Machining

Cutting Tool Sales Increase in October

December 16, 2014

(Photo credit: Lockheed Martin) Aerospace - commercial and military - remains a strong market for machining and other manufacturing processes. Shown here is the F-35 Lightning II fighter from Lockheed Martin, which is being built for the U.S. and a dozen other countries. (Photo credit: Lockheed Martin)

Aerospace - commercial and military - remains a strong market for machining and other manufacturing processes. Shown here is the F-35 Lightning II fighter from Lockheed Martin, which is being built for the U.S. and a dozen other countries.

For the sixth time in 10 months this year, U.S. demand for cutting tools has risen, posting a 9.7 percent gain in October over September to $193.6 million, and a 3.3 percent increase from sales for the same period in 2013.

According to data jointly developed by the U.S. Cutting Tool Institute (USCTI) and the Association for Manufacturing Technology (AMT) for their monthly report on business in the market, the October sales figures, which were released on Dec. 10, are the best monthly totals for cutting tool sales in the U.S. since March 2012. October's sales also mean that four out of the past five months have surpassed the figures generated during the same period last year.

The monthly report is developed from data supplied by participating companies, which USCTI and AMT say represent 80 percent of U.S. cutting tool consumption. Cutting tool sales are considered to be an accurate gauge of manufacturing health since they are essential to machining and thus follow upswings and declines in fabrication demand.

USCTI president Tom Haag, in a statement, credits much of the surge in demand to the September International Manufacturing Technology Show (IMTS) in Chicago. Orders placed during the six-day event or booked in follow-up contacts by exhibitors "created a momentum that has continued to swell into the fourth quarter," he remarks. The strong post-show numbers reinforce the consensus of exhibitors, attendees and the AMT, organizer of the biennial show, that this year's IMTS was exceptionally strong in terms of business.

As reported here last month, U.S. cutting tool sales in September amounted to $176.5 million, an increase of 4.6 percent from August, and a jump of 7.7 percent from September 2013. The positive sales months this year - i.e., those showing gains from previous months - are January, March, April, June, September and now October. If sales continue trending up in November and December this could be one of the best years for cutting tool sales since the downturn of 2008, and would likely provide momentum that carries over into at least the first quarter of 2015.

The $193.6 million generated in October brings the total of U.S. cutting tool sales to approximately $1.70 billion this year. This keeps sales on track to at least equal and possibly exceed the $2.03 billion in sales recorded in 2013.

USMTO Monthly Sales Decline

Meanwhile, manufacturing technology orders fell 35 percent to $417.8 million in October from September, and declined by 6.2 percent compared with year-ago figures. Nevertheless, year-to-date figures collected by AMT for its monthly U.S. Manufacturing Technology Orders (USMTO) report show that with sales through October totaling $4.15 billion, manufacturing technology orders are up 3.8 percent over the same period last year.

 

Douglas K. Woods, president of AMT, says in a statement that the October drop in orders was not unexpected and fits a pattern of sales declines in the month following IMTS that dates to 1998. Citing continuing growth in key industries such as automotive, medical and aerospace, he believes "the environment will stay ripe for capital equipment investment in 2015."

Pat McGibbon, AMT's vice president of strategic analytics, notes in a statement that despite the low sales results in October, U.S. manufacturers are continuing to invest in durable goods production for the domestic and overseas markets, and "significant growth is expected in 2015."

Indeed, the Beige Book, a compilation of U.S. economic data released by the Federal Reserve System, states that from Oct. 1 to Nov. 24, "Manufacturing activity generally advanced ..." in several areas across the country. The Beige Book also cites continuing growth in the automotive and aerospace industries, widespread growth in orders among fabricated metal manufacturers in the Chicago and Dallas districts, and steady growth for high-tech manufacturers in the Boston, Dallas and San Francisco districts.

In examining the MTO numbers by region, of the six areas cited in the report (two of which are routinely combined), two of the biggest, the North Central-East Region and North Central-West Region, posted declines in October versus September. Sales in the former totaled $106.51 million in October, down 20.4 percent from September, but up slightly from October 2013. Sales in the North Central-West Region fell almost 33 percent to $89.09 million compared with September, and were 2.5 percent less than in the same period a year ago.

Northeast Region sales essentially equaled those in September, increasing by only 0.5 percent to $671.19 million.

Sales in the Southeast Region showed a healthy gain in October to $390.43 million, up 9.5 percent from September's $356.43 tally. The October figure represented a 6.4 percent uptick from the same month in 2013.

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