The total consumption value of machine tool and related equipment from United States manufacturers rose to $219.6 million in December, a 22.9 percent increase over the previous month, according to the latest U.S. Manufacturing Technology Consumption (USMTC) report, released last week by the American Machine Tool Distributors' Association (AMTDA) and the Association for Manufacturing Technology (AMT). The December 2009 total was down 5.7 percent compared to December 2008.

Based on data from AMT and AMTDA member companies, the USMTC report provides nationwide and regional U.S. consumption figures for machine tools and related equipment.

On a regional basis, the largest December gains were in the Western states, with tech consumption increasing 50.4 percent from November. Despite the monthly boost, total purchases in the region in 2009 were down 54.4 percent from the previous year.

In the Northeast, manufacturing tech consumption rose 31.8 percent from the previous month, but the yearly total was 15.4 percent below the same month in 2008. Last year's year-to-date total was down 48.9 percent from 2008's total consumption.

December sales in the Central region climbed 10.7 percent over November, bringing the year-to-date total to 61.6 percent below the comparable figure in 2008.

In the Southern region, December tech consumption was up 7.3 percent over the previous month, yet the year-to-date total of manufacturing tech purchases was 63.6 percent below the same period in 2008.

In the Midwest, manufacturing tech consumption rose 27.1 percent in December, yet it was down 65.4 percent for 2009 as a whole.

The USMTC's reported December gain brought total machine tech consumption to $1.77 billion in 2009, down 60.4 percent from 2008. Despite several months of positive gains in manufacturing tech purchases, concerns about strengthening equipment demand and encouraging investment remain.

"The bump in November and December orders reflects the expiration of investment incentives at the end of 2009," AMT President Douglas K. Woods said. "AMT and 40 other industry groups have sent Congress and the President a letter urging them to reinstate the Recovery Act's depreciation bonus and increased Sec. 179 expensing provisions. Foreign tax structures encourage capital equipment investment, and our government needs to meet the competition if U.S. manufacturing is to generate jobs and be the innovation engine to drive our economy."

According to a separate report, from the U.S. Department of Commerce last week, new orders for manufactured goods in December rose 1 percent over November. The largest gain in December was in new machinery orders, which climbed 6.6 percent and marked the third month of growth in the past four months. Machinery shipments rose to $23.9 billion in December, a 5.1 percent increase over November.

Overall, 2009 new machinery orders and shipments were down by 25 percent and 20.2 percent, respectively, from the 2008 totals, according to the Commerce Department.

Although year-over-year comparisons indicate that 2009 was a significantly tougher period for machine tool and equipment manufacturers, the upward trend in new orders and shipments seems poised to continue in the coming year. As inventory levels realign to meet new demand, machinery companies can expect to see a stronger recovery taking shape in 2010.

"A record inventory drawdown last year has opened the door for manufacturers to pick up production and other companies to increase orders to meet demand," Bloomberg News reports. "Efforts to prevent stockpiles from falling further in the fourth-quarter provided its biggest boost to economic growth in 20 years and may keep supporting the economy in coming quarters."

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Resources

Manufacturing Technology Consumption Down 60.4% in 2009
Association for Manufacturing Technology / American Machine Tool Distributors' Association, Feb. 8, 2010

...Manufacturers' Shipments, Inventories and Orders December 2009
U.S. Department of Commerce, Feb. 4, 2010

Inventories at U.S. Wholesalers Unexpectedly Fall
by Courtney Schlisserman
Bloomberg News, Feb. 9, 2010