2014 Global Machine Tool Association President's Perspective

The EFFICIENT MANUFACTURING magazine conducted an e-mail interview with the presidents of several machine tool associations around the world. The interviews included regional macroeconomic trends, the development status of the machine tool industry, market prospects, and technology development trends.

India: First signs of recovery

Due to the influence of the international environment, domestic monetary tightening policies, lack of consumer confidence, and unfavorable economic reforms, India's economic growth rate is not optimistic. The Oxford Economic Report predicts that the major machine tool users in India will experience a 5.2% increase in 2014 after two consecutive years of contraction, which is expected to drive the growth of machine tool consumption by 3.8%. However, the growth of the machine tool market will also be affected by India's central bank tightening monetary policy and the progress of government reforms. The Indian Machine Tool Association is more optimistic about the market. They believe that due to the implementation of the auto tax cuts in 2014, the consumption tax will be reduced from 12% to 10%, and the growth of auto consumption will drive the growth of the machine tool market. It is expected that machine tool consumption will increase by 5-10%. In 2015, the market will increase by 15% year-on-year.

The consumption of machine tools in India is stable at US$2.05 billion, of which one-third is domestic machine tools. In the recent two quarters, with the launch of some projects in the automotive and parts, aerospace, defense, energy and other fields, the orders for machine tools showed a growth trend. The outstanding feature of market demand is the continuous increase in demand for forming machines.

China: Weak demand

The Oxford Economic Report believes that China is implementing economic rebalancing measures to reduce investment, which has slowed economic growth. It is expected that the growth rate in 2014 will be 7.2%, and that in 2015 will be 7.1%. Due to lack of investment, machinery, commercial vehicles, and metal products industries will face weak user demand. The capacity utilization rate is not high enough to further reduce new equipment acquisition expenses and business expansion. In the medium term, it has a certain inhibitory effect on machine tool consumption.

According to the information provided by the China Machine Tool Industry Association, the market for machine tools continues to be sluggish, the gold-cutting machine tool market is the most significant, and imported machine tools have fallen sharply. The demand for low-end products has been significantly reduced. The export of machine tools showed a slight fluctuation and growth.

In 2013, China's metal processing machine tool consumption reached 31.91 billion US dollars, a year-on-year decrease of 16.6%. Among them, gold cutting machine tools consumed 20.71 billion U.S. dollars, a year-on-year decrease of 24.4%; and forming machines accounted for 11.2 billion U.S. dollars, a year-on-year increase of 2.8%.

Although most of the machine tool products have declined to varying degrees, the “concrete, refined, and special” products, automation products, and high value-added services all show a trend of contrarian growth, and this trend will surely continue from now on. Several years.

For the trend of 2014-2015, the China Machine Tool Industry Association believes that the trend of a significant reduction in the total market demand and an accelerated demand structure will not change. This change will not only force China's machine tool industry to adjust and transform, but also put forward new challenges and new development opportunities for global machine tool manufacturers.

EU: Start the pace of growth

In the second quarter of 2013, the EU’s GDP turned negative, indicating that the longest economic crisis experienced by the EU was terminated in 2013. At present, the overall EU consumer confidence index has reached its highest level since 2008, and the high unemployment rate has started to fall in some countries. In the EU, both consumption and investment have increased. At the same time, economic growth has reduced dependence on the outside world. Industrial production grew moderately, and capacity utilization rate was close to the historical average.

The EU machine tool exports accounted for 83% of the output value and were affected by the weakness of the emerging markets (China, India, and Russia). In 2013, EU machine tool shipments reached 18.3 billion euros, the second highest in history.

In 2013, consumption of machine tools in the European Union decreased by 4% year-on-year, but in 2014 it began to recover. At present, the number of orders for machine tools in the European Union has increased by 8% and 16% year-on-year as compared with the same period of the previous year. It is cautiously optimistic that the consumption of machine tools in the EU will increase by 4.6%. Should be higher than the growth rate of machine tools in China and Taiwan.

The EU machine tool orders mainly come from equipment upgrades and emerging markets, while the industry with the largest purchase of new equipment within the European Union – the automotive industry lacks investment momentum.

For future technological trends, the European Machine Tool Federation believes that intelligent production will lead the development direction of the manufacturing industry. Intelligent manufacturing will make the production process more efficient and products more precise; man-machine dialogue will be more convenient; the processing of complex parts will be easier; and the service will be smoother. In short, intelligence has opened up a new window to make the production process more resource-efficient and energy-efficient, and its impact on the environment will be greatly reduced.

With the recovery of the European economy, the EU’s monetary policy is likely to tighten, and the exchange rate will also rise to normal levels. In the next five years, the average growth rate of the European economy is 1.9%, and the average annual growth rate of investment in fixed assets is 3.4%. Due to the slowdown in equipment investment in the previous two years, it is expected that the average annual growth of machine tool consumption will be 5.8% in the next two years.

Germany: Economic growth is still not stable

In 2014, the rapid growth in the field of machine tools for Germany's steel, electrical, mechanical, rail transportation, aviation and other machine tools will have a decisive effect on the demand for German machine tools. In 2013, the growth of overseas orders for German machine tools - Turkey, the United Kingdom and Russia - will no longer be significant in 2014. Overseas orders will mainly rely on Asia and the Americas.

It is estimated that the domestic and overseas orders for German machine tools will increase by 10% in 2014, and the machine tool output will increase by 3% to 14.8 billion euros, which is the highest point in history. If the world’s political pattern is stable in 2015 and no regional crisis occurs, this growth trend is expected to continue.

The German Machine Tool Association believes that the trend of machine tool technology development in the coming years will be reflected in the personalization, automation and high efficiency. Personalized products are not only the machine itself, but the concept penetrates into the various auxiliary components of the machine, such as cooling systems, loading and unloading systems, storage systems and so on. Some users are no longer planning large-scale production lines, but simply select the key machines that they must have. The user provides the part and the machine manufacturer designs the solution. In addition, energy conservation will also be a long-term theme. It is a trend to reduce energy consumption by using components such as variable frequency motors and low-power hydraulic valves.

Italy: Steady increase in demand for machine tools

In 2013, the Italian machine tool output value was 4.78 billion euros, a slight decrease of 1% year-on-year; it has dropped for the third consecutive year. Among them, exports account for three quarters. China, the United States, Germany, Russia and France are the major export destinations. From the current situation, imports have increased slightly by 0.7%, and machine tool consumption has reached the bottom, which is 1.6% lower than the same period of 2012.

According to the Oxford Economic Report, in 2014 Italy still did not get rid of the impact of domestic high unemployment and tightening monetary conditions, domestic consumption was weak, but exports would increase, so Italy's GDP is expected to increase slightly by 0.1% in 2014. The major user industries in the machine tool industry will achieve a recovery growth of 2.3%, but the 2013 rapid growth in the precision and optical instrument industry will be reduced. It is estimated that the output value of Italian machine tools will increase by 4.6% to 5 billion euros in 2014; exports will set record highs, and the export rate will still maintain over 75%.

The Italian Robotics and Automation Industry Association believes that although the automotive industry is weak, it has hit the machine tool industry, but other fields such as biomedicine, nanotechnology, energy, aerospace and other fields have provided new opportunities for the machine tool industry. Under the framework of the EU “Vision 2020”, capital will be more invested in technological innovation, creating a better development prospect for the Italian machine tool industry. 5% of the Italian machine tool industry's output value is used for research and development. Through close cooperation with end users, Italian machine tool manufacturers are pursuing the most suitable products for users.

Spain: Increasing orders for machine tools

Spain's major economic indicators show that the downward trend in Spain's economy has slowed down. The economic growth in 2013 was -1.3%. It is expected that it will achieve a positive growth of 0.5% in 2014. The driving force for growth comes from the manufacturing sector, especially the major user areas of the machine tool industry, such as automotive components, energy (wind, hydraulics, photovoltaics, petroleum), aviation, and railways. It is expected that the growth rate of these user areas will reach 4.2%, which is 6 times the average growth rate of Spanish industry, which will lead to rapid growth in machine tool orders.

The consumption of machine tools in Spain experienced a negative growth of 10 years, a year-on-year increase of 4.5% in 2013, which may be a turning point from negative to positive. However, it must also be noted that the high unemployment rate and tight monetary problems in Spain may inhibit the growth of machine tool consumption.

Japan: Government Supports Industrial Growth

Japan’s GDP grew by 1.7% in 2013 and it is expected that this growth rate will still be achieved in 2014. The growth point will be the upgrading of equipment from private investment. Japan's economic recovery, the main factor can be considered as a currency factor (currency devaluation); and the implementation of the tax reform of the government to stimulate manufacturing consumption.

In 2013, Japan's machine tool orders decreased by 7.9% year-on-year, of which domestic orders increased by 6.6% year-on-year. Mainly due to direct or indirect pull of government procurement growth. In Japan, among the major user areas of machine tools, orders for general machinery, automobiles and parts, aviation, shipbuilding, and transportation equipment have all increased to varying degrees, while orders for the electronics and precision machinery industries have declined slightly. As orders from Asia decreased by 14.4%, Japan’s overseas orders declined for two consecutive years in 2013.

The Japanese government’s loose economic policies and stimulating investment policies have boosted the growth of domestic demand and are expected to drive the growth of machine tool orders in 2014 by 16.3%. In terms of overseas markets, Asia will still be Japan's major market, accounting for about 40%; followed by North America, more than one-third; and Europe will account for 20%. The United States has surpassed China to become Japan's largest overseas market.

U.S.: Manufacturing boosts U.S. economic growth

Although the U.S. economy has not shown rapid growth to some Asian countries, it has not been easy to maintain a steady growth of 3-4% for four consecutive years. It is estimated that the U.S. GDP will still maintain a 3% growth rate in 2014. From this we can see that the strategy of “returning to manufacturing” has made great contributions to the US economy’s trough. This is the first time in the last half century that the United States has relied on manufacturing to achieve economic recovery.

In 2014, the United States will become a world leader in energy supply, low energy prices and transportation costs, and safe transportation networks to ensure that local manufacturing industries are more competitive globally. In the next two or three years, the most important areas for the machine tool industry include: First, the automotive industry, it will remain the most dynamic industry, the continuous launch of new models, the regular replacement of the power system will become the focus of investment. The second growth industry is aerospace, and the global demand for various types of commercial aircraft continues to increase, resulting in sufficient orders for U.S. aircraft manufacturers. Lastly, the strategy of returning to manufacturing has spawned a large number of outsourcing companies. Because they serve various industries, these companies are the largest machine tool consumer groups.

The American Machine Tool Association believes that the future trend of machine tool manufacturing technology will be expressed in robotics, automation, big data and so on.

UK: Expecting a strong recovery

With the shift of capital from real estate to exports and business investment, the UK economy has begun to show a recovery. In 2013, UK GDP increased by approximately 1.9%. It is expected that there will be a 2.2% increase in 2014, which means that all industries can achieve different degrees of growth. It is estimated that machine tool consumption will increase by 4%. In 2013, the UK's machine tool output value was 600 million pounds, a year-on-year increase of 4%, of which 85% was exported; machine tool consumption was 640 million pounds.

In the United Kingdom, the obvious trend in the development of machine tool technology is the deepening of technology-driven and automated applications. This depends on the rapid development of several major industrial areas in the UK. First of all, the United Kingdom has a strong aerospace industry and ranks second in the world. It is the main driving force for technological progress in the machine tool industry. This area has maintained high growth for several decades. Secondly, many foreign automobile companies have factories in the UK, which plays a decisive role in the demand for machine tools. In addition, the energy sector cannot be ignored. The United Kingdom is laying pipelines for oil and natural gas, plus nuclear power, wind power and other green energy. The UK has a large investment in the energy industry.

South Korea: Steady growth in investment

In 2013, South Korea’s manufacturing industry began to show signs of recovery, and the purchases of machine tools in the automotive, general machinery and equipment industries began to increase. The Oxford Economic Report predicts that South Korea's manufacturing industry will grow steadily in 2014, driven by strong investments from some advanced economies.

According to the data provided by the Korea Machine Tool Association, the South Korean machine tool orders in 2013 have the following characteristics: the growth rate of overseas orders is higher than domestic orders; the orders for numerically-controlled machine tools have increased while the orders for ordinary machine tools have fallen; the orders for numerically controlled lathes have decreased significantly more than the orders for machining centers; In addition to the decline in orders for machine tools from the automotive industry, other industries have shown growth, while orders for electronic, electrical and IT industries have been particularly significant.

As the global economy stabilizes, investor confidence will further increase. It is expected that the growth rate of machine tool users in South Korea will reach 10.9% in 2014, which will lead to a 5.1% increase in machine tool consumption.

Taiwan: Accelerating Growth in 2014

Despite the fact that Taiwan’s economy has been sluggish for some time in the past, with the acceleration of global economic growth, especially the steady growth of the US economy, it is expected that the Taiwan economy will rebound strongly in 2014.

According to the Oxford Economic Report, Taiwan’s economy is highly dependent on the mainland, and Taiwan’s economic growth will slow down as the Chinese economy slows. In Taiwan Island, the investment in fixed assets of the various user areas of machine tools is slightly insufficient, but it will still be better than 2013. It is estimated that the growth rate of the machine tool user industry in 2014 will reach 5.4%, and Taiwan's economic growth rate will reach 3.1%.