In a world that is seemingly ruled by globalization, more companies are refocusing their efforts on productivity to compete worldwide. As machinery continues to boost productivity and advances in technology continue to make machinery ever more efficient, the United States Bureau of Labor Statistics (BLS) expects "output in machinery manufacturing to increase significantly" to meet higher demand.

Demand for manufacturing machinery and technology is highly sensitive to cyclical economic swings. During periods of economic prosperity, companies tend to invest in new equipment to boost production; when economic growth slows, though, companies are understandably reluctant to purchase new machinery.

Yet, even in the current down economy, companies are investing in manufacturing technology.

Indeed, significant interest in manufacturing technology was shown last week, when the International Manufacturing Technology Show posted its strongest showing — with 92,450 total registrants from 119 countries and 1,803 exhibiting companies for the six-day event — since the 2000 show. But that's anecdotal evidence. With a year-to-date total of $2,655.14 million, however, consumption of manufacturing technology in 2008 is up 15.5 percent compared with 2007, according to the latest data from the Association for Manufacturing Technology (AMT) and the American Machine Tool Distributors' Association (AMTDA).

In the U.S. alone, approximately 126,000 companies use machine tools, with about 2 million machine tools total. These companies have between 750,000 and 1 million directly related employees, including toolmakers, machinists, operators and programmers, according to the BLS.

In fact, almost all midsize to large manufacturing companies periodically purchase machine tools. And if they're not buying, they're leasing. Machine shops are stable and machine tool leases are solid, according to the Agie Charmilles Machining Business Activity Index. In June, the 30-day delinquency rate on machine tool leases remained close to the lowest level on record, approaching 1 percent — much lower than the credit card or the home mortgage delinquency rate.

And demand for machinery is expected to remain strong.

"I think everyone is excited that the underpinning for productivity in our economic growth — manufacturing technology equipment — continues to grow at double-digit rates through the second quarter," AMT President John B. Byrd III said in a recent statement.

"Shops are uniformly in good financial shape judged by their ability to pay their bills," commented Agie Charmilles Chairman Harry Moser. "The stability, despite the housing market and oil prices, is helped by the lower U.S. dollar increasing competitiveness in both import and export markets, strength in aerospace, power generation, oil field equipment and medical."

Earlier this month the Commerce Department reported that orders to U.S. factories rose by a larger-than-expected amount in July as demand for commercial aircraft and heavy machinery posted solid gains (as did iron and steel). The Commerce Department reported that new orders increased by 1.3 percent in July — much stronger than the 0.8 percent increase economists had been expecting — underscoring the boost to manufacturers such as Boeing Co. and Deere & Co. from overseas demand for U.S. aircraft and machinery. (The jump was led by a 28.1 percent jump in commercial aircraft, while orders in all transportation categories rose by 3.2 percent in July, the best showing in five months.) Orders for machinery rose 4.1 percent with demand for construction machinery soaring by 17.9 percent.

New orders for machinery are up 10.9 percent from last year; those for construction machinery are up 23.5; and new orders for mining, oil field and gas field machinery are up 36.9 percent for the same period.

But not all manufacturing technology is doing as well.

North American robot orders, for instance, fell 23 percent in the first half of 2008 compared with the same period in 2007. The industry's trade group, the Robotic Industries Association (RIA), reports that robot orders by companies inside and outside North America decreased by 20 percent in units (though they increased 2 percent in dollars). The decline is due in large part to a major drop-off in purchases (-43 percent) by automotive manufacturers and their suppliers in the first half of 2008. Traditionally, orders from automotive-related companies account for around 65 percent of new robot orders.

"2008 is a very challenging year in North America for the robotics industry and other capital equipment industries," said Åke Lindqvist, chairman of the RIA's Statistics Committee. "With the economy either in a recession or on the edge of one, manufacturing companies are being quite cautious when it comes to investing in automation," Lindqvist explained last month.

Nonetheless, "even manufacturers in low-wage regions have turned to machine-tending robots," Manufacturing Engineering reported a year ago. Indeed, companies still have substantial headroom to automate many repetitive tasks that aren't yet mediated by computers, which opens up additional opportunities for automation robots.

Like all U.S. manufacturers, the manufacturing machinery industry continues to evolve. Domestic and foreign competition has required the industry to adopt new technologies and techniques to lower costs and raise productivity of its workforce.

By automating many of the production processes and outsourcing some functions (e.g., administrative and support), it has "reduced the need for many less-skilled workers and increased the skill level required for the remaining workers," notes the BLS.

These changes are allowing the machinery manufacturing industry to remain competitive and meet the demand for machinery upon which other industries rely.

Resources

Manufacturing Technology Consumption Falls in July
The Association for Manufacturing Technology and the American Machine Tool Distributors' Association, Sept. 8, 2008

Machining Business Activity Index: Machining Business Activity Grows Faster in June
Agie Charmilles, June 26, 2008

Full Report on Manufacturers' Shipments, Inventories and Orders (July 2008)
U.S. Dept. of Commerce, Sept. 3, 2008

Robot Orders Down 23% in First Half of 2008
Robotic Industries Association, Aug. 22, 2008

Bureau of Labor Statistics: Machinery Manufacturing
U.S. Dept. of Labor, Dec. 18, 2007 (last modified)

Lean Machine-Tending Robotics
by Michael Tolinski
Manufacturing Engineering, September 2007 (Vol. 139 No. 3)