As a group, the world’s top industrialized nations increased their pace in installing productive new machine tools by an average of 16 percent in 2007.
The standout, once again, is the People’s Republic of China. Since 2002, it has ranked at the top in consumption, and last year its $15.4 billion worth of installations grew by $2.3 billion. For perspective, that year-to-year increase was higher than total machine-tool consumption in, say, Brazil or India or Mexico. The 17-percent growth in Chinese consumption follows several years of double-digit percentage increases, some as high as 40 percent per annum. Simply put, China took in nearly a quarter (23 percent) of the value of all machine-tool production tracked last year in our annual survey.
Nor was China alone in its growth. In other parts of Asia, Taiwan (seventh place, at 31 percent) and India (ninth place, at 36 percent) also saw exceptional increases in new cutting and forming machines shipped into their metalworking factories (see top consumers table). Significant percentage increases were also seen in Germany, Italy, and Brazil.
The international statistics come from the 43rd World Machine Tool Output & Consumption Survey, conducted annually by Gardner Publications, Inc. The World Machine Tool Output & Consumption Survey measures shipments, trade and consumption from major industrialized nations.
The great majority of the 29 countries in this year’s survey showed an increase in consumption. Consumption, in this case what economists call “apparent consumption,” is derived from taking production from a country’s own machine tool factories, adding its imports and subtracting its exports. What remains is assumed to have been installed, or consumed, internally.
The United States produced $3,578 million in its own machine tool factories; brought in $4,254 million from Japan, Germany, Taiwan and others; and shipped out $1,660 million to customers in Mexico, Canada, China and others. So, America can be said to have consumed $6,172 million worth in 2007. That number, however, is down 3 percent from the previous year’s consumption. Were that decline to become a trend, it could mean more erosion of the manufacturing base in the U.S., which until the year 2000, had been far and away the world’s leading consumer.
Keeping America internationally competitive in metalworking by installing new, up-to-date factory equipment is a key reason many manufacturing executives are praising the economic stimulus package that Congress passed and the president signed into law in February. The new law offers firms bonus depreciation for new capital expenditures, such as machine tools that are put into service this year, and it boosts how much small businesses can write off for new equipment.
If tax incentives are one reason to be at least a little bullish about U.S. factory-equipment installations, another would be the fact that orders have continued to grow. Tracked by a monthly survey conducted jointly by the American Machine Tool Distributors’ Association and AMT—The Association For Manufacturing Technology, U.S. bookings for selected machinery types actually rose during 2007, increasing backlogs in some instances.
Turning to the other side of the World Machine Tool Output & Consumption Survey—that is, the production side—global output increased to $70,986 million in 2007, a percentage gain similar to that seen on the consumption side. Of that $71 billion, 73 percent represents metalcutting machine tools including lathes and machining centers, and 27 percent represents metalforming machine tools such as presses.Japan continues to lead the world in shipments of new machines, with Germany a close second (see top producers table). Third-place producer China saw a tremendous surge in output last year as its domestic factories, which had been pressured by a ravenous local appetite, cranked up output by more than 40 percent over the previous year. The country’s imports declined a bit in 2007, as Chinese demand was increasingly supplied by Chinese output, reversing a trend. But despite slowing imports, China remains the world’s largest machine tool importer, ahead of the United States and Germany.
Among the other top-ten producers, notable gains were made by Italy, Germany and Taiwan. Moreover, exchange-rate shifts further magnified the gains made by euro-denominated currencies after converting to U.S. dollars. The ranking order of the top-ten producers remained unchanged this year, with the exception that Brazil moved ahead of France.