2010 metalworking survey report

8/8/2019 2010 Metalworking Survey Report

1/15

M e t a lw o r k i n g o p e r a t i o n a l t r e n d s s u r v e y

S e p t e m b e r 2 0 10

on-line

Metalworking OperatiOnal trends surveyS e p t e m b e r 2 0 1 0

on-line


2/15

EXECUTIVE SUMMARY

The conclusions of the fifth annual Metalworking Operational Trends survey present a profile of the NorthAmerican metalworking industry in a challenging market and mixed economy. While financial conditions are still

shaky, solid progress and tentative optimism were reported this year versus last. Once again, larger companiesare substantially outperforming smaller companies as a whole, but there are elite performers in both groups. In allcategories, companies that are evolving into new markets and investing in better technology indicate that thereare rewards for doing so.

This year, fifty percent of respondents say that general business conditions have improved since the beginning ofthe year. It is important, however, to compare this reported improvement to business conditions at the end of2009 and before to gage how good the news really is. In early summer 2008, a softening in the metalworkingmarket became obvious. Throughout 2009, almost all metalworking businesses downsized, and many evenclosed their doors. Therefore, the reported improvement from metalworking manufacturers this year indicatesthat at least in this industry the recession may have bottomed out sometime around the end of 2009.

For this reason, its difficult to determine if forecasts for the next two years are encouraging or an indication thatbusiness is so slow that it can only go up. Only nine percent of respondents are forecasting negative growth overthe next two years, while 49 percent expect slow to strong growth.

When asked to select from a list of the greatest potential threats to their businesses, respondents most frequentlychose General Economic Conditions, Finding Qualified Laborand Pricing Pressure from Customersfrom a list of11 possible factors that included Government Political Policyand Regulations, Laws and Taxes. But writtenanecdotal responses to a similar question overwhelmingly mentioned government as a leading concern. Werenot sure how to reconcile this apparent contradiction, but its clear that the extremely high rate of reference togovernment in the free-form responses represents some sort of consensus. Some of the written responses alsosuggest other real threats including high health-care costs, offshore competition, tight credit and lack of interestfrom the young to enter manufacturing. China was also listed as a source of concern because it is perceived to besiphoning business away from the United States, offering unfair labor advantages and controlling the exchangerate.

The pace of change at American manufacturing companies has accelerated to its highest rate since the surveybegan five years ago. We think that more challenging market conditions are forcing all companies to adapt andchange, not just so they can improve or grow, but to survive. The data is again telling us that, for the most part,change is good. Companies that report that their business is trending up are seven times more likely have madeSignificant Changeversus No Change. Companies that forecast strong growth are about 18 times more likely toimplement significant changes. In other words, the stronger the company forecast, the more likely significantchange is in the mix.

For the first time this year, the survey explored purchasing-decision drivers. We learned that in the case ofmachine tools, Confidence in General Support of the Machine, followed by Brandand Upgrading Technology,were the top factors driving purchasing decisions. But for tooling, The Best Tooling for the Jobwas the mostimportant decision driver, followed by Availability and Delivery.

Seventy-three percent of all respondents said they would be purchasing new machine tools in the coming year,up from 61 percent last year. Leading the list of machine types are the old standbys for most metalworkingcompanies: vertical machining centers, horizontal machining centers, horizontal turning centers and multifunctionmachines. And, as with every previous year that weve surveyed, respondents this year told us that PurchasingFaster Equipment, and Multi-function Machineswere the two most effective process changes for improvedcompany performance.

Solar, wind and medical were the fields that respondents think will grow the most over the next two to three years.

While past performance is no guarantee of future results, much can be gleaned from the answers in this survey: Acompanys future economic outlook may depend not only on its size and industry, but also its willingness to adaptand innovate in the face of challenges.

A summary of the survey questions and responses is provided below.


3/15

Methodology:The survey was emailed to a broad cross section of the metalworking industry during August 2010. There were 963 completedsurveys were returned and the survey was closed September 3, 2010. Results presented in this report do not include

respondents who indicated that they were non-manufacturers.

Geography:- 89% USA- 5% Canada- 2% Mexico

Demographics as reported by respondents are included below. All statistics are as reported with no manipulation orinterpretation.

Survey Questions and Responses:

In keeping with a trend that was first noted in the 2007 survey and was observed in 2008 and 2009 data as well, larger companies are

outperforming smaller companies, on average.

15%12% 12%

23%

20%18%

5%7%

18%

25%

22% 22%

29%

11%

7%

18% 18%16%

0%

5%

10%

15%

20%

25%

30%

35%

Under 10 11-25 26-50 51-150 151-500 Over 500

Number of people employed in manufacturing at your company

All Respondents Strongest Performing Companies Weakest Performing Companies

0% 5% 10% 15% 20% 25% 30% 35%

Primarily a contract manufacturer for a few large

customers

Other manufacturer

Job shop dedicated primarily to single market (i.e.

Automotive, Medical, Aerospace, etc)

Original equipment manufacturer

Job shop supplying multiple end-user markets

Which best describes your company?


4/15

Indicate the percent of your business dedicated to these industries?

None 1-15% 16-50% 51-75% 76-100%

Military 50% 28% 14% 4% 4%

Aerospace 53% 25% 9% 4% 9%

Construction, Agriculture, Heavy Equipment 54% 22% 13% 5% 5%

Automotive 57% 21% 11% 4% 7%

Power Generation 61% 26% 9% 2% 2%

Medical 63% 23% 8% 2% 4%

Oil/Gas 65% 21% 9% 2% 3%

Valves/Fittings 68% 21% 7% 2% 2%

Computer, Communications, High Technology 71% 18% 7% 2% 2%

Consumer and Household Appliance Products 72% 19% 4% 2% 3%

Mining Equipment 74% 18% 5% 1% 1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Low

Production

metal cutting

R&D Prototyping High

Production

metal cutting

Moldmaking,

Tool and Die

Low

Production

metal forming

High

Production

metal forming

Indicate the percent of your business dedicated to these processes?

76-100%

51-75%

16-50%

1-15%

None


5/15

5%

17%

58%

20%

9%

23%

52%

16%

1%6%

63%

30%

0%

10%

20%

30%

40%

50%

60%

70%

The market is in trouble and will

decline

The market will be flat to slightly

negative

The market will grow slowly The market is becoming stronger

and will grow

Which best describes the outlook for manufacturing at your company?

2010 2009 2010 Companies Reporting Growth (50%)

In 2010, fifty percent of respondents report growth compared to only sixteen percent reporting growth in 2009.

33%

29%

19%

12%

4%7%

16%

26%

31%

19%

0%

5%

10%

15%

20%

25%30%

35%

Business is down

substantially

Business is down

somewhat

Business is steady Business is up somewhat Business is up

substantially

Which best describes general business conditions for your company since the

beginning of the year: 2009 vs 2010

2009

2010

22%17%

7%4%

26%

41%38%

17%

41% 40%

53%

72%

0%

10%

20%

30%

40%

50%60%

70%

80%

Business is trending

down

Business will be steady,

but I do not expect

growth

Business is trending up

gradually

I expect strong growth

Cross referencing Business Forecast

and Pace-of-ChangeWe have not changed

much

There has been some

change

There have been

significant and

important changes

When cross referencing questions related to Business Forecast and Pace-of Change it is clear that the companies that are growing themost are also changing the most.

The outlook is fairly strong for all respondents with seventy-eight percent indicating that they anticipate at least some growth. Amongcompanies reporting that they have experienced growth in 2010, the forecast is significantly better with thirty percent expecting solid growth,sixty-three percent forecasting slow growth and only one percent forecast business trending down.


6/15

Intent-to-purchase data looks strong in this years survey. Seventy-three percent intend to purchase within 12 months compared tosixty-one percent in November 2009. This indicator was at seventy-five in August 2008, prior to the dramatic collapse in thisindustry. Among respondents reporting growth, a full eighty-three percent indicate that they intend to purchase equipmenwithin the next 12 months.

29%

20% 18% 16% 16%11%

8% 8% 8% 6% 6% 5% 5% 5% 5% 4% 3% 3% 3% 3% 1%

27%

84%

55%

38%

65%

38%

21%

30%27%

59%

32%

22%

32%

55%

46%

10%

31%27%

22%

12%

30%

9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Equipment: Currently Own vs.

Intend to Purchase within 1 year

Intend to Purchase Currently Own

29%

20%18%

16% 16%

11%

3%

8%5%

1%

0%

5%

10%15%

20%

25%

30%

35%

% of all respondents expressing intent to purchase within 1 year (Machining)

2010

2009

2008


7/15

When rank ordering decision drivers for the purchase of machine tools the confidence in after sale support was ranked highestwith brand ranking second. This is important for new brands and established brands as it suggests that trust in the brand and itssupport network trumps new technology or product advancements when they come from less trusted resources.

28% 26%20%

12% 14%

23%19%

18%28%

12%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Confidence in the

general support:

installation,

repair, spare

parts availability

Machine

tool brand

Upgrading

technology in the

machine or

control that

provides

performance

advantages

Confidence in the

local distributor

Best warranty

Please rank in order of importance how these decision drivers impact you when

purchasing a machine tool

5 Least Important

4

3

2

1 Most Important

37%23%

16% 11% 14%

20%25%

29%

14% 11%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

The best quality

tooling for the part

Supplier's delivery

and availability

The best price on

the tooling for the

part

The tooling

recommended by

my machine tool

sales/support

vendor

The tooling

recommended by

my tooling

sales/support

vendor

When choosing tooling for your machine tool, please rank in order of importance the

following decision drivers

5 Least

Important

4

3

2

1 Most

Important


8/15

75% 74%

65%60% 58%

54%51%

49% 49%

44%

34%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Rate the following factors based on their potential threat to your company's success

Real challenge or Extremely Challenging Small challenge Not a problem

1%

9%

36%

52%

3%

12%

35%

48%

0%

10%

20%

30%

40%

50%

60%

Not applicable because it

is a very new company

We have not changed

much

There has been some

change

There have been

significant and important

changes

Which statement best describes the pace of change at your company over the

past few years?

2010

2009


9/15

Considering that not being able to f ind qualified labor continues to be one of the greatest threats to manufacturers, it's nosurprise that employee training and education is considered to be most important.

36% 34%29% 28% 26%

17% 14%6%

51%

41% 50% 55% 52%

53%49%

20%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Employee

training and

education

Adding new

applications

and

processes

Adding new

equipment

Breaking into

new

industries or

markets for

our company

Cutting cost

from our

processes

and

applications

Reducing

staff

Increasing

staff

Stronger and

more in

depth

support from

our suppliers

As the market recovers, please rate your perception of the importance of

following:

This is critical to our ability to recover or grow We will use this to help us recover or grow

This will not impact our ability to recover or grow Not Applicable

56%

33%

11%

0%

10%

20%

30%

40%

50%

60%

No change We rely more heavily on our

suppliers

We rely less on our suppliers

Has there been any important change in the way you work with your key suppliers as

a result of the recession?


10/15

For the fifth consecutive year, faster equipment and multi-function equipment have been the top two process-related actionstaken with the highest positive impact.

38% 30% 23% 22% 19% 18%11% 10% 10% 10% 8% 3%

31%

26% 37%30% 35%

28%

10%18% 22% 15%

16%

5%

4%

5%

10%

7%10%

9%

3%

5%8%

7%6%

5%

24%35%

25%36%

30%37%

68%58%

52%57% 62%

62%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Purchasedequipmentthatrunsfasterthan

cu

rrentprocess

Purchasedequipmentthataddscombined

functionor

multi-taskingcapability

Re-organize

dtheshopfloortoincrease

efficiency

Venturedin

tonewtypesofequipment

and/orapplications

IncorporatedQuick-C

hangeToolingor

Fixturing

Addednew

manufacturingsoftwareor

CA

D/CAM

capability

Incorporatedloa

dingrobotsorauto-loaders

Incorporatedunattendedoperations(not

includin

gautomatedloading)

Networkedthe

shopfloortotheofficefor

monit

oringofsometype

Nowrunsomefo

rmo

flights-outoperations

Incorporatedmaterialhandlingornon-

loadingautomat

ionequipmentintoexisting

processes

Addedorc

onvertedtoFMSoperation

In the last few years, has your company made any of the following process

changes and how important have they been to helping your company since the

beginning of 2010?

Yes, it has BEEN IMPORTANT Yes, it has HELPED SOMEWHAT

Yes, but it has NOT HELPED No, we have not done this


11/15

More of the strongest performing companies purchased faster equipment. They also reported a stronger impact as a result of theinvestment. However, it is worth noting that when the investment was made by weaker performing companies, it was still seen morepositively than negatively.

.

16%

1%

29%

51%

42%

11%

16%

27%

0%

10%

20%

30%

40%

50%

60%

We have NOT done

this

This has NOT HELPED It has HELPED

SOMEWHAT

It has BEEN

IMPORTANT

Purchased equipment that runs faster than current process

Elite Performers

Weakest Performers

27%

3%

23%

43%44%

9%

18%

24%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

We have NOT done

this


SOMEWHAT

It has BEEN

IMPORTANT

Purchased equipment that adds combined function or multi-tasking capability

Elite Performers

Weakest Performers


12/15

26%

7%

35%

27%

35%

18%

15%

22%

0%

5%

10%

15%

20%

25%

30%

35%

40%

We have NOT done

this


SOMEWHAT

It has BEEN

IMPORTANT

Incorporated Quick-Change Tooling or Fixturing

Elite Performers

Weakest Performers

46%

38%

24% 24%

43%

51%53%

43%

11% 11%

23%

33%

0%

10%

20%

30%

40%

50%

60%

Equipping existing

machinery with new tooling

or technologies

Refurbishing existing

machinery

Buying used equipment Buying new equipment

Has your approach to purchasing or maintaining machinery changed as a result of

the recession?

We are doing more of this Our approach has not changed We are doing less of this

Shops are figuring out how to get more out of their existing equipment by enhancing their productivity with new tooling or relatedaccessories. Enhancing the equipment seems to be a response to less opportunity to purchase new equipment.


13/15

Elimination of workflow bottlenecks is again indicated as an action that returns positive impact without risk or expense. Addingcustomers, especially in a challenging market continues to be the number one action that returns the most positive impact.

29% 27% 26% 23%18% 17% 15% 15% 14% 11% 11% 7%

40%38%

40%28%

24%24%

16%

34%

24%22%

35%

18%

9%11%

10%

12%

8% 8%

6%

13%

15%

9%

12%

15%

13% 14% 19%22%

38% 38%

52%

30%40%

52%

35%

47%

Acquirednewcustome

rsinNorthAmerica

IncreasedexistingNorthAmericanbusiness

Eliminatedworkflowbottle

necksbyidentifying

operationalinefficiencies

Implemen

tedqualityprogram

IncreasedexistingbusinessoutsideofNorthAmerica

AcquirednewcustomersoutsideofNorthAmerica

Movedtoanewfacilityorimprovedexistingfacility

AddedorChangedkeyequipmentand/or

consumablevendors

Madem

anagementchanges

Increasedtotal#ofemployees

Paidforemployeeeducationandtraining

Decreasedtotal#ofemployees

Which of the following actions has your company taken in the last year or two and

which best describes the impact it has had on your company since the beginning of

2010?

No, we have not

done it

Yes, but it has

NOT HELPED

Yes, it has

HELPEDSOMEWHAT

Yes, it has BEEN

IMPORTANT


14/15

There continues to be strong optimism around the growth in manufacturing related to alternative energy and medical industries.Relative to 2009 the only other notable change is a positive increase in the growth expectations for the automotive market withlow growth moving from twenty-nine percent in 2009 to fourteen percent 2010.

51%

24%

18%17%

12%

43%

23%26%

16%11%

0%

10%

20%

30%

40%

50%

60%

We take advantage

of this when we

find it

I would like to see

more of this from

key suppliers

No use to me or my

organization

There is very little

of value that I have

found

This is needed and

would be of high

value

Regarding webinars or online training for products and applications:

2010

2009

There was a strong increase in use and interest of online training and resources. This is consistent with general markettrends and is likely a result of suppliers to this and other industries investing more in online content.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Compared to the current level of manufacturing in the following industries,

rank the expected growth rate of manufacturing over the next 2-3 years.

Low

2

3

4

High


15/15

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2010 metalworking survey report

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