The changing face of machine tools production and consumption

The machine tools market is experiencing increased competition from Asian and Eastern European machine tool manufacturers - image courtesy of Exapro.
The machine tool market is experiencing increased competition from Asian and Eastern European machine tool manufacturers - image courtesy of Exapro.

The machinery sector is changing and, thanks to a growing global demand, the market is diversifying.

Previously, the machine tools sector was controlled by a few countries like Germany, Austria, the US, Japan and a handful of others. However, other countries, that have undergone industrialisation more recently, are starting to see considerable development amongst their home-grown machine tool manufacturers.

Asia is a new machine tools leader

Various Asian countries are now important actors in the industrial equipment market. Today, the continent is competing with Europe and the US and is a leader in some fields. In 2015, three of the five largest machine manufacturers (by revenue) were from Asia (China, Japan and South-Korea).

Japan has historically held the position of leader in the Asian machine tool market, thanks to important manufacturers like Amada, Makino, Okuma, Mazak, and Mori Seiki, which merged in 2009 with the Germany’s DMG to make DMG Mori.

China is becoming both a leader in the production of machinery and also it’s consumption. CNC lathe manufacturer, Dalian, which was founded in 1948, now has 640 different machine tool products on offer. Despite the growth of homegrown machine tool operators, in 2014 the country imported $17.78bn worth of machine tools.

Despite its considerable investment in machine tools, estimates from analyst firm Research and Markets say that only 30% of relevant manufacturers use machine tools in China, compared to roughly 90% in Japan or 70% in the US and Germany.

India is now also among the most important machinery producers. Used machinery online marketplace, Exapro, said it expects India’s machine tool manufacturing sector to grow 13% for the 2016-2020 period.

Europe still holds first place

Europe has long held the historical position as leader in the machine tools industry, thanks to very active countries like Germany, Austria, the UK, France and Italy. And the industry is supported by a vast array of industry events including: Hannover Messe, Mach and The Manufacturer’s own Smart Factory Expo.

But Central and Eastern Europe are now some of the most important actors in the market. According to Exapro, Poland has increased its machine tools consumption by 13%, Romania by 23.1%, Slovakia by 23% and Hungary by 24%.

Eastern and Central Europe are now attractive places for buyers and sellers and some of the most important industrial fairs take place there. MSV Brno (Czech Republic) occurs every year and is now among the biggest trade shows in the world with more than 80,000 visitors for the 2016 edition. ITM Poland took place in Poznan and presented innovations in both machine tools and automation industry.

Newly industrialised countries represent both increased competition but also a growing opportunity for machine tool makers.

But the growth is also serviced by the increased use of online marketplaces, such as Exapro, that allows buyers to have access to thousands of machines with only a few clicks. Regulations and laws have also  become more flexible, especially in Europe, in order to make deals easier and faster.

The continued industrialisation of manufacturing is close to a certainty but there is no doubt that the market is changing. The impact of these changes for the machine tool sector along with manufacturing in general are already being seen. But the long-term ramifications, whilst somewhat unclear, will likely see a further increase in competition, improved manufacturing quality in developing countries and likely a larger and more competitive second hand machine tool market.