A trend report concerning machine tools, one of 2011’s hottest industries. We re-visited the segment with the help of industry reports and our own Jason Adler.
When we last took a look at machine tools, the industry was doing blockbuster business.The demand for machine tools—which include milling machines and lathes—was so high that production was still struggling to keep up.
But that was September, and this is January 2012. What’s changed in the last few months?
Where The Industry Stands
One stat stands out overall: Machine tool orders are up nearly 74% over 2010, according to the American Tool Distributors’ Association and The Association for Manufacturing Technology.
“Manufacturing technology orders slowed slightly in November, but maintained their sprint toward the 2011 finish line thanks to the bonus depreciation tax incentive,” said Peter Borden, AMTDA president.
Obviously this bodes well for 2012, regardless of the end-of-the-year slowdown.
The other big issue is not that manufacturing is slowing down—it isn’t—but that demand continues to outstrip supply. Obviously that’s healthy, but those waiting probably will be tapping their feet in the next few months.
“Over the course of 2011 the available used machine inventory declined (as used machines were consumed in the market) and that forced increase in new machine tool orders as there was not an alternative even though lead time was still extended. Buyers just had to deal with the lead time it if they wanted a machine. So new machine tool orders continue to increase even thought the lead times are still pretty long,” Adler told us.
So the overall picture is of an industry with booming demand and quality sales. So what’s next?
Where The Industry Is Going
We’re not prognosticators by nature, but it would take a hell of a crash to kill off the machine tool momentum.
In fact, it’s fair to assume that given how strong demand has been, it will continue to grow. At some point supply will catch up with demand, but I can’t see it happening in the next twelve months. That’s especially true when you consider that used machine inventory is also running low at the moment, again due to that omnipresent demand that’s leading to customers and vendors snapping up machine tools all over the country.
“Machine tools will continue to be a hot market segment in 2012,” Adler said, “and that’s a great thing.”