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2014 Is Shaping Up as Positive Year Ahead for Machining
Source From: IMT Machining Journal
Posted Date: 2013-11-22
It looks as though 2014 will be a good year for much of the global machining industry. Demand is forecast to rise in key markets and, with it, sales of new machinery.
In remarks delivered by Martin Kapp, chairman of the VDW, the German Machine Tool Builders’ Association, at the recent EMO metal fabrication expo in Hannover, Germany, average growth of 12.7 percent worldwide is predicted by the U.K.’s Oxford Economics for machining-intensive applications such as automotive and aftermarket supply, aerospace, shipbuilding, railway vehicles, and medical devices.
This growth, if it pans out, would be almost twice the 6.5 percent surge in these markets expected this year. Kapp acknowledged that increases will not result in a one-to-one ratio of growth for machine shops and OEMs, but the industry should benefit overall.
The VDW is forecasting 2 percent growth in global sales of machining systems this year, equivalent to about €68 billion ($91.8 billion) of business — the highest ever in purchase value. Kapp did not cite growth figures for 2014 but said he believes another record will be set.
Major regions around the world are stoking demand for machining systems. In Asia, Kapp said sales are being driven by China, South Korea, and Taiwan. Elsewhere, higher sales are being recorded in Russia, as well as in the U.S., Mexico, and Brazil.
In 2012, German OEMs supplied machining systems and services valued at €14 billion ($18.9 billion), a 10 percent increase from 2011 and on a par with 2008, the last good year for sales before the financial crisis struck global markets. Sales through the first half of 2013, however, were disappointing, with total orders falling 13 percent from the same period in 2012. This breaks down to a 9 percent drop in overseas sales and a 19 percent decline in domestic business, which has been depressed for more than a year.
Kapp said domestic machinery orders started to rebound in July, posting their first positive numbers in 17 months. German OEMs are also seeing higher equipment sales in the U.K., Austria, and Italy, along with demand from the regional hot spots. Kapp was cautiously optimistic that major end-use industries in Germany will step up machining technology purchases next year and give domestic OEMs a sales boost.
Research by Oxford Economics, meanwhile, indicates that while global trade “has been unusually slow” in the last two years, “trade growth should pick up relative to GDP over the next few years,” though data do not suggest a “rapid acceleration.” In fact, Oxford is forecasting that the ratio of global trade growth to GDP growth will be “lower than for most of the post-war period.”
Nevertheless, increased demand on a global basis, no matter how small, will benefit OEMs and machine shops. And while these forecasts reflect average numbers, some end-markets are well above the median.
American Axle Manufacturing, in Detroit, for example, which produces powertrain components for cars and other vehicles, expects to do $3.3 billion of business this year — up almost 14 percent from 2012. The company has $1.25 billion of business booked to 2015, and in the next few years it plans to spend $1 billion on capital equipment, some of which will undoubtedly include machining systems.
In regard to the U.S. automotive market, which consumes most of American Axle’s products, some analysts predict that light-vehicle sales could exceed 16 million this year, a major increase from the 15 million that had been forecast.
The outlook for 2014 thus looks promising. But as always, the OEMs and machine shops that benefit most from higher demand will be those with the technology, capabilities, and equipment to exploit opportunities.
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