2008 World Machine Tool Output & Consumption Survey

Producers	Exporters	Importers
Trade Balance	Consumers	Per Capita
Analysis	Country Reports	Methodology
Reports/Presentations

Production

Virtually all of the major machine-tool-producing industries around the world saw increases in shipments in 2007. The notable exceptions were in North America, where the seemingly perennial shortage of skilled workers hampered output and increased backlogs, and in the United Kingdom, where there’ve been structural changes in the industry.

Elsewhere, however, builders saw nice growth. Japan, which has been the global leader in shipments for the past two decades, saw an 8% yen-based gain in output. The Japan Machine Tool Builders’ Assn. reports that metalcutting-machine orders for the year were nearly 11% higher than in 2006, driven by export orders, particularly to the rest of Asia.

Germany’s output rose significantly in the year just ended, maintaining its position as the second-largest producer. Estimated shipments grew an 15% in euros, and at an even higher rate when translated to dollars. Double-digit growth has been infrequent for the stable German industry, and builders have been extremely pleased. The Frankfurt-based builders association, the VDW, reports that the sector rode the crest of an orders wave that began in 2006 and continued throughout the year, with gains from both domestic and external customers. A significant portion of orders are for large, engineering-intensive special-purpose machines whose construction will continue through the current year. To keep up with the output increase, German builders added more than 2200 employees last year. The industry envisions a slowing—dubbed a “normalization”—for the current year, and the umbrella trade group VDMA is forecasting 5% growth.

China, while remaining in third place among builders, saw an astounding 43% increase in estimated dollar-volume output, the China Machine Tool Builders’ Assn. reports. For years the explosively growing manufacturing community there has led the world in consumption, fueling demand with a hefty import ratio. But more recently investments in the autochthonous machine-tool industry are being converted into output to at least partially slake local demand. And it’s not just machine tools; the China Machinery Industry Federation reports that the machinery industry as a whole grew 32% last year.

Italy, like other euro-denominated nations, saw its rate of growth in 2007 show a further increase when converted to U.S. dollars.

The Czech machinery industry, which reports in koruna, posted a very strong 30% growth rate, and the Austrians similarly showed strong gains.

Trade

Another sign that the world’s biggest market for machine tools is growing more self-sufficient comes from looking at China’s trade statistics. While still the world’s most voracious importer, the Peoples Republic showed a small decline in imports in 2007. On the export side, while China is still nowhere near the export powerhouses Germany nor Japan, it nevertheless increased machine-tool exports by one-third and now is virtually tied with the U.S.

The Exports table includes a column that calculates each country’s exports as a percentage of its domestic production. It can be an interesting measure of a nation’s reputation as a supplier to outside countries (e.g., Switzerland’s 74% ratio). But the export ratio also can be somewhat misleading. Some entrepôt countries like Belgium have percentages far in excess of their domestic production as machines pass through their ports to other markets.

A similar caution must be used for the Imports table, whose right-hand column lists imports as a percentage of consumption. Once again, heavy-trading countries like Belgium have imports in excess of consumption as they take in machine tools for later re-export.

Consumption

Chinese consumption of machine tools, reported in U.S. dollars, grew 17% last year to $15.4-billion . That means that nearly one out of four machine tools (by value) that were installed anywhere in the world last year were plugged into a Chinese power outlet. (More, probably, if you were to count units, as machines put in place in China traditionally are lower-cost than elsewhere.)

Elsewhere, while other big consumers Japan, the United States, and South Korea showed little or no growth in machine consumption, Germany expanded by 29%, Italy by 22%, and Taiwan by 31%.

Consumption in the context of this survey is “apparent consumption,” that is, a calculation taking a country’s domestic production, subtracting its exports, and adding in its imports.

The negative growth (-3%) in dollar-volume installations in the United States appears at odds with statistics recently released under its U.S. Manufacturing Technology Consumption survey conducted jointly by AMT – The Assn. for Manufacturing Technology and by the American Machine Tool Distributors’ Assn. That USMTC survey shows +8% growth for 2007. But the two sets of numbers are not comparable. Keep in mind two things: The USMTC survey is just that, a survey—participating members account for perhaps three-quarters of the market, and those participants are likely the ones experiencing growth. Moreover, whereas this WMTO&CS studies shipments, the USMTC tracks orders for future delivery, and backlogged orders are currently high. The good news is that, even if there’s a 2008 downturn, shipments (and collections) will continue for some time forward.
An interesting variation on the consumption measure here is consumption weighted for population (the last three columns on the next page). By that measure, Switzerland again tops the metalworking world with an average of $172 spent on new machine tools for each person there. Taiwan again ranks second, with $166 spent per capita.

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