Frost & Sullivan Forecasts Machining Center Growth, Milling Machine Decline

Two machine segments are headed in opposite directions.

Rising costs and declining demand are cutting into the market for milling machines while machining centers continue to gather momentum, according to the latest study from Frost and Sullivan (San Antonio, TX), titled World Machining Center and Milling Machine Tool Markets.

Although there have been more technological changes in the milling and machining center market in the last 15 years than in the prior 75 years, there is no change at present that can be described as groundbreaking, according to the study. Most changes revolve around changes in controls and spindle speeds in product design.

As prime end-use markets—automotive and aerospace—slow down, so too does demand for these machines. End-users are becoming "increasingly price-sensitive forcing manufacturers to deliver low cost products with a high value proposition." This has resulted in a "slight decline in machine prices despite increasing technology content."

Growth (decline) from 1998 to 2005

The global market for machining centers reached $4.48 billion in 1998 with expectations that sales will reach $6.58 billion in 2005. Unit shipments in 1998 were 23,300, likely to grow to 35,200 by 2005 with a compounded annual growth rate (CAGR) estimated at 6.1% from 1998-2005.

The global market for milling machines in 1998 was $1.61 billion, declining to $1.47 billion by 2005. The overall markets for milling machines have been on a slowdown in the 1990s due to cannibalization by machining center sales, the study notes. Unit shipment in 1998 was 47,900 and it is likely to decline to 40,100 by 2005 at a CAGR of a negative 2.5%.

The distinction between milling machines and machining centers is generally that all machining centers are CNC-controlled with automatic tool changers (ATC). Milling machines, however large, may or may not be CNC-controlled and may or may not have tool changers.

Forecast by type of machine

In 1998, worldwide sales of vertical machining centers (VMC) generated sales of $2.67 billion, a number that is expected to grow to $3.84 billion by 2005, a CAGR of 5.3%. The number of VMCs sold was 17,100, a number that is projected to rise to 26,100 by 2005, a CAGR of 6.1%.

Horizontal machining center sales in 1998 were $1.81 billion, a total expected to grow to $2.74 billion by 2005 a CAGR estimated at 6.1%. The number of HMCs produced globally in 1998 equaled 6100, a total that is estimated to rise to 9200 units by 2005, a CAGR of 6%.

Anatomy of a market in transition

Frost & Sullivan points to the 1990s as a turning point when machining centers were cannibalizing the milling machine market. "In this highly competitive market, with proliferation of companies and similar product lines, those players that provide opportunities for one-stop shopping of machines often stand out from the competition," explains Kumar Gangwani, Frost and Sullivan industry analyst.

The global market for machining centers is similarly intensely competitive, the study continues. It describes an oligopoly with more than 100 competitors in a fragmented market with smaller companies looking too boost revenues through differentiation of their products and services. The number of players diminished recently due to significant competition from low-end machining centers and shrinking demand. While Europe and North America have been the traditional powerhouses for machining centers, significantly more rapid growth is expected in Asia and Latin America.

F&S engineering awards

Frost & Sullivan also announced its 1999 Market Engineering Awards, which are given to companies making positive contributions to the machining center and milling machine industries. Winners are:

• Customer Focus Award… Deckel Maho Gildemeister
• Product Quality Award….Makino
• Product Differentiation Award…DMG USA
• Best of Breed Award…Yamazaki Mazak.

Industry participants in the study included Alenco Tool Supply Co; ABS Imports Tools Inc; Bostomatic (formerly Boston Digital); Bridgeport Machine; Burkhardt + Weber America Inc; Cincinnati Machine; Clausing Industrial Inc; D.C. Morrison Co; DMG Inc; Daewoo Heavy Industries America Corp; Danobat Machine Tool; Dayton Machine Tool; DoALL Co; Giddings & Lewis; Haas Automation; Hermes Machine Tool: Hitachi Seiki USA Inc; Ingersoll GmbH Inc; JMC Technology Group; Kitamura Machinery (USA) Inc; Komo Machine; Kuraki America; Leland Gifford Inc; Mazak Corp; Mikron Corp Monroe; Milltronics Mfg Co; Mitsui Machine Technology Inc; Mitsui Seiki (USA) Inc; MHI Machine Tool USA Inc; Morey Machinery Mfg Corp; Mori Seiki USA Inc; Niigata Machinery (USA); Okuma America Corp; Parpas America; Republic Lagun Machine Tool; Tos America Inc; Toshiba Machine Co America; Toyoda Machinery USA; Victor CNC Systems Inc; Willis Machinery & Tool Co; WMO Machine Tool Corp; WMW Machinery Co; and YCI.

Frost & Sullivan monitors the machine tool industry for market trends, market measurement, and strategies. The World Machining Center and Milling Machine Tool Market Report is available for $2950.

Contact Cara Shevlin at Frost & Sullivan, 7550 IH 10 West Suite 910, San Antonio, TX 78229; phone: 210-348-1018