ARC says CNC market bombed
Capital Equipment Surplus
During the rapid growth period, machine tool builders scaled up businesses for what seemed to be a new level of demand for capital equipment in the market. Many of the serial machine builders in Japan, Korea, and Taiwan built up inventory in the channel, creating a tremendous surplus in machinery that would not be depleted until the second quarter in 2010. Furthermore, manufacturers that had purchased capital equipment to meet the increasing demand for finished goods were faced with overcapacity in their operations.
Machine Tool Builders Suffer
The economic downturn hit the discrete manufacturing industries particularly hard, placing enormous business pressure on the OEM machine tool builders that serve these industries. In today’s tight, risk-averse, capital environment, end user manufacturers only purchase new equipment when they can no longer effectively redeploy existing equipment, delaying capital equipment purchases until the last possible moment. The recession that began in 2008 significantly impacts the way today’s manufacturers conduct business. Pressure points mount for machine tool builders of standard machines and custom-engineered machines, as past business models no longer match current economic realities.
Emerging Markets Drive Future Growth
The regions that will experience the largest growth over the next several years will be South America and Asia. Western Europe will continue to remain a dominant region, but the focus will remain on the high performance and high valued machinery. Over the course of the forecast period it is expected that the emerging markets will expand beyond the low valued machinery market and make inroads into the midrange performance in machine tools. This is inevitable as the domestic manufacturers seek to improve their manufacturing competency.
About ARC: Founded in 1986, ARC Advisory Group is the leading research and advisory firm for industry. Our coverage of technology from business systems to product and asset lifecycle management, supply chain management, operations management, and automation systems makes us the go-to firm for business and IT executives around the world. For the complex business issues facing organizations today, our analysts have the industry knowledge and first-hand experience to help our clients find the best answers.
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