The machine tool industry is the backbone of American manufacturing. High-tech, computer-controlled machine tools, which are used to cut and shape metal and other materials, serve every manufacturing sector...and are often used as a barometer of the nation's economic health.
From January through May, the United States had $1.2 billion in machine tool sales, up 18% from the same period in 2004, according to a recent report from the American Machine Tool Distributors Association. The factors driving a rebound in machine tool sales are:
- Higher profits have allowed certain companies to invest in more capital equipment,
- There was a pent-up demand as the manufacturing industry under-invested during the miserable years of 2001-2003,
- Companies have realized that they need new technologies to stay competitive.
In parts of the country, the machine tool business is especially strong, and the upturn in business has made it difficult for the machine shops to keep pace with orders. In Arizona, many machine and tooling shops serve the defense industry, where orders have increased by 71% over the past three years. Another factor is the construction boom, which is pushing the production of windows, doors, and furniture. "We're all busy...it's a thriving market," says Ray Rubin, president of the Arizona Tooling & Machining Association.
A limiting factor for certain machine tool manufacturers is the lack of qualified workers. Employment in the industry hit its peak in 1998, and during the industry's downturn through 2003, workers who lost their jobs turned to other industries that were hiring, e.g. construction, services, and commercial trucking. They aren't enthusiastic about switching back to the career that dumped them.
The two national associations that serve the industry are:
- the American Machine Tool Distributors Assn., www.amtda.org,
- and the National Tooling and Machining Assn., www.ntma.org.
Financial advisors who are interested in building relationships within this niche are encouraged to learn more about industry trends and concerns through these, and other, resources.
A third national association that services the machine tool industry is the Association for Manufacturing Technology, http://www.amtonline.org
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