If there's a constant in the cutting tool industry, it's that change is always waiting right around the corner. From machine diagnostics that connect the shop floor directly to the manufacturer's technical support specialist, to tools developed for specific industries, to tools that run a machine with little human intervention, the industry is highly influenced by two driving forces: rapidly evolving technology and changing customer demands.

INDUSTRIAL DISTRIBUTION spoke with distributors and manufacturers to find out what's ahead for cutting tool manufacturers and distributors in 2003 and beyond. Here's what they had to share:

Joe Kueter, industrial engineering manager, M.A. Ford Manufacturing, Inc., Davenport, Iowa.

Cutting tools are moving toward industry-specific tooling, such as a line of drills dedicated towards stainless steel or other materials. We're also seeing new and improved tool coatings and carbide grades – two areas that are constantly evolving, and being driven primarily by customers and their machining performance. Customers want to drive as much cost out of the acquisition process as possible, so when it comes to high performance drills and drilling products, they want the "total package" from the manufacturer, including the new tools, regrind and recoat.

In the machine diagnostics arena, technology is allowing manufacturers to tie into an end user's machine on the shop floor via the Internet and perform diagnostics, saving days of travel for themselves and downtime for the end user. I think we'll see more of this in the future, particularly as more end users move towards unmanned operations. Technology will also play a role in raw materials like carbide and coating technology, and that will result in improved tool performance. Also expect to see machine capabilities that allow end users to get increasingly complex forms for cutting tools.

Combined, this technology and innovation will play a part in lowering order costs, streamlining the order entry process and keeping costs reasonable for end users. It will also increase the need for distributor technical support for those end users, so expect to see more distributors partnering closely with manufacturers to train their sales reps and technical staff, who in turn will provide good technical support to end users. To make it work, the manufacturer and distributor must both create value to the end user that at least equals their cost in the channel.

Mike Moran, vice president, DCT Industrial Supply, Inc., Decatur, Ill.

Right now, the cutting tool business is being driven by the customer, particularly the high-level management folks like purchasing agents, engineers and tool analysts – not the people we would normally call on. That's because the trend right now is for distributors to provide more services to meet customers' demand for lower procurement costs. Put simply, customers expect distributors to do a lot more than they've done in the past.

To deal with these increasing customer demands, we've implemented an automated tool vending system and provided customers with "mini cribs" at their sites. We go in, purchase, handle the inventory and refill the bins. We also provide a lot of technical support, and even hired our own in-house technical staff to handle that. We've taken much of this on ourselves because manufacturers are also trying to work lean, and as a result their representatives are covering multi-state regions and are stretched to the limit.

Because we're in the people business, we know that we also have to provide more than just cutting tools and equipment that dispenses those tools. Going forward, I see distributors hiring their own programmers, tool processors and tool analysts in order to provide that "total procurement package." Right now, however, our biggest challenge is keeping up with the rapid rate of market change.

Mike Pines, sales manager with Elisha Penniman, Hartford, Conn.

In the cutting tool industry, there's been a lot of consolidation on the manufacturing side, which has made it difficult for distributors who are suddenly forced to deal with one larger entity after several of their smaller vendors are merged with or acquired by another firm.

Technology is also evolving at a rapid pace, making it that much harder for independent distributors to keep up. For example, we're selling tools right now that make tools we sold just four years ago obsolete. I don't see that changing anytime soon.

On the customer side, the key word is "partnership." End users are looking to align themselves with distributors that can provide the total package, and not just sell them tools. They want distributors who are up on technology, and who can help them be more competitive in a global marketplace. As technology continues to evolve, those customers will want tools that run faster, last longer and operate their machines with less human intervention. It's not a very popular opinion, but some end users are already moving in this direction.

Dale Petts, global product manager of bandsaw products for Simonds Industries, Inc., Fitchburg, Mass.

In the cutting tool industry, we've seen independent and family-owned distributors come under increasing pressure from the superstores in the last few years. To deal with the contraction, distributors have taken steps like forming buying consortia for pricing leverage. The super distributors are segmented into two basic groups: the integrators and the hybrid 7-Eleven. The integrators are evolving into a purchasing arm of the users they service, with their survival based on cost-reduction, while the 7-Elevens provide super service more closely aligned with the automotive wholesale service providers, but powered by the purchasing power of a corporate giant. Neither group is willing to work on historically acceptable profit margins and inventory levels.

In the cutting tool industry we often engineer and develop new, more efficient and effective cutting tools and find the users unwilling to break the mold of the way in which they are applied. We often do not understand our true cost of producing goods and services, thus are not driven to use technology to its fullest potential.

In band-sawing, we are still primarily using high-speed steel for our cutting teeth, and the buyer is often motivated away from the carbide technology that often would actually make his operation more profitable. The cost of the tooling, not the result, is the buying motive. The more successful distributors and manufacturers will understand when and where they can draw the line with the user and sell the high-speed bandsaw blade even though they know the user will be spending more in the long run.

Josh Kelly, marketing director, Lenox Bandsaw Division, Longmeadow, Mass.

We've seen a real movement in the areas of productivity and automation, and we're also seeing a lot of new machines on the market that possess a level of automation that hasn't been available in the past. Driving those innovations are the manufacturers' end users – both of whom are focused on cost and scrap reduction. Customers want more repeatability and consistency, and that has pushed the more sophisticated end users to gravitate toward these automated machines.

A big area for us right now in cutting tools are PVD coatings. We're finding that once you get the right combination of coating and saw blade, you start to produce saw blades with tremendous and unprecedented performance. Again, the need for such innovative tooling is coming from the customer side. End users aren't necessarily looking for blades that can cut faster – they're interested in blades that have long life – and coatings contribute to both blade life and cutting rates.

Companies are running so lean right now, but when demand comes back, I think we'll see bottlenecks in production, unless end users can get more productivity out of their shops. Companies will be stuck if they can't push their machines harder and gain more output – which is exactly what coatings and carbides allow them to do – so that's where we see potential for growth for distributors and manufacturers as the economy recovers.