Metalworking Machinery Manufacturing in the US Industry Report

8/11/2019 Metalworking Machinery Manufacturing in the US Industry Report

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WWW.IBISWORLD.COM Metalworking Machinery Manufacturing in the US September 2013 1

IBISWorld Industry Report 33351Metalworking MachineryManufacturing in the USSeptember 2013 James Crompton

Transition metal:Demand will strengthen, butoverseas competition will limit growth

2 About this Industry

2 Industry Definition

2 Main Activities

2 Similar Industries

2 Additional Resources

3 Industry at a Glance

4 Industry Performance

4 Executive Summary

4 Key External Drivers

6 Current Performance

8 Industry Outlook

10 Industry Life Cycle

12 Products & Markets

12 Supply Chain

12 Products & Services

13 Demand Determinants

14 Major Markets

16 International Trade

18 Business Locations

20 Competitive Landscape

20 Market Share Concentration

20 Key Success Factors

20 Cost Structure Benchmarks

22 Basis of Competition

23 Barriers to Entry

24 Industry Globalization

25 Major Companies

27 Operating Conditions

27 Capital Intensity

28 Technology & Systems

28 Revenue Volatility

29 Regulation & Policy

30 Industry Assistance

31 Key Statistics

31 Industry Data

31 Annual Change

31 Key Ratios

32 Jargon & Glossary

www.ibisworld.com | 1-800-330-3772 | [email protected]


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Companies in this industry primarilymanufacture power-operated tools thatare used for nishing or shaping metalparts, which are then used to manufactureother machines. Industry productsinclude: metal cutting tools, special dies,

coil handling equipment, and wiredrawing and fabricating machines. Thisindustry excludes companies thatprimarily manufacture power tools andother general-purpose machineryaccessories (IBISWorld report 33399).

The primary activities of this industry are

Manufacturing special dies, tools, die sets, jigs and fixtures

Manufacturing metal-cutting and forming machine tools

Manufacturing industrial molds

Manufacturing cutting and machine tool accessories

Manufacturing rolling mills and other metalworking machinery

33321 Woodworking Machinery Manufacturing in the US

This industry manufactures machinery specifically for working with wood.

33322 Plastics & Rubber Machinery Manufacturing in the US

This industry manufactures machinery specifically for working with plastics and rubber.

33399 Power Tools & Other General Purpose Machinery Manufacturing in the US

This industry manufactures power-driven hand tools, welding equipment and soldering equipment.

Industry Definition

Main Activities

Similar Industries

Additional Resources

About this Industry

For additional information on this industry

www.amtonline.orgAssociation for Manufacturing Technology

www.ntma.orgNational Tooling and Machining Association

www.pma.orgPrecision Metalforming Association

The major products and services in this industry are

Cutting tool and machine tool accessory manufacturing

Industrial mold manufacturing

Metal-cutting and forming machinery

Rolling mill machinery

Special tool, die, jig and fixture manufacturing


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Demand from machine shop services

SOURCE: WWW.IBISWORLD.COM

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Revenue Employment

Revenue vs. employment growth

Products and services segmentation (2013)

34.4%Special tool, die, jig andfixture manufacturing

23.0%Metal-cutting andforming machinery

20.4%Industrial moldmanufacturing

19.3%Cutting tool and machine

tool accessory manufacturing

2.9%Rolling mill

machinery


Key StatisticsSnapshot

Industry at a GlanceMetalworking Machinery Manufacturing in 2013

Industry Structure Life Cycle Stage DeclineRevenue Volatility High

Capital Intensity Low

Industry Assistance Low

Concentration Level Low

Regulation Level Light

Technology Change Medium

Barriers to Entry Low

Industry Globalization High

Competition Level High

Revenue

$29.9bnProfit

$1.9bnExports

$6.9bnBusinesses

6,495

Annual Growth 13-18

1.4%Annual Growth 08-13

-

1.1%

Key External DriversDemand from machineshop services

Demand from automobileengine and partsmanufacturing

Private investment inmetalworking machinery

Trade-weighted index

World price of steel

Market Share

There are noMajor Players in

this industry

p. 25

p. 4

FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 31



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Key External Drivers Demand from machine shop servicesMachine shops are a key downstreammarket for industry manufacturers.These shops use metalworking machineryproducts such as lathes, milling machinesand drill presses to shape materials.Demand from machine shop services isexpected to increase during 2013,representing a potential opportunity forthe industry.

Demand from automobile engineand parts manufacturingOriginal equipment manufacturers ofmotor vehicle parts require a number ofmetalworking machines to produceengines, bodies and other vehicle parts.Therefore, rising demand from motor

vehicle parts manufacturers positivelyaects industry demand. Demand fromautomobile engine and parts

ExecutiveSummaryIn the ve years to 2013, theMetalworking Machinery Manufacturingindustry has been recovering from therecession. The industry produces power-operated tools and machine accessoriesused for nishing or shaping metal parts.Machine shops are a key source ofdemand for metalworking units; industrycompanies develop tools and equipmentthat downstream producers, includingmotor vehicle parts manufacturers, use.

Additionally, activity in manufacturingindustries, domestically and abroad,

lters into this industry in the form ofprivate investment in metalworking

machinery. In 2009, industry operatorsfaced a disastrous year, with revenuefalling 30.8%, as the global recessionsqueezed demand in foreign anddomestic automobile and construction

sectors. As a result of these weak demandconditions early in the period, revenue isexpected to decline at an annualized rateof 1.1% in the ve years to 2013.However, IBISWorld expects growth toreturn in 2013, with revenue increasing2.4% to $29.9 billion.

Private investment in metalworkingmachinery is expected to total $27.7

billion in 2013, up from $19.0 billion in

2009. As manufacturing industriesrecover from the recession, demand willbe steady for industry manufacturers dueto the widespread use of their products.Nevertheless, competition from cheaperimports has undermined the eorts ofdomestic manufacturers, and the numberof industry operators has fallen at anannualized rate of 2.8% to 6,495 duringthe past ve years. If the current

workforce becomes more productive,companies can employ fewer workers. Inorder to boost prot and combat high

input prices, notably steel, wages areexpected to decrease at an average annualrate of 2.3% to $8.0 billion in 2013.

IBISWorld anticipates that moderategrowth will continue in the ve years to2018. Robust demand from Asianmarkets and rising commodity prices

will likely drive renewed investmentacross the mining and energy sectors,sustaining demand for metalworkingproducts that manufacture relatedequipment. In the latter half of the nextve years, industry revenue will level o,

as competition from emerging marketsin Asia increases, and the continuedrelocation of American production tooverseas factories reduces the potentialrevenue base. Still, as the globaleconomy improves and downstreamdemand for machinery and equipmentrebounds, IBISWorld forecasts industryrevenue to increase at an annualized rateof 1.4% to $32.1 billion.

Industry PerformanceExecutive Summary | Key External Drivers | Current Performance

Industry Outlook | Life Cycle Stage

Renewed demand across downstreammanufacturing industries will boost growth


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Industry Performance

Key External Driverscontinuedmanufacturing is expected to increaseduring 2013.

Private investment in

metalworking machineryTrends in private investment inmetalworking machinery positively aectmovements in industry revenue. Higherprivate expenditure on metalworkingmachinery leads to greater demand formetal parts provided by the industry. Keydownstream markets includeconstruction, mining, and automobile

industries. Private investment inmetalworking machinery is expected toincrease during 2013.

Trade-weighted indexThe trade-weighted index (TWI) measuresthe value of the US dollar relative to thecurrencies of its largest trading partners.

Since the metalworking machinerymanufacturing industry maintains a highlevel of international trade, volatility inthe TWI exposes the industry to trade risk.

As the TWI increases, the price of USexports increases, making them lessattractive to purchasers abroad, andimports more attractive to domesticmarkets. The TWI is expected to increaseduring 2013, representing a potentialthreat to the industry.

World price of steel

Steel is a major input in the production ofmetalworking machinery. Consequently,the price of steel can have material eectson prot and revenue for companies thatproduce this machinery, with rising steelprices limiting potential margins. The

world price of steel is expected toincrease during 2013.

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Demand from automobile engine and partsmanufacturing


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Demand from machine shop services


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Downstream demandreturning

Prior to 2008, growth for the MachineShop Services industry (IBISWorldreport 33271) was strong becauseincrease was fueled by the robustperformance of heavy machinerymanufacturers. Traditional majormarkets, such as automobile andmachinery manufacturers, were growingin step with market demand. Meanwhile,increased government spending ondefense and military aviation furthercontributed to demand growth formachine shops. During the year,underperforming downstream industriesoutweighed the more resilient segments.Sectors, such as commercial aviation andautomotive manufacturing, were hitparticularly hard by the economicdownturn, but conditions in thesemarkets stabilized and improved towardthe end of 2010. Demand for machineshop services has continued to recover asits own markets have stabilized. This

factor is expected to benet theMetalworking Machinery Manufacturingindustry, given that machine shops arethis industrys largest market.

Before the governments Cash forClunkers program provided a much-needed boost to the automotive sector,the domestic automotive industry wentthrough a period of gradual decline,culminating in its near collapse in early2009. The ensuing decrease in demandfrom automotive manufacturingcontributed to a 30.8% drop inMetalworking Machinery Manufacturingindustry revenue in 2009. USmanufacturers struggled to adapt torising petroleum prices and

The Metalworking MachineryManufacturing industry createsmachines that ultimately construct othermechanical devices. For example,industry player Kennametal producescomputer-controlled turning, boring,milling and drilling machines that canturn a solid chunk of steel into an engine

block, manifold or crankshaft. The samemachines may also create molds or diesthat are then used to stamp out shapesand patterns in other raw materials onassembly lines. In this way,

metalworking machinery represents aprimary input in most industrialprocesses that output machinery, metalproducts, vehicles and heavy equipment.In 2013, industry revenue is expected torise 2.4% to $29.9 billion, as operators

benet from increasing demand frommachine shops, recovering automobilesales and renewed investment inmetalworking machinery. These

advantages, however, are unlikely tomake up for losses incurred during therecession; IBISWorld expects revenue todecline an annualized 1.1% over the ve

years to 2013.Although the price of steel (a major

input for many industry products) hasfallen at an annualized rate of 2.3% in theve years to 2013, prices remainhistorically high. These high steel priceshave spurred competition from industryimports, as downstream markets soughtcheaper substitutes in the wake of rising

domestic machinery prices. However,due to economic concerns in theEuropean Union and Japan, increases inimports from 2010 to 2012 are expectedto ease with a 12.3% drop in 2013. Theseanxieties have negatively impactedimports from Japan (down 14.5% from2012) and Germany (down 3.8% from2012), which are the two largest importsources of the industry.

CurrentPerformance

Demand for machine shopservices is recovering,spurring industry demand


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Export demandremains solid

International trade represents animportant market for this industry. In theve years to 2013, exports are expected todecline at an annualized rate of 0.5% toabout $6.9 billion. Rapidindustrialization and population growthin emerging and newly industrializedmarkets, particularly China, havesupported demand for mineral andenergy resources. Consequently, thesetrends inated commodity prices and ledmining companies to invest heavily inresource exploration. In particular,

strong activity in the coal industryresulted in high investment inmetalworking machinery by miningequipment and service companies. The

increased demand in machines used forextraction helped bolster industryrevenue through demand for machinesthat make drill bits and drillingequipment. Also, the trade-weightedindex has favored overseas buyers, with adepressed US dollar giving foreigncurrencies more buying power thanduring previous periods. Althougheconomic conditions are picking up andimproving circumstances for industryexporters, the abundant supply of qualityforeign goods is expected to persist in the

period. Consequently, imports in theve-year period to 2013 are expected togrow at an annualized rate of 2.1% toabout $16.1 billion.

Profit andparticipation

Industry prot (earnings before interestand taxes) is expected to equal 6.5% in2013, compared with 3.5% prior to therecession. In 2008 and 2009,protability was hurt by reduced sales

volumes and higher steel prices, whichraised purchasing costs and the nalprice of goods. This consequently sentdownstream markets in search of cheapermachinery from foreign manufacturers.In response, metalworking machinerymanufacturers sought to mitigate fallingsales and rising purchase costs byreducing employee numbers andlowering wage costs, helping prot

margins rebound. In the ve years to2013, employment is expected to fall atan annualized rate of 3.8% to 136,664

workers. Along with falling employment,the number of industry operators hasdeclined in the ve-year period at anannualized rate of 2.8% to 6,495.

environmental concerns, relying on theAmerican big-car legacy to generatesales. Instead, US consumers shiftedtheir preferences from SUVs and otherlarger automobiles to smaller, morefuel-ecient automobiles. Japanesemanufacturers responded to thesechanging consumer preferences byaggressively increasing their marketshare during this time. US manufacturers

also succumbed to relatively higher laborand legacy costs. As a result of thesechanges, automobile production hasfallen during the past ve years, reducingdemand for machinery from this industryin turn. Demand for new andreplacement manufacturing, metalfabricating and other equipment relatedto auto making fell accordingly, butoverseas demand has grown.

Downstream demandreturning continued

Higher steel prices ledto higher-priced goodsand falling demand for

domestic machinery


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Private investmentsto grow

Stronger business conditions and betteraccess to credit will likely encourageinvestment in new metalworking tools.In turn, rising capital expenditure in themanufacturing sector will raise demand

for this industrys machinery. Privateinvestment in metalworking machineryis expected to grow at an annualized rateof 2.0% in the ve years to 2018. Asdemand for the construction andautomobile sectors picks up, thosecompanies will likely invest in newmetalworking machinery crucial to theiroperations. In addition, commodityprices are forecast to plateau at highrates over this time, which will keeprevenue for the mining sector high and

allow mining machinery companies toinvest in metalworking tools. Defenseand aerospace manufacturing are alsoexpected to provide another steadysource of demand for machine tools

during the next ve years, as will aforecast cyclical upturn in nonresidentialconstruction markets. Growth in all ofthese downstream markets willencourage machine shops, the industrysprimary market, to capitalize on newand replacement machinery, in order tomeet higher demand. However,increasing import competition isexpected to drive the number of industryoperators down at an annualized rate of0.9% to 6,214.

Cars to help drivedemand

After years of volatility, the automobilemanufacturing industry can expect amore optimistic future. IBISWorldprojects signicant growth in the hybridand fuel-ecient car market. Manyautomakers launched electric cars in2012, underpinning strong demand formachine tools and other metalworking

machinery to make related parts. Inparticular, improvements in auto designs

will boost demand for metalworkingmachinery capable of handling lightermaterials and thinner shapes. IBISWorldexpects demand from automobile partsmanufacturing to increase at anannualized rate of 3.8% through 2018.

The Metalworking MachineryManufacturing industry is expected togrow moderately during the ve years to2018. If steel prices continue their ascentand downstream markets opt for cheaperimports, domestic producers willcontinue to face intense competition.Renewed demand from machine shops,an upturn in automobile sales and arelatively weak US dollar will contributeto moderate growth. In 2014, theindustry can expect continued recoveryfrom recessionary lows, with revenue

forecast to grow 2.8% as the economyimproves and demand for machinery andequipment rises. Moreover, rising exportsales will remain a key driver of revenuegrowth. In the ve years to 2018, revenue

is projected to increase at an annualizedrate of 1.4% to $32.1 billion.

IndustryOutlook

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Prot is forecast to be relatively stagnantduring the next ve years. Companies

will have a dicult time passing alonghigher steel prices to customers becausecontinued high levels of cheaper importscompete directly with domesticproducers. As exports increase theirshare of revenue and imports grow todominate domestic demand, companies

that lack foreign contacts will likely facepressure to merge with better-connectedcompanies, or exit the industry entirely.

At the same time, the industrysstructural shift from a supplier of

domestic markets to an exporter, willlikely constrain growth in employmentand wages. In light of persistently highand rising steel costs, companies willseek to streamline production processes,

which will limit the need for humanlabor. In the ve years to 2018,employment is expected to be stagnant,falling at less than 0.1% to 136,373, while

wages are expected to rise at anannualized rate of 0.7% to about $8.3

billion. Companies will also likelyrelocate manufacturing activitiesoverseas to lower operating costs.

Profit to remain underpressure

IBISWorld projects the US dollar toremain weak through the coming veyears, though it will appreciate relativeto the previous ve years. The weak USdollar will continue to boost exports,stimulating industrial output andmanufacturing in general. Robustdemand from Asian markets and risingenergy prices are projected to driverenewed investment across the miningand energy sectors, underpinningdemand for metalworking products.Exports are anticipated to grow at an

annualized rate of 1.2% through 2018

and total an estimated $7.3 billion.Meanwhile, imports are expected tomake gains as a share of domesticdemand, rising to about 44.1% in 2018,up from an estimated 41.0% in 2013. Inthe ve years to 2018, imports areexpected to rise at an annualized rate of

4.0% to about $19.6 billion.

Trade to remaincrucial Robust demand from Asianmarkets and rising energyprices will support growth


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Industry PerformanceIndustry value-added growth lags US GDP growth

Import penetration is increasing

The number of companies is decliningThe emergence of 3D printing technologyis a threat to this industry

Life Cycle Stage


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% Growth in number of establishments

-10 -5 0 5 10 15 20

DeclineShrinking economic

importance

Quality GrowthHigh growth in economicimportance; weaker companiesclose down; developedtechnology and markets

MaturityCompanyconsolidation;level of economicimportance stable

Quantity GrowthMany new companies;minor growth in economicimportance; substantialtechnology change

Key Features of a Decline Industry

Revenue grows slower than economy

Falling company numbers; large firms dominate

Little technology & process change

Declining per capita consumption of good

Stable & clearly segmented products & brands

Woodworking Machinery ManufacturingIron & Steel Manufacturing

Plastics & Rubber Machinery Manufacturing

Machine Shop ServicesAluminum Manufacturing

Metalworking Machinery Manufacturing


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Industry Life Cycle This industry is in the decline stage of itslife cycle. Growth in industry valueadded (IVA), which measures theindustrys contribution to the USeconomy, lags US GDP growth. Duringthe 10 years to 2018, IVA is expected todecline 1.0% on average annually. Incomparison, US GDP is forecast to rise atan average rate of 2.1% annually duringthe same period. Further, fallingnumbers of US companies andincreasing import competition aredetrimental structural changes to the

industry. The industrys reliance ondownstream markets negativelyimpacted performance in the ve yearsto 2013. Additionally, the advent of 3Dprinting technology is expected todisplace demand for this industrysproducts moving forward.

During the 10 years to 2018, imports ofmetalworking machinery are projected toincrease at an annualized rate of 3.1%.

Also, the number of businesses is forecastto decline at an annualized rate of 1.8%during the 10-year period, andemployment is expected to decline at anannualized rate of 1.9%. Small andmedium-size rms have ceased operationsin the wake of weakened downstreamactivity, and some of the larger rms inthe industry have attempted to merge andacquire smaller players to increase market

share, but most of these are overseasoperations. The shifting focus of theindustry away from US-based productionand downstream markets has encouragedoperators to relocate their operationsoverseas to be closer to consumers ofmetalworking machinery.

This industryis Declining


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Products & Services Special tool, die, jig andfixture manufacturingIBISWorld estimates that special tools,die sets, jigs and xtures account for themajority of industry revenue at 34.4% ofthe total. This segment is made up ofmany small players that are contracted

by metal- and plastic-casting operators.Major casters include motor vehicle andparts manufacturers as well as casterssupplying metal-fabricating industries.Molds for plastic products are primarilyused by injection-moldingmanufacturers. This segment has

begun to recover as demand fromautomakers and construction

companies accelerates fromrecessionary shocks.

Metal-cutting machinery

and forming machineryMetal-cutting machinery includes metalmachining centers for shaping materialsthrough a cutting force or action.Machining centers are typicallymultifunction, numerically controlledmachines that act as lathes, grinders,polishers, buers, honers, lappers, bores,drills, gear-cutting machines and others

with a cutting function. Metal-formingmachinery forms metal into shapesthrough the use of machines that punch,

Products & MarketsSupply Chain | Products & Services | Demand Determinants

Major Markets | International Trade | Business Locations

KEY BUYING INDUSTRIES31-33 Manufacturing in the US

Metalworking machinery products are directly or indirectly used in the production of countlessend products in a wide variety of manufacturing industries

33271 Machine Shop Services in the USMachine shops require metal-cutting tools and form a primary market for the industrysproducts.

KEY SELLING INDUSTRIES

33111 Iron & Steel Manufacturing in the USThis industry supplies metalworking machine industry with steel bars, bar shapes and plates(except castings, forgings and fabricated metal products).

33131 Aluminum Manufacturing in the USThis industry supplies cutting tool and machine tool accessory manufacturers with aluminumand aluminum-base alloy sheets, plates, foil and welded tubing in their manufacturingprocesses.

33149 Nonferrous Metal Rolling & Alloying in the USThis industry group supplies tungsten-carbide metal powders to cutting tool and machine toolaccessory manufacturers.

33231 Structural Metal Product Manufacturing in the USThis industry group provides other fabricated products (except fluid-power products andforgings) to the metalworking machinery group.

33272 Screw, Nut & Bolt Manufacturing in the USThis industry group supplies metal bolts, nuts, screws, washers, rivets and other screw-machineproducts to machine tool manufacturers.

33299b Ball Bearing Manufacturing in the US

This industry supplies mounted and unmounted ball and roller bearings to machinerymanufacturers.

33531 Electrical Equipment Manufacturing in the USThis industry group supplies numerical controls for metalworking machinery.

Supply Chain


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Products & Markets

DemandDeterminants

Metalworking machinery is used across awide range of manufacturing industries,including automotive, construction,mining, defense, machinery, metal goods

and other consumer goods. Thus,demand is determined by the level ofactivity in these downstream markets.The capital intensive nature of these

Products & Servicescontinued

shear, bend, form and press metals(excluding forging and die-stampingpresses). Parts and other formingmachinery are also included. The wide

variety of expensive and necessarymachinery commonly sold from thissegment help it command 23.1% of totalindustry revenue.

Industrial mold manufacturingLike the manufacturers of die sets and

jigs, downstream markets sometimesrequire special molds to mass producegoods. Unlike die sets and jigs, industrialmolds have a limited life because changingproduct specications will require a newmold. This business segment comprises20.4% of total industry revenue. Animproving automobile manufacturingindustry has positively impacted thisindustry segment.

Cutting tools and machinetool accessoriesThe cutting tools and machine tool

accessories segment includesmetalworking attachments, bits,inserts, tips, drills and shanks that can

be used in various machining centersand mills. The versatility of thisproduct segment, alongside a widerange of oerings and improvingdownstream markets, have helpeddrive its share of industry revenue

upward to 19.3%.

Other productsOther machinery includes rollingmill machinery, special-purposeassembly machines, synchronousand nonsynchronous rotary- andinline-transfer machines, separatelysold parts and miscellaneousmachines. The segment excludeshandheld and ultrasonic machinery.Rolling mills include machinery thatrolls hot or cold metals into tubesand other shapes, and thissegment makes up 2.9% of totalindustry revenue.

Products and services segmentation (2013)

Total $29.9bn

34.4%Special tool, die, jig andfixture manufacturing

23%Metal-cutting andforming machinery

20.4%Industrial moldmanufacturing

19.3%Cutting tool and machine

tool accessory manufacturing

2.9%Rolling

mill machinery



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Products & Markets

Major Markets

Metalworking is the craft and practiceof working with metals to create partsor structures. The term covers a widerange of work, from large ships, bridgesand oil reneries all the way to jewelry.Therefore, it includes a wide range ofskills and the use of many dierenttypes of tools. Machines shops areusually the primary destination formetalworking machinery. In addition,many economic sectors usemetalworking machinery to createproducts, including manufacturers ofconstruction, automotive, and mining,oil and gas equipment.

Machine shopsMachine shops, also known as tool anddie shops, employ skilled techniciansknown as machinists. Machinists use thisindustrys products to fabricate metalshapes, molds and consumer goods fromraw inputs, usually steel, aluminum orother alloys. Because machine shops existfor the sole purpose of machining itemsthrough the use of this industrysequipment, IBISWorld estimates thissegment to dominate the market. As aprimary end consumer, machinists shareof the market is expected to remainrelatively steady at about 30.0%.

DemandDeterminantscontinued

downstream markets indicates thatdemand is inuenced by economicconditions such as business sentiment,disposable income, unemployment,population growth, interest rates andcapital expenditure. Because theautomotive and construction industriesplay a large role in the metalworkingmachinery downstream market, demandfor these industries inuencesmetalworking machinery manufacturersmargins and protability.

The fragmented nature of the industry

ensures that price and quality

competition among market players iserce. As metalworking machinerycompanies continue to move productionoutside of the United States, domesticoperators will face increasingly toughprice competition. Furthermore, due tothe long-lived nature of metalworkingmachinery, industry customers typicallydo not need to continuously update theirmachinery, which dampens industryrevenue growth. As technology and thequality of metalworking machineryimprove, IBISWorld expects that the life

cycle of industry products will increase.

Major market segmentation (2013)

Total $29.9bn

30.0%Machine shops

25.0%Automakers

23.1%Exports

21.9%Other markets



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Products & Markets

International Trade Industry data reveals high levels ofinternational trade within theMetalworking Machinery Manufacturingindustry. During the past ve years,exports have accounted for betweenone-fth and one-quarter of industryrevenue. Meanwhile, imports have beengaining ground, consistently accountingfor well over one-third of domesticdemand during the period. The trade-

weighted index helps determine tradevolumes across all industries.

ExportsMexico, Canada and China represent keyexport markets for metalworkingmachinery made in the United States.Mexico and Canada benet from shared

borders with the United States, whichfacilitate shipping and provide eciencyfor both sides of the supply chain throughlower costs and reduced transport times.

Also, the North American Free TradeAgreement lowers regulatory pressuresbetween North American countries,

thereby further facilitating trade. Levels oftrade with Mexico and Canada haveremained steady since 2008. China,meanwhile, has exhibited phenomenalindustrial growth during the past decade,thus raising the countrys demand forimproved manufacturing capabilities.Since 2008, industry-specic exports toChina have risen at an annualized growthrate of 12.6%, now giving it an estimatedexport market share of 13.1%, up from8.2% ve years ago. IBISWorld expectsthat exports as a share of total industry

revenue will rise to 22.9% from 22.2% in2008. A weaker dollar has inuenced thisincrease in exports, as goods manufacturedin the United States have become relativelycheaper to foreign consumers.

ImportsRegarding imports, the Japanese havelong been noted as the worlds largestproducer of machining tools, withcompanies like Makino, Nachi-Fujikoshiand Fanuc leading the way. The

Imports From...

Total $16.1bn

36%All others

34%Japan

13%Germany

9%Canada

9%China

Exports To...

Total $6.9bn

46%All others

22%Mexico

15%Canada

13%China

5%Germany

Year: 2013SIZE OF CHARTS DOES NOT REPRESENT ACTUAL DATA SOURCE: USITC

Level & Trend

Exports in theindustry are Highand Steady

Imports in theindustry are Highand Increasing


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Products & Markets

International Tradecontinuedadvanced technologies available inJapans supply chain thanks to localelectronics industries help Japanesemanufacturers produce superiorproducts with the latest advancements.Germany, Canada, and China round outthe top four importers of this industrysmachinery. Imports have been growingat an annualized rate of 2.1%, withChinese imports growing at anannualized 12.4% since 2008. Importsas a percentage of domestic demand hastrended upward to 41.0% from their

2008 level of 37.1%. The ve yearsleading to 2013 have seen a great deal of

volatility in imports. In 2009, importsdropped 35.2%, only to see jumps of26.2% and 46.4% in 2010 and 2011,respectively. As the eects of the

recession subside, these numbers areexpected to normalize as economicconditions stabilize.

$b

illion

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Exports Imports Balance

Industry trade balance



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Products & Markets

Business Locations 2013

MO2.0

VT0.3

MA2.5

RI0.7

NJ2.0

DE0.0

NH0.5

CT3.0

MD0.4

DC0.0

1

5

3

7

2

6

4

8 9

Additional States (as marked on map)

AZ1.2

CA8.0

NV0.2

OR0.9

WA0.8

MT0.1

NE0.3

MN2.9

IA1.2

OH10.4

VA0.7

FL1.8

KS0.5

CO0.8UT0.6

ID0.2

TX2.7

OK0.6

NC1.7

AK0.0

WY0.1

TN2.3

KY1.2

GA1.0

IL8.8

ME0.2

ND0.0

WI4.8 MI

16.8PA6.0

WV0.1

SD0.2

NM0.1

AR0.7

MS0.4

AL0.8

SC1.0

LA0.1

HI0.0

IN4.6

NY3.8 5

6

78

321

4

9


Establishments (%)

Less than 3%

3% to less than 10%

10% to less than 20%

20% or more


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Products & Markets

Business Locations Across the country, the location of rawmaterials and, to a lesser extent,wholesalers and export markets (i.e.ports) inuence the location ofmanufacturing establishments.Companies located near sources of keyinputs and downstream markets benetfrom greater eciencies in transport,

which helps improve prot. As a result,metalworking machinery manufacturerstend to cluster in urban or highlyindustrialized areas near downstreammanufacturing markets. According to

data from the US Census BureausCountry Business Patterns report, theGreat Lakes (45.4%), the Mid-Atlantic(12.2%) and the Southeast (11.8%)regions exhibit the highestconcentrations of industry locations.

Great LakesOverall, Michigan exhibits the highestconcentration of industry locations bystate, with 16.8% of the nationsmetalworking machinery manufacturerslocated there. In particular, this region

exhibits a high concentration ofestablishments due to its proximity toautomobile manufacturers and theindustrys largest export destination,Canada. Furthermore, the Great Lakesregion has the highest concentration ofIron and Steel Manufacturing(IBISWorld report 33111). Because

both iron and steel are primary inputsinto the metalworking machineryindustry, this proximity isadvantageous to market participants.

Other states in the region with highconcentration levels are Ohio (10.4%),and Illinois (8.8%).

Mid-Atlantic

After the Great Lakes, the Mid-Atlanticregion consists of the second highestconcentration of metalworking machinerymanufacturers at 12.2%. This isattributable to a high concentration ofindustrial centers, such as Pittsburgh, andthe high concentration of iron and steelmanufacturers. Port cities such asBaltimore and New York City also providelogistical eciencies in internationaltrade that make it an attractive region forindustry participants.

%

50

0

10

20

30

40

South

west

West

GreatLakes

Mid-Atlantic

NewEng

land

P

lains

RockyMoun

tains

Southeast

Establishments

Population

Distribution of establishments vs. population



20/33


Cost StructureBenchmarks

ProfitIn 2013, Metalworking MachineryManufacturing prot margins areexpected to reach 6.5%, up from 3.5% in

2008. This increase can be attributed tolower wage costs and greater laborproductivity (as measured by revenueearned per employee) in the ve years to

Key Success Factors Access to the latest available and mostefficient technology and techniques

Access to the latest technology is

required for companies to makeinnovative improvements in productcapabilities and/or specications inorder to meet downstream demands forhigh quality products.

Proximity to key marketsMetalworking machinery manufacturers

benet from being close to their maindownstream markets, such as in theGreat Lakes region of the United States,

where there is a high concentration ofautomobile manufacturers.

Having contacts within key marketsThere is a distinct advantage in

cultivating and maintaining strongcustomer relationships in a highlyfragmented market because

customers are spread acrossseveral industries.

Effective quality controlSuccessful companies maintain detailedand extensive quality control systemsthat enable them to cultivate andmaintain important downstreamclient relationships.

Proximity to transportIncreasing levels of trade dictate thatindustry companies establish themselvesin regions where key export markets can

be reached easily in order to minimizetransportation costs.

Market ShareConcentrationConcentration in the MetalworkingMachinery Manufacturing industry islow. At an estimated 2.8% market share,Kennametal is the largest industryoperator in the United States. Thisindustry is highly fragmented, withmore than half of all companiesemploying fewer than 10 people. Thisindustry is fragmented due to thespecialized nature of downstreammarkets. The variety of downstreammarkets, such as automotive, airplane,defense, construction, mining, energy

and gas, give smaller rms anadvantage by specializing in individualproduct segments rather thanproducing a vast array of machinery.The number of enterprises operating inthe industry has declined at anannualized rate of 2.8% during the ve

years to 2013. Furthermore, the

relocation of manufacturing operationsfrom the United States to countries

with lower operating costs hasencouraged concentration. For example,only two of nine of Hardingesmanufacturing locations remain in theUnited States.

Competitive LandscapeMarket Share Concentration | Key Success Factors | Cost Structure Benchmarks

Basis of Competition | Barriers to Entry | Industry Globalization

Enterprises by employment sizeNo. of employees Share (%)

0 to 4 37.5

5 to 9 19.2

10 to 19 17.9

20 to 99 18.1

100 to 499 4.7

500+ 2.5

SOURCE: US CENSUS BUREAU

Level

Concentration inthis industry is Low

IBISWorld identifies250 Key SuccessFactors for abusiness. The mostimportant for thisindustry are:


21/33


Competitive Landscape

Cost StructureBenchmarkscontinued

2013. High levels of competition pressureindustry operators to compete via priceand quality for market share, butimproving technology enables workers to

be more productive.Because the world price of steel and

iron are major cost inputs formetalworking machinery products, theseare costs that confront every operator inthe industry. By reducing the overallamount spent on labor, and increasingthe amount spent on high-precisionmachines, companies can more eciently

manage production. Notably, theindustry operated at a loss of 0.9% onaverage in 2010 as sluggish demand

weighed on industry operators and theworld price of steel rose 16.0%.

PurchasesPurchases consistently account for themajority of an average metalworkingmanufacturing companys revenue. In

2013, purchases are expected to make up40.0% of total revenue, a decline of 3.4%from 2008. Raw materials used for themanufacture of machining tools includesteel, iron, ore concentrates, compoundsand secondary materials containingtungsten, tantalum, titanium, niobiumand cobalt. Many of these materials may

be supplied by sources outside the UnitedStates. The raw materials market as a

whole is highly cyclical, and at times,pricing and supply can be volatile due tonatural disasters, general economic and

political conditions, labor costs,competition, import duties, taris andcurrency exchange rates. This volatilitycan signicantly aect purchase costs.

WagesWages constituted 26.7% of total industryrevenue in 2013, down from 28.4% in2008. The majority of wage and salarycosts are incurred in manufacturing

Sector vs. Industry Costs

Profit

Wages

Purchases

Depreciation

Marketing

Rent & Utilities

Other

Average Costs of

all Industries in

sector (2013)

Industry Costs

(2013)

0

20

40

60

Percentage

ofrevenue

80

1007.7

15.0

2.8 1.52.6

59.9

10.4

6.5

20.4

3.0 0.43.0

40.0

26.7



22/33



Basis of Competition The Metalworking MachineryManufacturing industry has a high levelof competition. There are many small,regional competitors, more than half of

which employ fewer than 10 people, thatcompete with each other and imports ofindustry products.

Internal competitionInternal competition stems frommetalworking machinery manufacturers

vying for local and regional marketshare. Quality, reliability, price, deliverytime, service and technologicalcharacteristics are the main bases ofcompetition. Machine price, reliabilityand performance are critical forcustomers. Other important features

include cutting accuracy, useful tool life,the availability of replacement parts andaccess to factory service and productsupport. Product bundling is alsoimportant to competitive success, as itenables rms to capture market share byfurther maintaining low prices anddeveloping quality relationships withdownstream buyers.

With changes in the types of ferrousand nonferrous metals used in customerindustries, the introduction of improvedproduct designs and the acquisition ofproduct lines at dierent price points arekey to maintaining and increasing marketshare. Furthermore, because of thetechnical nature of the work required toproduce metalworking products, access to

Cost StructureBenchmarkscontinued

because these positions often requiretechnical skills to operate the machinery.The recession sparked a sharp downturnin employment and wages in the industry,as downstream demand from theconstruction and automobile industriessharply retracted. Industry employmentand wages plummeted 14.8% and 23.1%,respectively, in 2009, coinciding with a30.8% drop in revenue in the same year.

As general business conditions haveimproved, demand for metalworkingmachinery has encouraged companies to

slowly begin hiring more employees.Furthermore, while wages still consist of asizeable portion of revenue, improvedtechnology has enabled workers to

become more productive.

Depreciation, rent and utilitiesDepreciation is a proxy for the cost ofcapital equipment over time. Capitalequipment includes all the machinerynecessary to manufacture metalworkingequipment. In 2013, depreciation isexpected to account for 3.0% of total

revenue, up from 2.8% in 2008.Likewise, rent and utilities expenses are

expected to reach 3.0% in 2013,compared with 2.8% in 2008. Becausethe industry is so fragmented and ismade up of many small operators,these numbers reect the large numberof smaller companies, which do nottypically expand beyond local regionsof operation.

Other costsOther costs include temporary sta,computer hardware and software,communication services, repairs and

maintenance, and refuse removal(including hazardous materials).Combined, these costs are expected tomake up 20.4% of total revenue in 2013.Temporary sta and repairs andmaintenance have increased their sharesof revenue. An increase in temporarysta can help keep long-term wage costsdown, and after the recession, companiesneeded to protect prot margins fromdecreased demand and foreigncompetition. Furthermore, rising steeland iron prices encourage companies to

minimize expenses in order to bolsterprot margins.

Level & Trend

Competition inthis industry isHigh and the trend

is Increasing


23/33



Barriers to Entry Barriers to entry in the MetalworkingMachinery Manufacturing industry arelow. Employees operating within thisindustry are not required to have a licenseto operate, but a high level of engineering

and metalworking specialization andskills are necessary. In some areas of thisindustry, technical knowledge is amedium barrier to entry. The highlyfragmented nature of this industry meansthat product quality and reputation arekey in achieving success. As such, thelarge concentration of rms aroundindustrial centers and manufacturersencourages high levels of competition assmall rms compete for limiteddownstream market opportunities.

Access to materials, notably steeland iron, provide barriers to entry

for rms that cannot negotiateeective contracts with suppliers,especially as imports increase inimportance in the industry. Firms

with global operations gainadvantages due to their exposure inoverseas markets.

Basis of Competitioncontinuedskilled labor is key to remainingcompetitive. In such a crowded marketspace, companies must capture limitedregional market share from competitors.The regional advantages of operators nearautomobile manufacturers, for example,are limited and advantageous. Therefore,the limited markets of this industry,mainly to machine shops and specicindustrial activities (e.g. automanufacturing, mining, construction),encourage market participants to competein very segmented regional areas.

External competitionAlthough there are few substitutes for thetype of metalworking tools this industryproduces, imports form a large basis for

external competition. Price-basedcompetition has increased due to lowerdomestic demand and higher levels ofimports as a percentage of sales. Thepercentage of imports to domesticdemand has increased steadily during thepast ve years, now satisfying 40.3% ofdomestic demand, up from 37.1% in 2008.The ability of foreign manufacturers tocompete more aggressively on the basis ofprice reects operational ecienciesachieved through lower wage costs, fewerregulations and supply chain eciencies

that lower costs. In turn, operationalsavings are passed onto the consumer inthe form of lower product prices. Importsare forecast to continue gaining as a shareof domestic demand.

Barriers to Entry checklist Level

Competition High

Concentration Low

Life Cycle Stage Decline

Capital Intensity Low

Technology Change Medium

Regulation & Policy Light

Industry Assistance Low


Level & Trend

Barriers to Entry

in this industry areLow and Steady


24/33




Trade Globalization Going Global: Metalworking MachineryManufacturing 2002-2013

Exports/Re

venue

Exports/Re

venue

200

150

100

50

0

200

150

100

50

0

Imports/Domestic Demand Imports/Domestic Demand

0 040 4080 80120 120160 160

International trade is amajor determinant ofan industrys level ofglobalization.

Exports offer growthopportunities for firms.However there are legal,

economic and political risksassociated with dealing inforeign countries.

Import competition canbring a greater risk forcompanies as foreignproducers satisfy domesticdemand that local firmswould otherwise supply.

Export ExportGlobal Global

ImportLocal ImportLocal

Metalworking MachineryManufacturing

2002

2013

Globalization in this industry is high andincreasing. In 2013, exports are expectedto account for about 22.9% of industryrevenue. Over the same period, importsas a percentage of domestic demand areexpected to equal 40.3%, and imports willincrease at an annualized rate of 1.5%.Due to the high levels of trade in theindustry, the trade-weighted index is akey driving factor in industryperformance. Beyond levels ofinternational trade, the industry alsoexhibits globalization through the

operation of oshore and outsourcedlocations. For example, only 13 ofKennametals 24 manufacturing locationsare located in the United States. Themajority of metalworking machinery and

equipment manufacturers are located inJapan, Germany and China. Majorinternational businesses in this globalizedindustry include Noritake and Toyoda(both in Japan) and Klockner-Werke AG(Germany). China has increased its shareof both imports and exports within theindustry. Furthermore, Chinese importsincreased at an average rate of 12.4%during the ve-year period to 2013, andChinese exports have increased at anannualized rate of 17.0% over the sameperiod. The increasing importance of

emerging markets is apparent asconsumer demand, especially forautomobiles and construction, in thesemarkets inuence production levels in theUnited States and abroad.

IndustryGlobalization

Level & Trend

Globalization inthis industry isHigh and the trendis Increasing


25/33


Other Companies The Metalworking MachineryManufacturing industry is highlyfragmented, and there are no companiesthat command more than 5.0% marketshare. More than half of all companies inthis industry employ fewer than 10people, while less than 5.0% employmore than 100 people. Kennametal is thelargest company in the industry based onits US manufacturing operations. Elmira-

based Hardinge has an estimated share ofless than 1.0% of total industry revenue

because only one of its manufacturing

facilities is located in the United States.

Kennametal Inc.Estimated market share: 2.8%Founded in 1938, Kennametal Inc. is ametalworking and tool productioncompany based in Latrobe, PA. Thecompany specializes in advancedengineering and creating products formanufacturing, mining, construction,power generation and other industries.The company employs about 12,900people worldwide, of which 4,700 are

located in the United States. Just overhalf of the companys industry-relatedmanufacturing occurs in the UnitedStates, with the remainder of production

based in China, India, Germany, Israel,Italy, Poland, Spain, the United Kingdomand Canada.

In the ve years to 2013, Kennametalsindustry-relevant revenue is expected to

grow at an annualized rate of 1.4%. Thesharp downturn caused by the recessionnegatively impacted Kennametalsperformance over the ve-year periodfrom 2008 to 2013. Although thecompanys overall revenue has exceededits prerecession levels, the long-livednature of many of the companys products

burdens continued growth. However, dueto the companys size in relation to otherindustry operators, Kennametalmaintains a competitive advantage in itsability to attract larger clients.

The companys fortunes turneddramatically when the economy enteredthe recession, since demand from key

buying markets such as automakers andconstruction declined signicantly.Industry-specic revenue declined anestimated 20.1% in scal 2009. In March2012, the company acquired an Indiana-

based materials provider, Deloro Stellite,thus furthering vertical integration andincreasing economies of scale. IBISWorldexpects the company to generate anestimated $846.7 million in industry-

relevant revenue during 2013, which is adecrease of 5.4% from 2012.

HardingeEstimated market share: Less than 1.0%Since 1890, Hardinge Inc. hasmanufactured machines used in theMetalworking Machinery Manufacturingindustry. Based in Elmira, NY, Hardinge

Major CompaniesThere are no Major Players in this industry | Other Companies

Kennametal Inc. (industry-relevant segments) financial performance**

Year*Revenue

($ million) (% change)Operating Income

($ million) (% change)

2007-08 790.1 N/C 74.5 N/C

2008-09 631.5 -20.1 -31.5 -140.0

2009-10 639.9 1.3 31.7 200.5

2010-11 882.9 38.0 118.2 272.9

2011-12 894.5 1.3 136.1 15.1

2012-13 846.7 -5.3 96.9 -28.8

*Year-end June, **Estimates

SOURCE: IBISWORLD


26/33


Major Companies

Other Companiescontinuedproduces high-precision and generalprecision turning machine tools.Hardinge maintains manufacturingfacilities in China, Switzerland, Taiwan,England and the United States. Of the 12total properties owned by Hardinge, onlytwo are located in the United States. In

2012, about 75.0% of sales were tocustomers outside of North America andabout 80.0% of products weremanufactured outside of North America.Hardinge acquired Jones & Shipman andUsach Technologies Inc. in 2010 and2012, respectively.


27/33


Capital Intensity The US Metalworking MachineryManufacturing industry has a low level ofcapital intensity. IBISWorld estimates thatfor every $1.00 spent on wages, industryoperators will spend $0.11 in capitalinvestment. This is an increase from2008, when for every $1.00 spent on

wages operators spent an estimated $0.10in capital investment. In the same period,the total amount spent on wages as apercentage of revenue has fallen 11.0%.The negative shocks of the recessionforced a sharp contraction in demand for

metalworking machinery products, and asa result employment dropped 14.8% in2009. The industry has increased capitalexpenditures by 12.0% since 2008.

Even though the vast majority ofcapital expenditures in the industry is

on machinery, constituting 86.6% oftotal expenditures, labor is an importantinput into production. While production

Operating ConditionsCapital Intensity | Technology & Systems | Revenue Volatility

Regulation & Policy | Industry Assistance

Tools of the Trade: Growth Strategies for Success


LaborIntensive

CapitalIntensive

Change in Share of the Economy

New Age Economy

Recreation, Personal Services,Health and Education.Firmsbenefit from personal wealth sostable macroeconomic conditionsare imperative. Brand awarenessand niche labor skills are key toproduct differentiation.

Traditional Service Economy

Wholesale and Retail.Relianton labor rather than capital tosell goods. Functions cannotbe outsourced therefore firmsmust use new technologyor improve staff training toincrease revenue growth.

Old Economy

Agriculture and Manufacturing.Traded goods can be producedusing cheap labor abroad.To expand firms must mergeor acquire others to exploiteconomies of scale, or specializein niche, high-value products.

Investment Economy

Information, Communications,Mining, Finance and RealEstate. To increase revenuefirms need superior debtmanagement, a stablemacroeconomic environmentand a sound investment plan.

Woodworking

Machinery Manufacturing

Iron & Steel Manufacturing

Plastics & RubberMachinery Manufacturing

Machine Shop ServicesAluminum Manufacturing

MetalworkingMachinery Manufacturing

Capital intensity

0.5

0.0

0.1

0.2

0.3

0.4


Dotted line shows a high level of capital intensity

Capital units per labor unit

MetalworkingMachinery

Manufacturing

ManufacturingEconomy

Level

The level of capitalintensity is Low


28/33


Operating Conditions

Revenue VolatilityFluctuations in downstream demand,price movements for raw materials andcredit markets contribute to high

volatility for the Metalworking MachineryManufacturing industry. During theve-year period to 2013, the industryexperienced an average revenue volatilityof 18.2%. For example, in 2009, revenueplummeted 30.8% as a result of therecession. However, in the following two

years, revenue rose 13.3% and 15.9%,

respectively. As such, this averagerevenue volatility gure is largelyinuenced by the recession. Moreover,downstream manufacturing, mining andconstruction markets are highly cyclical,

with activity tending to follow generalconditions in the global economy.Likewise, markets for raw materialsoperate on a cyclical basis, and factors as

varied as natural disasters and laborcosts can send prices for raw materials up

Technology

& Systems

According to their annual reports, the

largest companies in the MetalworkingMachinery Manufacturing industryincreasingly outlay signicant resourcesfor research and development (R&D). Forexample, Kennametals R&D expenditurefrom 2010 to 2011 grew 18.9%, and from2011 to 2012, grew 15.0%, up to a total of$38.3 million. Hardinge increasedspending on R&D in 2012 to $12.1million, up 23.5% from expenditures in2008. As such, IBISWorld estimates theindustry employs a medium level oftechnology, with the largest operators

undertaking the most research anddevelopment projects.

The major technological developmentsin the industry have been the adoption ofcomputer-aided design and computer-aided manufacturing (CAD/CAM) andnumerically controlled machine tools.Larger companies in the industry tend tohave CAD facilities and lease CAM to

contract toolmakers. In the manufacture

of dies and molds, new-generationcomputer-based technologies includeprograms using CAD/CAM tools on acomputer and programmed intonumerically controlled milling machines.The dies produced in this manner are

very accurate, and they reduce time andlabor costs. Conventional, manuallycontrolled tool-making techniquesinevitably result in asymmetry in thedies, and heavy use and wear led toproduction problems, scrapping andadded costs to subsequent processes.

New technologies, such as ultrasonicmachinery, can be used for the machiningof alternative materials, non-ferrous andprecious metals, ceramics and tungstencarbide. With the increasinglycomputerized nature of the productionprocess, employees are capable ofgenerating more revenue while producinghigher quality products.

Capital Intensitycontinuedprocesses in this industry rely onlarge-scale investment in capitalequipment, human labor is required tooperate increasingly advancedmachinery, as computer numericalcontrolled (CNC) machines becomemore widespread. Increasing pricepressure from imports stress theimportance of production eciencies,

and by reducing wages, which havedecreased at an annualized rate of 2.3%between 2008 and 2013, companies caninvest in high-precision machinery thatrequire less physical labor to operate.Greater labor eciency enablesoperators to remain competitive, andfuture investment in computer operatedmachines is expected to continue.

Level

The level ofTechnology Changeis Medium

Level

The level ofVolatility is High


29/33



Regulation & Policy Environmental standardsCompanies are subject to various federal,

state and local laws and regulationsrelating to the protection of theenvironment. These laws and regulationsimpose limitations on the discharge ofmaterials into the air and water.Companies must comply withEnvironmental Protection Agency (EPA)regulations or risk the negativeconsequences of monetary nes and lossof reputation. Government regulation hasprompted most companies to developenvironmental, health and safety policiesand procedures designed to ensure theproper handling, storage and disposal ofhazardous materials. These proceduresincrease operating costs throughadditional personnel and procedural costssuch as ongoing monitoring and testing.

Product standardsOn an industry level, the National FirePrevention Association (NFPA) sets

standards regarding factory safety andproduct limitations. The American

National Standards Institute (ANSI) thencoordinates these and other US standards

with international standards so Americanproducts can be used worldwide. At thesame time, the InternationalOrganization for Standardization (ISO)coordinates with countries to dene, setand ensure standards between countries.

Product standards are set at threelevels: industry level (NFPA developsthese); national level (ANSI approvesthese); and international level (ISO setsthese). Further, product standards fallinto three basic categories:communication standards that dene the

basic terms and symbols used to identifyproduct characteristics; design ofstandards to establish dimensions,tolerances or other physicalcharacteristics of products; andperformance standards that provide a

voluntary method of rating products.

Revenue Volatilitycontinuedor down unexpectedly. Exchange ratesalso contribute to volatility in theindustry, impacting the relativecompetitiveness of exports and imports.

The high level of trade in the industry,especially in imports, makes exchangerates an important factor in protabilityfor companies that engage in trade.


Volatility vs Growth

Revenu

evolatility*(%)

1000

100

10

1

0.1

Five year annualized revenue growth (%)

30 10 10 30 50 70

Hazardous

Stagnant

Rollercoaster

Blue Chip

* Axis is in logarithmic scale

Metalworking MachineryManufacturing

A higher level of revenuevolatility implies greaterindustry risk. Volatility cannegatively affect long-termstrategic decisions, such asthe time frame for capitalinvestment.

When a firm makes poor

investment decisions itmay face underutilizedcapacity if demandsuddenly falls, or capacityconstraints if it risesquickly.

Level & Trend

The level ofRegulation isLight and thetrend is Steady


30/33



Industry Assistance The Metalworking MachineryManufacturing industry receives littledirect assistance. Trade associationslike the Association for ManufacturingTechnology (AMT, formerly theNational Machine Tool Builders

Association) provide education andsupport services through sites onlineand annual conferences. AMT also

works to lobby for favorable standardsand regulations that will enablemachinery made in America to be moreeasily exported to overseas markets.

Indirectly, there are a number of tarisdesigned to increase the

competitiveness of US-made machinesagainst the threat of cheaper imports.These taris apply to several industry

facets, including dies, tools, moldsand carbides.

Key Tariffs

Goods Low Rate High Rate

Interchangeable tools 5.7 6.3

Interchangeable dies 3.9 4.5

Mold for metal/metal carbides 3 3.5

SOURCE: USITC

Level & Trend

The level ofIndustry Assistanceis Low and thetrend is Steady


31/33


Key StatisticsRevenue

($m)

IndustryValue Added

($m)Establish-

ments Enterprises EmploymentExports

($m)Imports

($m)Wages($m)

DomesticDemand

World priceof steel(Index)

2004 29,819.3 11,068.3 8,547 8,240 175,797 5,818.6 9,832.3 9,935.2 33,833.0 147.2

2005 31,768.2 11,860.9 8,417 8,111 174,183 6,378.1 10,624.6 9,923.0 36,014.7 159.7

2006 31,956.4 11,871.7 8,181 7,890 173,681 6,990.1 11,948.2 9,666.7 36,914.5 174.22007 32,019.3 11,561.0 8,010 7,736 167,558 6,438.5 14,936.1 9,383.7 40,516.9 182.9

2008 31,643.7 10,992.9 7,719 7,480 165,650 7,013.0 14,503.6 8,999.3 39,134.3 220.6

2009 21,904.0 8,388.0 7,344 7,124 141,179 5,200.0 9,402.4 6,920.5 26,106.4 165.2

2010 24,825.5 7,837.3 7,035 6,833 129,404 6,126.2 11,862.4 7,216.7 30,561.7 191.7

2011 28,759.7 10,080.0 6,886 6,678 137,300 7,049.0 17,367.3 7,865.5 39,078.0 216.2

2012 29,249.3 10,685.4 6,794 6,565 136,399 7,038.2 18,326.5 7,906.7 40,537.6 208.0

2013 29,946.0 10,853.4 6,717 6,495 136,664 6,851.4 16,074.0 8,008.5 39,168.6 196.4

2014 30,790.5 9,743.8 6,675 6,454 137,465 7,238.3 16,502.6 8,144.9 40,054.8 192.3

2015 31,347.0 9,593.0 6,624 6,408 137,681 7,273.4 16,207.2 8,224.9 40,280.8 196.8

2016 32,126.8 10,240.6 6,590 6,373 138,638 7,419.8 17,098.9 8,355.8 41,805.9 200.6

2017 32,309.3 10,135.7 6,494 6,297 137,768 6,960.8 18,447.9 8,353.3 43,796.4 205.6

2018 32,147.8 9,977.9 6,405 6,214 136,373 7,267.7 19,591.7 8,290.2 44,471.8 214.8

Sector Rank 56/418 27/418 12/418 11/418 16/418 45/388 32/388 13/418 45/388 N/A

Economy Rank 295/1305 239/1305 414/1304 360/1304 268/1305 53/447 35/448 198/1305 52/447 N/A

IVA/Revenue(%)

Imports/Demand

(%)

Exports/Revenue

(%)

Revenue perEmployee

($000)Wages/Revenue

(%)Employees

per Est.Average Wage

($)

Share of theEconomy

(%)

2004 37.12 29.06 19.51 169.62 33.32 20.57 56,515.19 0.09

2005 37.34 29.50 20.08 182.38 31.24 20.69 56,968.82 0.09

2006 37.15 32.37 21.87 183.99 30.25 21.23 55,657.79 0.09

2007 36.11 36.86 20.11 191.09 29.31 20.92 56,002.70 0.09

2008 34.74 37.06 22.16 191.03 28.44 21.46 54,327.20 0.08

2009 38.29 36.02 23.74 155.15 31.59 19.22 49,019.33 0.07

2010 31.57 38.81 24.68 191.84 29.07 18.39 55,768.76 0.06

2011 35.05 44.44 24.51 209.47 27.35 19.94 57,286.96 0.08

2012 36.53 45.21 24.06 214.44 27.03 20.08 57,967.43 0.08

2013 36.24 41.04 22.88 219.12 26.74 20.35 58,599.92 0.08

2014 31.65 41.20 23.51 223.99 26.45 20.59 59,250.72 0.07

2015 30.60 40.24 23.20 227.68 26.24 20.79 59,738.82 0.07

2016 31.88 40.90 23.10 231.73 26.01 21.04 60,270.63 0.07

2017 31.37 42.12 21.54 234.52 25.85 21.21 60,633.09 0.06

2018 31.04 44.05 22.61 235.73 25.79 21.29 60,790.63 0.06

Sector Rank 62/418 108/388 140/388 346/418 22/418 335/418 143/418 27/418

Economy Rank 544/1305 116/447 156/447 754/1305 380/1305 529/1304 424/1305 239/1305

Figures are inflation-adjusted 2013 dollars. Rank refers to 2013 data.

Revenue(%)

IndustryValue Added

(%)

Establish-ments

(%)Enterprises

(%)Employment

(%)Exports

(%)Imports

(%)Wages

(%)

DomesticDemand

(%)

World priceof steel

(%)

2005 6.5 7.2 -1.5 -1.6 -0.9 9.6 8.1 -0.1 6.4 8.5

2006 0.6 0.1 -2.8 -2.7 -0.3 9.6 12.5 -2.6 2.5 9.1

2007 0.2 -2.6 -2.1 -2.0 -3.5 -7.9 25.0 -2.9 9.8 5.0

2008 -1.2 -4.9 -3.6 -3.3 -1.1 8.9 -2.9 -4.1 -3.4 20.6

2009 -30.8 -23.7 -4.9 -4.8 -14.8 -25.9 -35.2 -23.1 -33.3 -25.1

2010 13.3 -6.6 -4.2 -4.1 -8.3 17.8 26.2 4.3 17.1 16.0

2011 15.8 28.6 -2.1 -2.3 6.1 15.1 46.4 9.0 27.9 12.8

2012 1.7 6.0 -1.3 -1.7 -0.7 -0.2 5.5 0.5 3.7 -3.8

2013 2.4 1.6 -1.1 -1.1 0.2 -2.7 -12.3 1.3 -3.4 -5.6

2014 2.8 -10.2 -0.6 -0.6 0.6 5.6 2.7 1.7 2.3 -2.1

2015 1.8 -1.5 -0.8 -0.7 0.2 0.5 -1.8 1.0 0.6 2.3

2016 2.5 6.8 -0.5 -0.5 0.7 2.0 5.5 1.6 3.8 1.9

2017 0.6 -1.0 -1.5 -1.2 -0.6 -6.2 7.9 0.0 4.8 2.52018 -0.5 -1.6 -1.4 -1.3 -1.0 4.4 6.2 -0.8 1.5 4.5

Sector Rank 226/418 253/418 321/418 298/418 252/418 325/388 375/388 211/418 369/388 N/A

Economy Rank 745/1305 883/1305 1081/1304 1036/1304 950/1305 369/447 429/448 799/1305 418/447 N/A

Annual Change

Key Ratios

Industry Data



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Metalworking Machinery Manufacturing in the US Industry Report

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Transcript of Metalworking Machinery Manufacturing in the US Industry Report