Production
Japan, the Peoples Republic of China, Taiwan, the Republic of Korea, and India all saw percentage gains in double digits for their production of machine tools in 2005.
With an estimated 28% yen-based increase in its output of metalcutting and metalforming machines Japan cemented its leadership position among the world’s builders. Put another way, Japan’s output last year exceeded that of second-place Germany by $3¾-billion dollars, or by more than the output of Taiwan.
Moreover, Japan’s gain comes after a 24% increase in output a year ago. At last, however, there are some signs of cooling for the industry. The Japan Machine Tool Builders’ Assn., which reports statistics on metalcutting machines, notes that new orders continue to increase, but not at the same rate as they had at the beginning of the 2005 production year.
China’s machine-tool builders’ group posted only a slight revision to its year-ago estimate for 2004 and projects that 2005 saw a 23% increase in production. That moves China into third place in terms of output (table, Producers), ahead of Italy, which held that slot last year.
Taiwan remains fifth among the world’s builders and follows a one-third gain in 2004 production with a very respectable 10% increase in the year just past. South Korea, number seven on the list, increased its machine-tool industry’s growth rate to 19%, from 10% the year prior.
Indian machine-tool output in the last two years has seen a growth rate nothing short of phenomenal, posting nearly a 50% increase in 2005 on the heels of a similar percentage increase the year before. The country’s trade association attributes the surge to increased demand from three suddenly growing industrial sectors within the country: automotive, auto ancillaries, and consumer durables. Even after weathering a slump in 2001-2002, the Indian machine-tool industry production (in rupees) is more than double its level for 2000. Much of the gain has been in relatively straightforward numerically controlled machines including lathes, machining centers, grinders, and sheetmetal centers.
As a bloc, these five Asian countries account for $24.7-billion, or 47.6% of the survey total; a year ago they held a 44.1% share. Together their one-year gain was 23%, considerably ahead of the worldwide increase of 14%.
The other major bloc of producing countries is, of course, Western Europe, represented by the Brussels-based CECIMO organization of national machine-tool associations. Production by its 15 members shows a growth rate of 7% and amounts to $21.9-billion, or a 42.3% share of the survey total; a year ago CECIMO members held 44.7%, two years ago it was 48%.
The United States showed a small expansion, 1%, and was nudged out of the fifth-place slot it held a year ago by Taiwan.
Some producing countries showed declines in 2005 output versus 2004: Brazil, the U.K., Austria, and Croatia.
Trade and Consumption
Exports by the 28 countries in the survey rose in 2005 by $3.6-billion or 14%, the same percentage as the rise in production.
The United States is one of only three machine-tool economies that show a decline in exports, despite trade-promotion activities on the part of its major trade associations. Insiders attribute the slip variously to a growth in the home market, currency fluctuations that no longer give the dollar a boost, the mix of machine types produced in America, and/or U.S. government restrictions or inactions.
Whatever the formula, Japanese builders appear to have got it right. That country increased its exports 27% in 2005 (table, Exporters), and that came on top of a 16% yen-based increase the year before.
Japan’s exports amount to about half of the value of its production, a proportion that’s backed up by trade association reports of foreign orders. That ratio column, “Exports as a Percentage of Production,” can point to interesting insights about a country’s industry; Switzerland seems to live up to its reputation as export-oriented as its export ratio again exceeds 85%, while China—with an export ratio of only 16%—appears to be oriented toward building for internal use. But the ratio must be looked on with some wariness. Some entrepôt countries like Belgium have export ratios way in excess of their domestic production as machines pass through their ports. A similar caution must be used with the Import table on this page. Once again, mercantile nations like Belgium import more than their home metalworking industries consume since import statistics include machines imported for re-export.
Among importers, China again leads the world, having pushed the United States out of the top position in 2002. Other major importing countries are Germany, South Korea, and Taiwan, whose level of imports fell in 2005 after an apparently unsustainable gain in 2004 (when imports more than doubled over 2003).
The total of this survey’s exports always exceeds the total of reported imports. That’s because some countries like Thailand and Mexico have substantial imports but, with virtually nonexistent domestic production of machine tools, lack reliable statistics and cannot be included in the study.
Among the major producing countries, the Trade Balance table shows that nations like Japan and Germany manage to bring in money with their industries while China and the United States have high negative balances.
With its 2005 consumption put at $10.9-billion (table, Consumers), the Peoples Republic of China installs 21% of the value of machine tools produced in the entire world. That’s about the same portion as in last year’s survey.
The size of a particular national market can be measured by “apparent consumption.” That measure is calculated as a country’s domestic production, less its exports, and plus its imports. Because it measures equipment actually delivered, apparent consumption is a more stable measure of a market than other more-immediate indicators, such as orders (like the USMTC statistics in America), which don’t take into account cancellations, backlogs, and shipping delays.
The U.S. shows a gain of 14% in equipment consumption and is in third place, behind Japan whose installations moved up 29%. Germany, which led the U.S. in consumption in 2004, did not keep pace and increased its purchases only 4%; it ranks fourth in consumption. Other European economies followed Germany’s lead and had only modest increases in their consumption.
An interesting variation on the consumption measure is consumption weighted for population (table, Per-Capita Consumption). By that measure, Switzerland ranks at the top, spending more than $110 per capita on machine tools. Taiwan is next at $96 per capita. India with its huge population is last at 94¢ per person.
