Durable-goods-producing plants continued to increase their purchases of new machines last year. New data show that overall world output grew slightly more than 10 percent to almost $60 billion.
American factories were part of that expansion, but they cooled a bit in their rate of expenditure increases last year. Consumption in 2006 amounted to $6.3 billion. That represents a respectable 5-percent increase from 2005’s $5.9 billion, but it’s less than the 16-percent gain the previous year or the whopping 30-percent boost coming out of the 2002 slump.
So once again, the United States ranks third among industrialized countries in terms of installations (see Top Consumers table).This puts the United States ahead of Germany, which saw a decline in expenditures last year.
However, there’s a cautionary note to the statistics. Competitors in other countries, particularly in Asia, also increased their installations of new, and more productive, factory equipment—in many cases at a rate faster than in America.
China, the world’s leading consuming country for the last 5 years, saw a 20-percent boost in 2006 to $12.9 billion. This means that the value of Chinese consumption is equal to more than 21 percent of the total output of all producing countries in the annual survey.
Japan saw only a 1-percent increase in purchases last year, measured in yen. Nevertheless, that gain still was enough for Japan to firmly hold on to the No. 2 position in consumption at a strong $7.4 billion.
Other Asian countries increased installations at a faster pace. Factories in both South Korea and Taiwan increased their spending on machine tools by 14 percent. These countries rank fifth and seventh, respectively, in the consumption listing.
India, while not quite yet in the top ten consuming nations, is sure to get there after this year. Booming industrialization continues, and consumption for the 2006 came to $1.3 billion. That figure may be only one-tenth that of giant China, but India’s pace is noteworthy. Installations, measured in rupees, grew an astounding 41 percent last year. That comes on top of a 65-percent increase from 2004, which, in turn, saw a doubling of consumption from 2003. After many years of mediocre machine-tool consumption, India is clearly skyrocketing.
The international statistics come from the 42nd World Machine Tool Output & Consumption Survey, conducted annually by Gardner Publications, Inc. The WMTO&CS measures output, trade and consumption from major industrialized nations.
Of the 29 countries in this year’s survey, all but three showed an increase in consumption. Consumption, in this case what economists call “apparent consumption,” is a statistic derived from taking production from a country’s machine tool factories, adding its imports and subtracting its exports. What’s left is assumed to have been installed—consumed—internally.
So in the case of the United States, $3.7 billion in domestic production, plus $4.4 billion in imports, minus $1.8 billion in exports comes to $6.3 billion in consumption for 2006, still well below the all-time U.S. record of $8.7 billion in 1998.
The increase in American consumption undoubtedly will continue in 2007. Machine tool orders placed by U.S. factories continue to increase, and as these orders are fulfilled, this will be reflected in the next WMTO&CS. American orders, tracked by the two Washington-area trade groups—AMT–The Association for Manufacturing Technology and the American Machine Tool Distributors’ Association—show a 2006 order level that's ahead of 2005 by 27 percent.
Turning to the WMTO&CS’s other main measure, which is output, there are several notable changes from last year. Once again, the news seems to be concentrated in Asia.
Japan continues to lead the world in production of metalcutting and metalforming machine tools with $13.5 billion in shipments in 2006, a yen-based increase of 8 percent. But more remarkable is the growth of China as a producer. The People’s Republic of China’s domestic machine tool industry grew 37 percent last year, as Chinese factories sought to meet a voracious local appetite that had previously been fed by imports. With estimated shipments of $7 billion, China ranks as the world’s third largest producer, behind Germany and ahead of Italy.
Other Asian producers also made significant gains. South Korea had an 18-percent boost in output last year and moved into fifth place. Taiwan, sixth, saw a 10-percent gain in 2006 to $3.7 billion, moving ahead of the United States, which saw a 5-percent increase in production to $3.6 billion.
The other major Asian player, India, still has modest machine tool output by Japan/China/Korea/Taiwan standards. However, 18th-ranked India has a domestic industry that, like China, is striving to meet growing internal demand; last year, its shipments grew 47 percent, the largest percentage increase of any of the 29 countries in the survey.
About the author: Joe Jablonowski is editor of Gardner Publications’ Metalworking Insiders’ Report newsletter. Find more information at www.metal workinginsider.info.blog comments powered by Disqus