over American consumption of $5.1 billion in 2004, which in turn was a whopping 30 percent improvement over the spending level in 2003.
Clearly, there has been a turnaround in the worrisome slump in American capital spending, which saw double-digit negative percentage changes in the opening years of the new millennium. In a ranking of countries by their machine tool consumption, the United States moves ahead of Germany into third place.
That’s the good news. The not-so-great news is that competitive goods-producing economies—particularly those in Asia—also increased their investment in machine tools.
China, the world’s largest consuming country for the last 4 years, saw a 15 percent boost in 2005. Japan, number two in the world, broadened its investment by nearly 30 percent. Among other Asian consumers, South Korea increased consumption by 20 percent. Taiwan, which had posted an unsustainable near-doubling of consumption a year ago, declined in consumption by 19 percent but nevertheless managed to hold on to the number-seven position. Suddenly booming India showed a 73 percent increase in machine tool installations compared to 2004.
The international statistics come from the 41st World Machine Tool Output & Consumption Survey, conducted annually by Gardner Publications, Inc., publisher of this magazine. The study measures output, trade and consumption from major industrialized nations.
Of the 28 countries in this year’s survey, three-quarters showed an increase in consumption. The term “consumption” is a derived statistic. It’s what economists call “apparent consumption,” and it’s calculated by taking a country’s production, adding in the value of its imports, then subtracting its exports. The figure of $5.8 billion in machine tools consumed by the United States comes from taking $3.2 billion in American output, adding $3.8 billion in imports and reducing the sum by the value of American exports, $1.2 billion.
As noted, the $5.8 billion in American consumption represents a 14 percent increase over the $5.1 billion figure a year ago. (However, the figure is still well below the all-time high of $8.7 billion in 1998.)
There are indications that U.S. consumption will continue to increase as this year progresses. Orders for delivery of new factory equipment keep trending upward, as tracked by two Washington-area trade associations, the American Machine Tool Distributors’ Association and AMT—The Association For Manufacturing Technology. Their joint U.S. Machine Tool Consumption statistical series tracks a sampling of bookings reported by participating members for future installation by their American customers, and it covers a substantial portion of the total U.S. market. The most recent monthly USMTC data shows a surge in December and a 2005 order total that showed year-over-year growth of 81/2 percent.
When the U.S. 2005 consumption figure is divided by the nation’s 295 million population, it works out that America spent about $19.60 per person on machine tools last year. That puts the country 15th among the 28 industrial countries in the survey in terms of per-capita machine tool investment. How does that compare to other countries? Switzerland, traditionally high in the per-capita measure, again leads with an average of a little more than $110 per capita. Other high per-capita spenders include Taiwan at $96 per resident, South Korea at around $75 and Germany at $64. At the other end of the scale are Argentina at around $4, Russia at about $3 and highly populous India at about $1 per capita. In case you’re wondering, China—with a per-capita machine tool expenditure of $8.39—ranks 23rd.
Consumption is only half the picture, however. Gardner’s World Machine Tool Output & Consumption Survey also tracks domestic machine tool production by country.
In 2005, Japan led the world in production of machine tools once again. Its $13.3 billion in output represents a 28 percent yen-based increase over its 2004 output (25 percent when converted to U.S. dollars, because of the fluctuating exchange rates during the 2 years in question). Next comes Germany with $9.5 billion in shipments, a 6 percent gain over the year before. Japan and Germany had been running neck-and-neck for the top slot in production since 1991, when East and West Germany were combined; in the past 3 years, however, Japan has been moving ahead and now holds a nearly 40 percent lead.
For the past several years, machine tools have been pouring into China, and all that consumption has encouraged the growth of a domestic machine tool-producing industry. Estimates for that local industry’s output in 2005 are pegged at a cool $5 billion, a 23 percent boost over the $4.1 billion that Chinese builders shipped during 2004. With this increase, China moves ahead of Italy as the third-largest producer. Taiwan, which saw a production increase of 10 percent last year, is in the fifth spot, producing $3.3 billion.
American machine tool builders also showed an increase in output in 2005, but only by 1 percent, so Taiwan slips ahead of the sixth-place United States in the standings. America’s $3.2 billion in production, by the way, is broken down into 80 percent metalcutting machines and 20 percent metalforming machines.
South Korea comes next, with $2.8 billion in output, followed by Switzerland, with $2.6 billion. A stand-out in terms of production increase is India, where growth in the local automotive and consumer durables industries has been firing up demand, and its domestic machine tool builders have been scurrying to keep up. Although total output, one-third of a billion dollars, is still small by the standards of the major producers, India saw 48 percent growth in its shipments last year. That was the highest percent increase of any country in the survey.
Total production by the 28 countries tracked in the world survey comes to $51.9 billion in 2005. That’s a 14 percent increase over the output of those same nations 1 year prior.
As a bloc, the five Asian countries (Japan, China, Taiwan, South Korea and India) account for $24.7 billion, or 47.6 percent of the survey total production. A year ago, they held a 44.1 percent share.
The other major bloc among producers is the 15-country Western European alliance, whose trade associations are members of CECIMO. This is the Brussels-based organization that runs EMO, the huge European show that alternates years with IMTS. CECIMO members’ shipments, $21.9 billion, held a 42.3 percent share of production in 2005; a year ago, they had a 44.7 percent share; 2 years back, they held 48 percent.
About the author: Joe Jablonowski is editor of Gardner’s Metalworking Insiders’ Report, a newsletter for executives in the factory automation business ( www.metalworkinginsider.info). He and Gardner Research Department Manager Nancy Eigel-Miller are the principal authors of the World Machine Tool Output & Consumption Survey.blog comments powered by Disqus