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 to 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 machines online marketplace - Exapro, sais it expect India’s machine tool manufacturing sector to grow 13% for the 2016-2020 period.

India stands 13th in production and 10th in the consumption of machine tools in the world according to Gardner Business Media survey in 2016. The country is set to become a key player in the global machine tools industry and is likely to see substantial high-end machine tool manufacturing. With emphasis on "Make in India” and manufacturing growth, for which the machine tools sector serves as the mother industry.

The Indian Machine tool Industry has around 1000 units in the production of machine tools, accessories, subsystems and parts. Regarding to this around 25 percent in the large scale sector accounts for about 70 percent of the turnover and the rest are in the MSME sector of the industry. Approximately, 75 percent of the Indian machine tool producers are ISO certified. While the large organized players supply India’s heavy and medium industries, the small-scale sector meets the demand of ancillary and other units. Many machine tool manufacturers have also obtained CE Marking certification, in keeping with the requirements of the European markets.

The industry can be segmented in several ways:

 

CNC

Convertional

Forming

Rs. 126 Cr

Rs. 381 Cr

Cutting

Rs. 3756 Cr

Rs. 462 Cr 


Indian Machine Tool Idustry 2014-115 & 2015-16 (INR Crores)

 

2014-15

2015-16

Growth Rate

Production

4230

4727

12%

Exports

281

296

5%

Imports

5318

5945

12%

Consumption

9267

10376

12% 

The Indian machine tools sector offers several opportunities for investment. Given the current gap between demand and supply, there is a clear need for adding capacities in this sector. The industry is moving towards increasingly sophisticated CNC machines, driven by demand from key user segments, such as, automotive and consumer durables, aerospace etc. Machine tool manufacturers need to develop capabilities to supply to this demand and investments in this area could yield long term benefits.

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. Moreover industry is supported by a variety of industry events including: Hannover Messe, Machand The Manufacturer’sown Smart Factory Expo.

Central and Eastern Europe are now some of the most important  players 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%.

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

Newly industrialised countries represent not only increased competition but also a growing opportunity for machine tool makers.

Also the growth is serviced by the increased use of online marketplaces, such as Exapro, that allows buyers to have access to thousands of machines in 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. During the long-term ramifications, whilst somewhat will likely to observe a further increase in competition, improved manufacturing quality in developing countries and likely a larger and more competitive second hand machine tool market.