The economic downturn has hit factory floors' bookings for new tools and equipment hard. In the United States alone, machine shops' financial strength and business activity have been weak, hitting record lows earlier this year.

"The 30-day delinquency rate on machine tool leases is still about one-fourth of the 30-day delinquency rate on home mortgages, and one-third of the 30-day delinquency rate on credit cards," GF AgieCharmilles Chairman Harry Moser said in his summary of the latest Financial Strength Index results. Created by surveying machine-tool users concerning their current business level versus the level three months earlier, the AgieCharmilles Machining Business Activity Index in April was the lowest on record.

Repossessions and liquidations of machine tool equipment tripled in the third quarter of 2009 compared to the same period in 2008, according to Nassau Asset Management's NasTrac Quarterly Index. Machine tool repossessions have undergone a steady and continuous increase since the third quarter of 2007, Nassau's records indicate.

A recovery in shop floors' capital spending won't be assured unless production picks up in a lasting way. "Until demand picks up to boost the utilization rate in manufacturing sufficiently, demand for business equipment such as industrial machinery will likely remain soft," the National Association of Manufacturers (NAM) explained in its 2009 Labor Day report.

According to the U.S. Department of Commerce, the seasonally adjusted value of new machine orders dropped by 6.3 percent in the latest monthly (July) data. The consumption of machine tools, both metal-working and metal-forming, in July was about 55 percent below the year-ago level, according to the latest U.S. Manufacturing Technology Consumption (USMTC) report from the American Machine Tool Distributors' Association (AMTDA) and the Association for Manufacturing Technology (AMT).

So far this year, manufacturing technology consumption is down 68 percent from 2008.

Before manufacturing companies invest in new machine tools and equipment, they'll simply use what they already have.

What Are Shops Using Now?
One dominant trend underlying hundreds of new technologies to be unveiled at the biennial pan-European international machine tool show, EMO, is the blending of multiple operations into smaller, more compact workstations.

"For years, machine tool technology has sought to combine the skills of several machines into a single operating unit," IndustryWeek says. At EMO, one of the largest machine tool exhibitions in the world, set to take place Oct. 5-10 in Milan, "a handful of companies will be showcasing new machine tools that are both versatile and getting smaller and smaller," according to IndustryWeek.

Mori Seiki, for instance, will show the NT1000, a compact high-precision integrated mill turn center. Designed for small and complex work pieces, the NT1000 is a standard five-axis machining center, but one of the rotary axes is capable of high-speed rotation, so it can perform lathe operations as well.

In American Machinist's 2009 Benchmarks for Machine Shops, the topic of multitasking garnered significant attention. "Out of all the shops that responded [to] the question of which type of multitasking processes they used most, over half indicated that mill-turning was the primary type." This represents a significant increase over last year's survey. (See last year's How Healthy is Your Shop?)

Other multitasking processes that have increased in use across shops over the last year include: multiple live tools; hard turning; multi-spindle machining; and hard milling.

"The big news emerging from the 2009 Benchmark survey is the improvement that benchmark shops enjoyed from their use of multiple work-piece fixturing," American Machinist says. "[T]his year's benchmark shops [those that scored highest in the survey] indicated a significant improvement has taken place in reducing cycle times and improving productivity."

Reducing cycle time, maximizing machine up-time and boosting productivity remain key factors in determining machine use, "because they overwhelmingly indicated their businesses are characterized by a high mix of short-run jobs."

Machinists are also using production software to achieve higher performance. "Among all shops responding to the survey, 68.5 percent are using CAM systems; 90 percent of the benchmark shops make the same claim," American Machinist reports. "As for CAD systems, 61.8 percent of all responders use 3-D CAD, and 54.2 percent use 2-D CAD," while, among the benchmark shops, "82.5 percent use 3-D CAD, and 60 percent use 2-D CAD."

Overall, automation usage dropped "slightly" from last year. Yet it increased for American Machinist's benchmark shops, among whom the percentage using robotics almost doubled from that of the 2008 survey.

According to the Robotics Industries Association, North American-based robotics companies saw orders for new robots decline 36 percent in units and 47 percent in dollars through the first half of 2009. The second quarter alone saw declines of 43 percent in units and 51 percent in dollars over the same period in 2008. (See today's New Profit Opportunities for the Robotics Industry)

Despite the cutbacks in capital equipment investment, signs suggest some hope for manufacturing. William Gaskin, president of the Precision Metalforming Association, told IndustryWeek last month that, "as factories and facilities — especially those in the automotive industry — begin restarting operations, it will increase the need for more sophisticated equipment."

For a more complete view of shop floor priorities, see American Machinist's summaries of machine shop benchmarks.

Earlier

How Healthy is Your Shop?

The Differences Between Top Shops and Mediocre Shops

How to Get Top-Shop Equipment Efficiency

Resources

2009 Benchmarking Survey: Parts 1, 2, 3, 4 and 5
by editorial staff
American Machinist, July 16, 2009

Evaluating Equipment In New Ways
by Derek Korn
Modern Machine Shop, July 24, 2009

Machine Shops' Activity at Record Low Level
GF AgieCharmilles, April 2009

...Construction Equipment and Machine Tool Repossessions Rising Dramatically In Q1 2009
Nassau Asset Management, June 25, 2009

Labor Day 2009: The Manufacturing Report
National Association of Manufacturers, Sept. 3, 2009

Full Report on Manufacturers' Shipments, Inventories and Orders - July 2009
U.S. Department of Commerce, Sept. 2, 2009

July Manufacturing Technology Consumption Up 9.2%
American Machine Tool Distributors' Association and Association For Manufacturing Technology, Sept. 14, 2009

Catching The Next Great Wave
by Peter Alpern
IndustryWeek, Sept. 16, 2009

2008 Machine Shop Benchmark Survey Analysis
by Bruce Vernyi
American Machinist, July 22, 2008

Robot Orders Down Sharply in First Half of 2009
Robotic Industries Association Posted, Aug. 13, 2009

Manufacturing Equipment - Too Shy to Buy?
by Peter Alpern
IndustryWeek, Aug. 19, 2009

Summer Business Forecast Showing Slight Improvement
American Mold Builders Association, July 23, 2009