Machine Tools, Metal Cutting Types

SIC 3541

Companies in this industry

Industry report:

This industry details establishments primarily engaged in manufacturing metal cutting type machine tools, not supported in the hands of an operator when in use, that shape metal by cutting or use of electrical techniques; the rebuilding of such machine tools; and the manufacture of replacement parts for them. Also included in this industry are metalworking machine tools designed primarily for home workshops. Establishments primarily engaged in the manufacture of electrical and gas welding and soldering equipment are classified in SIC 3548: Electric and Gas Welding and Soldering Equipment; those establishments manufacturing portable power-driven handtools are classified in SIC 3546: Power-Driven Handtools.

Industry Snapshot

The metal cutting industry is concerned with the removal of metal from a larger piece of metal to create a desired shape. Metal cutting, also referred to as machining, is performed on most manufactured items. The uses range from low-precision machining, such as grinding undesired protrusions from a rough casting, to high-precision machining, which involves working tolerances of less than half the thickness of a human hair (0.0001 inch). Classic metal cutting produces scrap pieces, called chips, that are relatively useless and generally cannot be reused through remelting or pressing. Both the environmental and economic consequences of such waste have created new processes referred to as chipless machining. General machining processes include turning, shaping, milling, drilling, sawing, abrasive machining, and broaching.

The machine tool industry as a whole is closely tied to national and world economic conditions. The United States produced $3.6 billion in metal cutting machine tools in 2009, according to Dun & Bradstreet's Industry Reports. About 2,500 establishments employed 39,600 workers, with the largest numbers in Michigan, Ohio, and Illinois. About 96 percent of establishments employed fewer than 100 workers, although companies employing more than 100 people accounted for almost 33 percent of total industry sales.

The prices for metal cutting machine tools ranged from under $100,000 to several million dollars, depending on the sophistication and purpose of the tool. Multiple machining centers, capable of performing several metal cutting processes, were becoming more popular with larger companies interested in decreasing the amount of time handling materials between machining stations.

As worldwide competition increases in areas of quality and precision, U.S. machine shops will be forced to update or replace machine tools with those that possess higher levels of technical innovation. However, a significant downward trend in employment levels continued through 2000s as machine tool manufacturers cut direct labor costs. This trend, a disheartening one for those seeking employment in this industry, came about due to higher levels of automation throughout all related industries and the continued drive to manufacture still more automated machine tools.

Half of the machine tool market is concentrated within the automotive industry, one-quarter within nonmechanical industries, and the remainder within aerospace, defense, and other industries.

Organization and Structure

Four major categories comprise this industry: classic machine tools, automated machine tools, expendable tools, and machine tool repair. Classic metal cutting machine tools are characterized by manually operated, power driven (usually electric) stationary machines. These machines are operated by skilled machinists with relatively good trigonometry skills. The demand for these machines dropped as automated machine tools became more available.

Automated machine tools are more commonly known as numerically controlled (NC) machine tools. NC machines use a generated program of coordinate values (numerics) to move machine parts quickly with consistency and precision. Downtime between tool changes is minimized, compared to classic machining methods. The information is loaded into the machine by punched tape, punched cards, or magnetic tape that has been generated by a computer program written by an NC programmer. The NC machines have given way to computer numerically controlled (CNC) machines due to the affordability of microcomputers. The next wave of NC machines included downloadable numerically controlled (DNC) machines, which are network-based CNC machines. This technology reduces the steps between design engineering and manufacturing. NC machines created a large market for manufacturers of machine controls and increased microcomputer markets. Chipless machining processes implement some form of NC capabilities to the various machine configurations.

Expendable tools are the actual cutting pieces that wear as a result of use. Therefore, this segment of the industry is closely tied to client industry levels of activity. Although many of these tools can be resharpened and reused, many machine shops find it more economical to replace the tool once it is worn. When industry success is high, this segment of the industry experiences increased sales.

Machine tool repair became a more specialized segment due to the increased popularity of NC machines. The nature of this business category requires that repair technicians have adequate computer hardware/software trouble-shooting skills. Machine tool repair by the late 1990s was thus closely related to computer electronics as well as mechanics.

Background and Development

Various machine tools have been crafted through the centuries to address specific needs, but it was the invention of the clock in 1364 that created a need for higher precision machining methods. Clocks require accurately turned arbors, machine-cut gears, and screw threads. The concepts of precision and consistency in product quality thus pushed machine tool technology to the point that, by the seventeenth century, clock making was regarded as a particularly painstaking craft.

During the second half of the eighteenth century, the barriers between pure science and workshop technology were dissolving. Scientists began interacting more closely with mechanical engineers, spawning new ideas for improved machining techniques. The steam engine was born from this interaction, an invention that drastically increased the potential of the machine tool in the minds of the industrial leaders of the day. The industrial age was afoot. This period was greatly influenced by Henry Maudslay, who is known as the man responsible for the introduction of many of the early engineering machine tools.

Maudslay introduced the concept of precision to heavy machinery, which before that time had been only the concern of watch and scientific instrument makers. In the early 1800s, he made the first screw-cutting lathe, a device that remains the standard even today. His second great contribution was the creation of a method of finishing a plane surface with a surface plate, marking compound, and hand scraper. Maudslay also constructed a micrometer in 1805 that enabled machinists to measure work to one ten-thousandths of an inch. Maudslay's successors furthered his craft and assisted in the evolution of machine tools, thus encouraging the industrial revolution.

Today, metal cutting tools remain very similar to those used in the nineteenth century. The implementation of computers has increased the precision and time efficiency of the metal cutting tools, but the basic processes have not changed significantly. However, new metal cutting advances are gaining acceptance and applicability in industry, whereby metal is eroded by chemical discharges, electric discharges, water jets, and laser beams. These methods were employed to cut metal to achieve a desired shape.

In the early 1990s, the industries placing the most orders with metal cutting machine tool manufacturers had limited orders due to large financial losses, as exhibited by the poor performance during that time of some American auto makers. Decreases in spending by farming and construction industries in the late 1980s and early 1990s were offset by the aerospace industry. However, this industry also suffered due to the financial instability of various airline companies, as well as military spending cutbacks. The condition of the industry was attributed to three factors: high sensitivity of the industry to the overall health of the economy, a lag time of a year between economic improvements and growth in machine tool shipments, and long-term decline in machine tool demand.

After peaking in 1997 at $5.33 billion, the value of shipments for the metal-cutting machine tool industry began to drop. One reason for this decline was the collapse of Asian economies--an essential market for U.S. manufacturers' machine tools. As Asian currencies rapidly devalued, the construction and automotive industries in once-expanding economies such as China curtailed spending. Moreover, a widespread strike by General Motors workers eroded demand for machine tools from U.S. car companies. Shipments fell to $5.2 billion in 1998, to $4.6 billion in 1999, and to $4.4 billion in 2000.

High gas and oil prices and a slow economy combined to hurt automobile companies in the late 2000s. The Big Three (Ford, Chrysler, and General Motors) all suffered enormous losses in 2008, and even a government bail-out did not keep two out of three of them (Chrysler and General Motors) from filing for Chapter 11 bankruptcy in 2009. Because half its market comes from the auto industry, this was not good news for the machine tool industry.

Current Conditions

The economic recession and decline of the U.S. auto making industry in the late 2000s caused a decline in the machine tools industry. However, orders for machine tools and other manufacturing technology in the United States were up 22 percent in February 2010 as compared to a year earlier, according to Metalworking Insiders' Report. Douglas Woods of AMT told the magazine in May 2010, that "the market has turned and is slowly recovering from the worst single year downturn in our industry's history." The central U.S. showed the strongest growth in early 2010, with monthly orders rising 32 percent to $53 million, followed by the Midwest, up 26 percent to $43 million. The Northeast market grew 16 percent to $27 million; the West, 13 percent to $22 million; and the South, 12 percent to $19 million.

Industry Leaders

In 2010, MAG Giddings & Lewis, part of MAG Industrial Automation Systems, was one of the largest manufacturers of industrial automation products and machine tools in the United States. The company's key clients included the construction, mining, aerospace, oilfield, and power generation industries. In 2010, the Fond du Lac, Wisconsin-based company employed 1,000 workers.

Ingersoll Machine Tools of Rockford, Illinois, was purchased by Italy's Camozzi Group in 2003 and was another leading company in the metal cutting machine tools industry. Ingersoll produced machine tools, manufacturing systems, and metal cutting for a number of businesses in the transportation, construction, and agricultural sectors, including Caterpillar and Lockheed Martin. The company had 2009 sales of approximately $82 million.

Other industry leaders in the early 2010s included Washington, D.C.-based Danaher Corp., with 2009 sales of $11.2 billion; Latrobe, Pennsylvania-based Kennametal with $1.9 billion in 2009 sales; Global Industrial Technologies of Coraopolis, Pennsylvania; and General Cutting Tools of Chicago. Leaders in NC machine tools included General Electric and Rockwell Automation, both of which primarily manufactured control systems.

Workforce

A total of 21,375 workers were employed in the metal cutting machine tool industry in 2007, down from 23,896 in 2000. About 11,081 were production workers, who earned an average wage well above the national average for manufacturing jobs. Most people employed by this industry reside in the Great Lakes region and the northeastern United States (Michigan, Ohio, Illinois, and New York). In 2007, 381 metal cutting-related establishments were in Michigan, with 13 percent of all American machine tool shipments originating in that state. With 203 companies, Ohio accounted for 6 percent of the industry's total shipments in 2010. One hundred sixty-two establishments in Illinois generated 11 percent of sales, and New York's 91 companies accounted for about 9 percent of the total.

America and the World

Due to the global recession of the late 2000s, every major manufacturing country experienced a decline in machine tool consumption in 2009 as compared to 2008. (Consumption is figured by adding a country's domestic production and imports together then subtracting exports.) According to a report by Production Machining, the United States consumed $3.37 billion of machine tools in 2009--less than half of that consumed in 2008. The United States remained third worldwide in the industry, behind China and Germany. China was the undisputed leader in the industry, with $19.4 billion of machine tools in 2009, not even one percent less than in 2008. Number-two Germany consumed $5.4 billion, a decline of 41 percent. Japan and Taiwan experienced major declines of 61 percent and 66 percent, respectively.

Research and Technology

Due to the limitations and adverse side effects of traditional machining, chipless machining processes were developed. These processes are primarily concerned with chemical, electrochemical, electrodischarge, water jet, and laser machining techniques. Intricate parts require nontraditional machining methods, and the advent of the computer age hastened the research and development of chipless machining processes. Chipless machining processes were expected to be used more as NC controls become more sophisticated, environmental laws grow more stringent, and technology advances. Other technological developments that had taken hold by the late 2000s included robotized water jet cutting systems and sophisticated laser cutting systems.

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