MARCH 2005
On the Rebound (cover)
All Eyes East to China
Recovery, Not Growth;
SIDEBAR: Localized Dis-Incentives Driving Michigan Tool-and-Die Location Decisions
Incentives + Growth = Southern Migration?
More Foreign Investment in U.S.
Steel Price Increases Burden Heavy Equipment
Future Location Decisions Driven by Cost — and Workers
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On the Rebound
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| Japanese machinery maker Mori Seiki, which maintains U.S. headquarters in Dallas, is expanding its Chicago-area technical center to better serve customers in eight states. |
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alk to enough veterans of U.S.-based machining and equipment manufacturing companies about the state of their industries in 2005 and Mark Twain's famous quote comes to mind: "The reports of my death are greatly exaggerated."
Following several years of sharp downturns — characterized by excess factory capacity, too much inventory, sluggish orders, increased competition from overseas and numerous bankruptcies — these bedrock American industries might have been considered down for the count.
But they're not.
In fact, there is a guarded optimism following a better 2004 and encouraging estimates for new order growth in 2005. New orders for factory robots in 2004 were up 13 percent. Construction equipment manufacturers saw their orders grow 16 percent, and the industry predicts 8-percent growth next year. Machine tool orders were up 30 percent in 2004. Overall, North American manufacturing firms posted a 40-percent increase in new orders over 2003.
Some industry sub-sectors, such as semiconductor manufacturing equipment and turbines and turbine generators, are enjoying astronomical growth, fueled in large measure by China's seemingly insatiable demand for industrial equipment. Turbine exports to China alone increased more than 1,000 percent (yes — that's one thousand) in 2004 over 2003, according to Chi Nguyen, international economist with the National Association of Manufacturers.* Exports of semiconductor machinery to China grew by 200 percent, and machine tool orders to China went up more than 100 percent.
"China is the largest buyer's market in the world for machine tools and factory equipment," says Bob Gardner, vice president of the Association for Manufacturing Technology, a trade group based in Washington, D.C. That nation is also the world's largest consumer of construction equipment. And demand is growing.
Though sweeping generalizations covering all industry sub-sectors might not hold true, one thing is certain: The machining and equipment companies that have globalized their sales are seeing a huge bump in export growth, even if domestic sales gains are more modest.That means U.S.-based machinery manufacturers are establishing broader beachheads in nations that are gobbling up their tools, while increasing production capacity at home.
*EDITOR'S NOTE: According to figures supplied to Site Selection by NAM after publication of this article, the 1,000-percent figure was actually derived from month-to-month data comparing the value of October 2003 turbine exports to the value of October 2004 turbine exports. Since the time of the interview, year-on-year cumulative data have become available. With total value of $80,966,000 in 2003 and $433,687,000 in 2004, the growth rate in turbine exports to China was 435.6 percent.
Following several years of sharp downturns — characterized by excess factory capacity, too much inventory, sluggish orders, increased competition from overseas and numerous bankruptcies — these bedrock American industries might have been considered down for the count.
But they're not.
In fact, there is a guarded optimism following a better 2004 and encouraging estimates for new order growth in 2005. New orders for factory robots in 2004 were up 13 percent. Construction equipment manufacturers saw their orders grow 16 percent, and the industry predicts 8-percent growth next year. Machine tool orders were up 30 percent in 2004. Overall, North American manufacturing firms posted a 40-percent increase in new orders over 2003.
Some industry sub-sectors, such as semiconductor manufacturing equipment and turbines and turbine generators, are enjoying astronomical growth, fueled in large measure by China's seemingly insatiable demand for industrial equipment. Turbine exports to China alone increased more than 1,000 percent (yes — that's one thousand) in 2004 over 2003, according to Chi Nguyen, international economist with the National Association of Manufacturers.* Exports of semiconductor machinery to China grew by 200 percent, and machine tool orders to China went up more than 100 percent.
"China is the largest buyer's market in the world for machine tools and factory equipment," says Bob Gardner, vice president of the Association for Manufacturing Technology, a trade group based in Washington, D.C. That nation is also the world's largest consumer of construction equipment. And demand is growing.
Though sweeping generalizations covering all industry sub-sectors might not hold true, one thing is certain: The machining and equipment companies that have globalized their sales are seeing a huge bump in export growth, even if domestic sales gains are more modest.That means U.S.-based machinery manufacturers are establishing broader beachheads in nations that are gobbling up their tools, while increasing production capacity at home.
*EDITOR'S NOTE: According to figures supplied to Site Selection by NAM after publication of this article, the 1,000-percent figure was actually derived from month-to-month data comparing the value of October 2003 turbine exports to the value of October 2004 turbine exports. Since the time of the interview, year-on-year cumulative data have become available. With total value of $80,966,000 in 2003 and $433,687,000 in 2004, the growth rate in turbine exports to China was 435.6 percent.