No matching 1998's robust sales
By Industrial Distribution Staff -- Industrial Distribution, 8/1/1999
Despite healthy automotive and aircraft markets, cutting tool sales have slowed compared to last year's near-record pace. According to the U.S. Cutting Tool Institute, domestic sales during the first four months of 1999 were lower than the same period a year ago. USCTI's current business report index, which measures net domestic billings, shows activity in April dropped four percent compared to the previousyear; March fell eight percent; February declined seven percent while activity in January dropped 10 percent.
Sales for those four months were slightly better than levels in 1997, but sharply lower than activity in 1996 and 1995.
However, some industry officials suggest the trend was expected, given last year's levels.
"We're down compared to 1998, but if we compare the first quarters, '98 was almost a record for everybody. It's hard to maintain that pace," says Tom Haag, vice president of sales and marketing at SGS Tool Co. in Munroe Falls, Ohio. "I think by the end if we can meet last year's sales we'll be successful.
For those showing growth, it must be through new product lines or acquisitions."
Some officials say the decline in sales reflects increased productivity of tools because of improvements like better coatings -- which may extend tool life by up to 15 percent. But John Thimmig, executive director of USCTI, says it's hard to pinpoint the exact cause. Haag suggests there is a huge over capacity of tool-making machines.
"I don't think anybody would argue it [more productivity] hasn't had an impact, but it's hard to measure," says Thimmig.
"There's no question that coatings and high-performance tools have had some effect, but that's not the only reason," Haag adds.
The president of one manufacturing company says the decline reflects better tool design and trends such as automakers turning to cellular assembly methods, where fewer tools need to be stocked as backups.
Many suppliers also are spending more time experimenting with and testing new applications for large end users, he says. "Overall, we feel the total market and volume of cutting tools is going to shrink," says the executive, who asked not to be identified. "That's what makes America great -- better tools, better performance ... it's encouraging to me how much productivity potential remains in the system."
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