And where is the market headed in 2018? In October of 2017, industry reporting firm AMT reported that machine tool orders were up 7.6% over 2016’s numbers during the same month. This was great news as a few years before, the value of the industry as a whole was on the decline, falling into a negative cycle of decreasing demand and lost value in financing machine tool equipment.
The success of the machine tools industry and financers largely depends on the various manufacturing sectors remaining profitable and growing. Luckily, 2017 brought the first positive change in machine tool consumption with a 1.6% over the previous year. Experts forecast the same kind of results for 2018, and they expect the rate to increase as well.
Understanding the Ups and Downs of the Industry
The machine tools industry has taken sharp dives and monumental ascensions over the last decades or so. Some believe that the recent shifts are due to low interest rates for manufacturers and a larger demand for machine tools in the Chinese market.
A report from the industry research firm IndexBox found that the value of machine tool production in the U.S. fell by 4.5% between 2014 and 2015 which raised major alarms among investors and manufacturers alike. Luckily, the market has since gone on the upswing in 2017 and analysts predict the same momentum to carry over into 2018 because of the new corporate-friendly economic policies of the current administration.
With China’s appetite for machine tools and manufacturing as a whole, the recent declines in value aren’t nearly as severe as expected and the peaks are also much more positive than predicted.
The Leading Lenders
Industry research firm EDA reported that the top 20 machine tool financers accounted for 481 new financial filings in the month of November 2017 alone. These five lending titans are the following:
1. CNC ASSC INC 72
2. BANTERRA BANK 39
3. DMG MORI SEIKI USA 32
4. ELLISON TECH 32
5. HARTWIG INC 30
These top five lenders financed 42.6% of the total units sold and the number one lender, CNC Associates accounted for 15% by itself.
Who Was Buying in 2017?
Purchasing from these lenders were companies across industries and sectors all seeking the equipment and machine tool they need to produce their products. In the same EDA report mentioned above, they listed the top five buyers as follows:
1. Kennametal Pennsylvania, USA 16
2. TE Connectivity Pennsylvania, USA 9
3. Aerofit California, USA 8
4. C&C Machine Tool Minnesota, USA 8
5. FMI Holdings Texas, USA 8
The economy is on the upswing from recent tax cuts for corporations to reinvest in their equipment and labor so expect 2018 to hold true to these same trends from the previous year. That being said, as we mentioned, the machine tool industry follows periods of ups and downs and the same could be true for the next few years as well.