2008 World Machine Tool Output & Consumption Survey

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

Production
Producers Brace for Slackening Demand. At first glance, 2008’s 15% increase in worldwide machine-tool production over 2007 appears to be good news indeed for the industry. The trouble is that much of that growth occurred in the first half of the year, before the current cooling set in.

That cooling is reflected in the pace of monthly new orders, which are not reflected in this annual survey. In number-one-producer Japan, for example, the Tokyo-based Japan Machine Tool Builders’ Assn. reports that orders for metalcutting machines started dropping precipitously after September 2008. By November monthly orders fell below 60-billion yen for the first time in 73 months, and the trade group estimated that year-to-date orders would be off 13% from 2007. In America, the U.S. Manufacturing Technology Consumption survey that tracks both domestic and foreign-built machines showed that December orders were less than half that a year prior. For the full year, USMTC orders were down 2.4%. As orders go, shipments will follow.

Another factor affecting production in 2008 was the falling value of the U.S. dollar. While benefiting some American exporters, the exchange-rate slide also affects international comparisons. So, for example, the machine producers in the Zurich-based Swissmem trade group saw a 2008 production decline of 4%, when they counted up their Swiss francs. But when calculated in dollars at the average rates for last year and for the year before, Swiss output is seen to have grown by 6%. Countries that use euros, yen, pounds or other currencies saw similar disparities between year-on-year changes seen locally or in dollars.

Given the potent forces that are stirring what has become a most global industry, it’s likely that standings among individual countries are likely to shift. What can be seen from this annual World Machine Tool Output & Consumption Survey is how national industries have positioned themselves to take advantage or—or suffer from—the changes to come.

With China’s voracious appetite in the past decade, its domestic machine-tool builders almost couldn’t help growing. They moved into third place among producing countries in 2005 and have held that position into 2008. (A decade prior they were seventh.) Chinese growth rate, 30%, may have cooled a bit from the 40%+ annual increases seen lately, but what with domestic demand continuing, more growth seems likely, and as the industry matures its products are being seen as internationally competitive, solidifying its slot.

Italy’s respectable 5% increase in output in 2008 becomes 13% when euros are converted into dollars and makes it next after China in the standings. But Italy’s increases, along with stronger gains in Germany, weren’t enough to put the CECIMO bloc of Western-European producer industries ahead of those in Asia in share of world output. Last year also, Asia out-produced Europe.

Machine-tool builders in the United States saw a 15% increase in exports for the year; that helped them attain a 17% increase in shipments. But the American industry’s growth since the late 1990s hasn’t been able to keep pace with that of other nations, particularly in Asia. So, as the chart on the first page shows, it has become less of a major player in the global market, yet it remains in seventh position, about tied with Switzerland.

Trade
In sampling the international movement of machine tools, the WMTO&CS can turn up some interesting trends. China, for example, continues as the world’s biggest importer. But its imports as a percentage of its consumption, 39%, has been easing in recent years, showing more reliance on domestic production. Moreover, China’s exports grew at a respectable 27% last year, further showing the maturation of its domestic machine-producing industry.

That last column in the table at right, “Imports as % of Consumption,” figures out a proportion between what’s traded and what’s used. While it can be an interesting measure of a country’s self-sufficiency in machine tools, there’s a caveat. Some entrepôt countries like Belgium that do a brisk business in transshipments show percentages higher than 100, sometimes much higher. A similar caution should be applied to a column on the Export Activities table on the previous page, the column that measures exports as a percentage of production.

Another aspect of trade is the amount of cash flow it can engender. Japan, the world’s largest producer, is also the number-two exporter. But Japanese machine-tool customers tend to buy domestic products, so imports are relatively low. Not surprisingly, Japan once again leads the world in its positive balance of trade. Exports, $8,587.3-million, minus imports of $770.8-million leave a positive balance of trade of $7,816.5-million. At the other end of the scale, China with its huge imports has the worst machine-tool balance of trade, a negative $5,400.0-million.

Consumption
Production Minus Exports and Plus Imports. That’s the formula for calculating what economists call apparent consumption. For machine tools, it’s the measure of how a country is investing in its manufacturing capacity.

In 2002 China moved ahead of the United States, Japan, and Germany into the top spot in world machine-tool consumption and has remained there ever since. With installations totaling an estimated $19.4-billion in 2008, up 20% from the previous year, China’s consumption accounts for almost one-quarter of total shipments by all the producers in the survey.

Germany and Italy both posted healthy euro-denominated gains in consumption last year while Japan actually saw a decline.

Turning away from the topmost tier of consumers, the Czech Republic, Finland, and Denmark all had notable increases in their installations during 2008.

The United States is fifth among world consumers, installing $6.8-billion worth of domestic machines and imports, about a 15% gain over 2007. How does that figure compare with numbers released through the U.S. Manufacturing Technology Consumption survey? It doesn’t (although the numbers are sourced from the same office). The USMTC series, despite its use of the word “consumption,” measures orders instead of machinery actually shipped and consumed. Moreover, the USMTC records responses from participating member companies, whose coverage does not equal the entire U.S. market. In short, apples and oranges.

An interesting variation on the consumption measure here is consumption weighted for population. By that metric, which is sometimes seen as a relative index of industrialization, Switzerland again tops the metalworking world with an average expenditure of almost $185 spent on new machine tools for each person there.

Italy ranks second with around $100 spent per Italian, moving ahead of Taiwan. India, with its huge population, is at the bottom of this list (of countries having a substantial machine-tool-producing industry) with $1.63 spent per capita.

Countries included in this annual WMTO&CS generally are those that have established production capacity and therefore effective internal data collection. The authors estimate that the 28 countries that are part of the study represent more than 95% of world output, with the larger producers consuming the bulk of the annual shipments.

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