Metal Cutting Milling Bit

The U.S. metalworking industry is red-hot. The Gardner Business Index (GBI): Metalworking averaged nearly 56 in 2017, which was easily the best year since Gardner Intelligence started the Index almost seven years ago. The Metalworking Index continued to increase in the beginning of 2018, hitting an all-time high of 61.3 in February.

The strong performance of metalworking facilities throughout 2017 resulted in a significant increase in machine tool consumption, as reflected by data from Gardner Intelligence’s latest World Machine Tool Survey. Machine tool consumption in the United States totaled $8.142 billion in 2017, an increase of 6.8 percent from 2016. This increase represented the fastest growth rate since 2011, and the second fastest since 2007.

While a 6.8-percent increase is commendable looking at consumption in the last 10 years, it is relatively low compared to, let’s say, a 60-year history of U.S. machine tool consumption. So, why do I say that the machine tool industry is booming?

In 2017, 12 of the top 15 countries that consume machine tools increased their consumption from the previous year. This occurrence is rather unusual: The last time this occurred was 2011. That year, all of the top 15 countries that consume machine tools increased consumption—the only time that has ever happened. However, the industry was then in the midst of a rapid recovery from the Great Recession of 2007. Since 1980, only six years saw more than 12 of the top 15 increase consumption. Before 1980, no single year showed that level of growth.

At the moment, I do not think the strength of the top 15 consuming countries will decline in 2018. We can make a rough estimate of machine tool consumption in a country by analyzing the trends in its money supply, industrial production and capacity utilization. This analysis indicates that it is quite possible for 13 of the top 15 countries that consume machine tools to increase consumption in 2018.

Indeed, the machine tool industry is booming, but not based solely on United States doing well. Rather, it is because almost all major manufacturing countries around the world are doing well.

Perhaps most importantly, China raised its 2017 machine tool consumption by $1.780 billion to $29.970 billion, an increase of 6.3 percent. This increase in Chinese consumption made China the 10th largest machine tool consuming country. Although China increased its domestic production of machine tools and consumed more of that output than in the past, it increased its imports significantly in 2017 as well. Chinese imports rose to $1.147 billion, an increase of 15 percent from the previous year.

Read more: The Machine Tool Industry Is Booming Globally