2003 World Machine Tool Output & Consumption Survey




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Production

Ever since German reunification in the early 1990s, Japan and Germany have been running neck-and-neck as the world leaders in production of machine tools. For 2004, Japan expanded on its margin to once again take the undisputed number-one position. Its shipments of ¥1,003-million in metalcutting machines and ¥135-million in metalforming machines show a combined 24% improvement over the 2003 figures. And when each year’s output is translated into an ever-weakening U.S. dollar, the year-to-year difference grows to 33%.

Expansion in the Japanese industry will continue through 2005 and into 2006, as the country’s metalcutting-machine-tool trade association reports that orders for calendar 2004 are up 45% from the previous year, swelling backlogs.

Germany gained a very respectable 8% in its output of machine tools. (Again, when the year-to-year change in euros is converted to dollars, the percentage increase grows to 19%. See Producers table.) In mid-September 2005, the German industry hosts the biennial EMO, the European world machine-tool show, at its Hanover fairgrounds. Italy, the other country that hosts the EMO series, has a 2% gain in output, once again expanding when translated to dollars.

Even larger percentage increases in production are seen in Asia, where Taiwan decisively came out of a slump with a one-third gain in output, measured in Taiwanese dollars, and the Peoples Republic of China, which reports in U.S. dollars, saw a 34% boost.

The United States, Switzerland, and South Korea, each of whose machine-tool output is in the same range, also saw double-digit expansion rates.

A notable expansion is seen continuing in India, whose boom grew at 47%, following a 35% gain a year before.

Together, Japan and Germany account for 43½% of the total output of the 31 countries in the survey; that’s up from 42½% a year ago.

Speaking of agglomerations, the 15 countries that make up CECIMO, the European union of machine-tool associations and the body that officially sponsors EMO, together account for $20.8-billion, or 45¾% of the survey total output. That’s somewhat diminished from the 48% of the total that CECIMO accounted for a year ago, as Asian producers grabbed share.

Trade and Consumption

Only two of the 31 countries in the survey show dollar-dimensioned declines in exports in the year just ended, Holland and Argentina. Of the balance that have gains, more than two-thirds have double-digit gains. (See Exporters table.)

The weakening dollar has its benefits for exporters. Among the top-ten machine-tool-producing countries, China, Taiwan, and the United States have the highest percentage gains in exports. The two Asian countries currencies are closely pegged to the dollar.

In absolute numbers, Germany and Japan lead among exporters with each shipping more than $5-billion abroad. They’re followed by Italy, Taiwan, and Switzerland, each sending out machines to the tune of $2.0- to $2.3-billion. The U.S. and South Korea come next.

An interesting ratio is the comparison of exports to the total production of each country. Swiss builders live up to their reputation as export-oriented suppliers as their industry’s export ratio once again exceeds 85%. Taiwan’s metric is similarly high, and even the Germans export a dollar volume that is equal to more than three-fifths of its domestic production. (The export ratio must be viewed with some wariness, however. Some entrepôt countries like Belgium have export ratios well over 100% as machines pass through their ports.)

When looking at the Importers table, the same mercantile entrepôts also have outsized import ratios, the measure of imports versus total consumption.

China’s demand for machine tools far outstrips its production capacity, so it leads the list of importers with $5.8-billion worth of product shipped in. That’s nearly a 40% increase in imports versus the previous year. The United States, long the world’s most open market for machine tools, is second among importers at $3.4-billion. Imports into Taiwan more than doubled during the year just ended, moving it into third place among buyers of outside goods.

An important up-and-coming market for machine tools is Thailand (whose statistics come from a third-party source and are unrevised from 2003 except for exchange-rate updating). With a very small domestic machine-tool-producing industry (chiefly Sodick EDMs), the Thais import nearly 100% of their manufacturing capacity, and the country ranks in the top ten among importers.

For all the squawking about lopsided trade with China in manufactured goods, the balance is tilted the other way when it comes to machine tools. China increased its trade deficit in machine tools to $5.3-billion. At the other end of the scale, Japan, Germany, Switzerland, et al. manage to bring in money via machine tools.

Sellers of machine tools worldwide have been brushing up on their Chinese-language courses in the face of the continuing voracious demand from the mainland and now a boost in consumption by Taiwan.

The Peoples Republic of China again is hands-down leading consumer, at $9.3-billion. That means that 20.4%—one fifth!—of the machine tool value produced by the 31 countries in this survey went to China.

Taiwan in 2004 saw nearly a doubling of its consumption, moving it to seventh place among the world’s consumers. Japan, Germany, the U.S., Italy, and South Korea fall between the two countries. (Consumers table.)

Japan’s one-third-again increase in consumption and America’s one-quarter-again boost has been keeping machine-tool production lines busy and backlogs becoming frustrating.

The size of a particular national market can be measured by the “apparent consumption” seen in that table. The measure is calculated as a country’s domestic production, less its exports, and plus its imports.

Apparent consumption is a more stable measure of a market than other, more dynamic, indicators like orders, such as compiled by the U.S. Machine Tool Consumption series of reports, in that apparent consumption measures machines that are actually delivered. In contrast, when tracking orders for future delivery, factors like cancellations, backlogs, and shipping delays can skew the picture somewhat.

An interesting variation on the consumption measure is consumption weighted for population (Per-Capita Consumption table). It’s a way of envisioning a country’s relative rate of industrialization. For the year just ended, Taiwan’s surge in buying has it investing $111 worth of machine tools for every citizen of that island. The Swiss come in next at $101 per-capita investment.

By the same measure, China’s big demand for machines becomes mitigated by its huge population, and the per-capita measure of machine-tool investment of $7 shows the true agrarian nature of the country as a whole.

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