With a year-to-date total of $1.2 billion, 2022 is up 7.7% when compared to the same time period in 2021.
According to the U.S. Cutting Tool Institute (USCTI) and AMT – The Association For Manufacturing Technology, July 2022 U.S. cutting tool consumption totaled $173.2 million. This total, as reported by companies participating in the Cutting Tool Market Report collaboration, was down 1.5% from June’s $175.9 million and up 6.7% when compared with the $162.3 million reported for July 2021.
These numbers and all data in this report are based on the totals reported by the companies participating in the CTMR program. The totals here represent the majority of the U.S. market for cutting tools.
Costikyan Jarvis, president of Jarvis Cutting Tools, spoke on demand by saying, “The July 2022 cutting tool results continue to show demand is still well off 2019 levels. 2022 dollar volume is still running about 15% lower than 2019, and when inflation is considered, total unit production is even lower. This data is supported by 2022 vehicle sales being around 13 million units versus 17 million units in 2019 and the lower production in commercial aerospace. Expect to see improving cutting tool demand well into 2023. Improvement will be driven with increased aerospace production (Boeing reported that 737 production returned to 31-per-month rates in June) and a reduction in automotive supply chain issues. Another good indicator is North America’s premier manufacturing technology show, IMTS. The show returns this month, and attendee numbers and interest will be a good gauge for future demand.”
“The slowdown in shipments seen in the second quarter of 2022 continued into July, although they remain well above last year’s totals,” comments Mark Killion, director of US industries at Oxford Economics. “This is in line with the deceleration recently seen in new orders and a moderating pace of activity in key client markets.”
The Cutting Tool Market Report is jointly compiled by AMT and USCTI, two trade associations representing the development, production, and distribution of cutting tool technology and products. It provides a monthly statement on U.S. manufacturers’ consumption of the primary consumable in the manufacturing process – the cutting tool. Analysis of cutting tool consumption is a leading indicator of both upturns and downturns in U.S. manufacturing activity, as it is a true measure of actual production levels.
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New orders of manufacturing technology totaled $291.9 million in July 2022.
According to the latest U.S. Manufacturing Technology Orders report published by AMT – The Association For Manufacturing Technology, new orders of manufacturing technology totaled $291.9 million in July 2022. This was a decrease of 6.1% from June 2022 and were off 14.3% from July 2021. Manufacturing technology orders in 2022 have reached a total of $3.22 billion, an 8.7% increase over the first seven months of 2021.
“While July 2022 is down compared to July 2021, orders in both years were quite above what would be seen in a typical year,” says Douglas K. Woods, president of AMT. “Last year was the best on record and was particularly fueled by strong orders in the last third of the year, so it will be hard to match. However, given that orders are already nearly 9% over 2021, and with the typical boost to orders from IMTS, it appears possible to come close.”
The transportation sector, typically a driver of manufacturing technology orders, led the retreat into July. Orders placed by most motor vehicle manufacturing industries pulled back significantly in July after an outsized June order. Machine orders for railroad, ship, and other transportation manufacturing also decreased. The one bright spot in transportation was in aerospace, led by space and defense sectors, where orders nearly doubled from June to July 2021.
Manufacturing technology orders have benefited greatly from recent foreign direct investment, particularly in the manufacture of chips and batteries. “Not only has foreign direct investment in the United States benefited manufacturing in recent months, but the trend of reshoring has also greatly increased the need for additional capacity,” Woods says. “Metal valve manufacturers, whom we have highlighted in previous months, continue to place orders for machinery at levels that would be unheard of just a few years ago.
“The ongoing desire to create more resilient supply chains will continue to require more parts to be made domestically,” Woods says. “That demand has pushed manufacturing capacity utilization to an over two-decade high. If these trends continue, it could create a sustained need for additional manufacturing technologies – and particularly automation, should manufacturers continue to grapple with a shortage of labor.”
Uncertainties continue to increase, however order intake in the German machine tool industry rose by 24%.
In the second quarter of 2022, order intake in the German machine tool industry rose by 24% compared to the same period last year. In this context, orders from Germany increased by 27% and those from abroad by 23%. In the first half of 2022, orders increased by 34% overall. Domestic orders contributed to this with a 35% increase and foreign orders with a 33% increase.
"Despite the current difficult conditions, machine tool orders continued to develop well in the second quarter. In relation to the first half of the year, volumes are even almost at record levels from 2018. Foreign business is primarily supported by demand outside the EU. In particular, our two lead markets China and the USA remain strong. The severe lockdown in Shanghai and other Chinese cities did not leave any deeper traces in the second quarter," comments Dr. Wilfried Schäfer, Executive Director of the VDW (German Machine Tool Builders‘ Association), Frankfurt am Main. "In terms of technologies, cutting machining is currently pulling up the overall result Demand in the first half of the year was twice as strong as that for forming technology. This is an indication that major projects in the automotive industry are currently on hold, especially in Germany," Schäfer adds.
Forming technology accounts for around 30% of total machine tool sales. Press technology in particular is used in major projects.
Sales continue to be a cause for concern. In the first half of the year, it was 7% higher than in the same period of the previous year. In real terms, the result means stagnation.
"Accordingly, as feared, the supply chain problems are far from over," Schäfer says.
After all, capacity utilization rose slightly from 85.9% in April to 87.4% in July.
70% of German machine tool production goes into exports, which picked up again in the second quarter. The statistics thus show an increase of 5% in the first six months. Exports to Asia grew the most strongly in a regional comparison at 11%. However, China, the largest market, made only a disproportionately small contribution, with a 5% increase. By contrast, Japan, India and some smaller markets in Southeast Asia took up German machine tools with double-digit growth rates.
Business with American customers also continues to be good, with a plus of 9%. Europe stagnated at the previous year's level, with exports to Eastern Europe in particular slumping sharply due to the breakaway from Russia. Exports to Western Europe, on the other hand, have picked up significantly.
Imports rose by a total of 16%. Asian suppliers in particular are leading the way.
"They are obviously able to circumnavigate the supply chain problem better,” Schäfer suspects. "The uncertainties for economic development have increased further. Regarding the Russia-Ukraine war, he says, there’s no end in sight. The energy supply in the coming fall/winter remains uncertain with corresponding consequences for prices. In China, the largest market, there are signs of weak overall economic growth. Added to this are geopolitical dangers in dealings with Taiwan. Accordingly, the business climate in the machine tool industry has clouded over."
"At least on the plus side, there is still a high need for investment in climate change. The recently adopted investment program in the USA will also provide impetus for the industry," Schäfer concludes.
In the Reshoring Initiative 1H 2022 Data Report, the current 2022 projection of jobs announced is around 350,000 – another record and up from 260,000 in 2021.
In 2021, the private and federal push for domestic supply of essential goods propelled reshoring and foreign direct investment (FDI) job announcements to a record high. Projections from Reshoring Initiative 1H 2022 data show reshoring and FDI continuing these gains. The current 2022 projection of jobs announced is around 350,000 – another record and up from 260,000 in 2021. If the projection is achieved, 2022 will bring the total jobs announced since 2010 to more than 1.6 million.
Supply chain gaps and the need for greater self-sufficiency continue as major factors driving reshoring. The possibility of a Taiwan-China conflict and the threat of China decoupling are focusing those concerns. Destabilizing geo-political and climate forces have brought to light our vulnerabilities and the need to address them. Subsequently, great opportunities have arisen for a meaningful rebound of U.S. manufacturing. If the current trajectory continues, it will reduce the trade and budget deficits, add jobs, and make the U.S. safer, more self-reliant, and resilient.
More takeaways from the report
See the full report Reshoring Initiative 1H 2022 Data Report: Multiple Supply Chain Risks Accelerate Reshoring for detailed analysis.
About the report The Reshoring Initiative’s 1H 2022 Data Report contains data on U.S. reshoring and FDI by companies that have shifted production or sourcing from offshore to the United States. The report includes projections and analysis for 2022 full year in categories ranging from the number of manufacturing jobs gained, to a breakdown of data by industry, country, and state.
“We publish this data semiannually to show companies that their peers are successfully reshoring and that they should reevaluate their sourcing and siting decisions,” says Harry Moser, founder and president of the Reshoring Initiative. “With 5 million manufacturing jobs still offshore, as measured by our $1.1 trillion/year goods trade deficit, there is potential for much more growth. We also call on the administration and Congress to enact policy changes to make the United States competitive again.”