Modest growth expected in machine tool industry

By Staff -- Industrial Distribution, 1/1/2001

Newton, Mass.-Machine tool purchases are expected to rise just 1.4 percent for 2000, according to CIT Equipment Financing's Eighth Annual Machine Tool Outlook, released this fall.

The CIT report predicted another small, one percent increase for 2001, raising domestic demand to $7.4 billion.

The report identified several long-term trends impacting the machine tool industry, citing technological improvements as the driving force behind the steady decline in machine tool demand. Essentially, technological enhancements are improving the performance of machine tools, resulting in better and faster machines being built that reduce the number of machines that manufacturers need to replace each year.

Ralph Nappi, president of the American Machine Tool Distributors' Assn., said he largely agrees with CIT's conservative forecast for the future, despite a nearly 20 percent spike in machine tool consumption in September.

Nappi attributed that spike to orders placed during the biennial International Manufacturing Technology Show, held in Chicago.

"I think we'll end this year one to three percent ahead of last year, and ever since IMTS things have slowed down," Nappi said. "And last year we had a big downturn. [In 2001], I expect a modest gain, maybe one to three percent again.

"There's a lot of activity proposals-wise, but nobody's really reaching into their pocket to go ahead and buy that equipment," Nappi said. "The buyers are really easing off the [machinery] investments a bit. ... We had five boom years from 1993 through 1997 with good equipment being sold that has been extremely productive and the manufacturers are still getting the benefits out of that machinery."

Nappi points to the outsourcing trend manufacturers are fulfilling in places like Mexico and South America as another important factor impacting machine tool purchases.

The U.S. Machine Tool Consumption report released in November, sponsored by AMTDA and the Assn. for Manufacturing Technology, placed the year-to-date total U.S. machine tool consumption at $4.5 billion, up three percent compared to the same period in 1999. Though there are some discrepancies between the two reports, related largely to the breadth of products included in consumption figures, the basic projections are the same: modest gains this year, and modest gains expected for 2001.