The Machine Tool Industry - Under the Dominance of a Single Tree, Thousands of Horses Speak in Silence

2014 was a year when the tide of the machine tool industry receded, and listed companies generally had poor performance, with most small and medium-sized enterprises struggling. How has the direction of the industry, which used to be filled with pigs, changed now?

The phenomenon of escaping from the manufacturing industry is extremely serious at present. Due to the sharp increase in domestic labor costs and social security expenditures, the deterioration of the investment environment, and the meager profits of the manufacturing industry, many capital have withdrawn from the manufacturing industry. Some high-end industries are flowing back to capital and technology exporting countries, while many mid to low end industries are migrating to low-cost Southeast Asian countries. Many companies are simply changing their focus and shifting their funds to industrial, commercial, real estate, and other non manufacturing industries. Most of the left behind enterprises are struggling to support themselves with the advantages of a well-established domestic industrial chain.

The machine tool industry, which is highly dependent on manufacturing, has been deeply affected. According to the National Bureau of Statistics, in the first half of 2014, the proportion of loss making enterprises in the machine tool industry was 13.8%, and the proportion of loss making enterprises in China with controlling stakes was 41.8%. Among the eight sub industries of machine tools, metal cutting machine tools have the largest loss area, accounting for 24.7% of loss making enterprises, with Chinese holding companies accounting for 50.8% of losses.

Naked swimming is not scary, the most frightening scene is when after the tide recedes, there are no naked swimmers left, only discarded slippers and garbage scattered everywhere.

The Thinking Machine Tool Industry

At the beginning of 2014, Yang Qing, a journalist from China Industry News, hit the nail on the head with a heavyweight article titled "Where Has Spring Gone with Chinese Machine Tools?" which sparked deep reflection within the industry. Shen Liechu, former Deputy Minister of the Ministry of Machinery, wrote a lengthy article titled "Analyzing How the Machine Tool Industry Can Get Out of Difficulties from Reality and History", reflecting on the past and presenting his unique insights. I predicted the downturn of the machine tool industry in 2014 with the article '2013- The Year of Change in the Machine Tool Industry'.

The machine tool industry has found its lifeline in thinking. What the Chinese machine tool industry lacks is not only thoughtful enterprise design, but also carefully designed and crafted products, production methods, and management models. What it lacks most is the spirit of craftsmanship: to make our employees love their work more than the monetary rewards it brings.

The West Lake Sword Conference organized by Jack Ma, who raised his arms and shouted loudly, laid the foundation for the trend of domestic e-commerce and Alibaba's industry position. The machine tool industry also urgently needs such high-end, free, and grassroots ideological collisions to change the trajectory of the machine tool industry.

Drilling and attacking centers stand out, and the industry's machine tools shine brightly

From a certain perspective, mobile phones saved the metal cutting machine tool industry in 2014, allowing many factories in this industry to find the dawn before dawn.

In 2014, under the guidance of the Apple 6 smartphone banner, the selling point of new phones from major mobile phone manufacturers such as Xiaomi, Huawei, Meizu, and Samsung was the metal border. Guided by emotions, the finely crafted metal frame directly enhances the sophistication of the phone and is deeply loved by trendsetters. The demand for drilling and tapping centers, the main machine tool for manufacturing metal frames, has increased significantly, with an average monthly demand of up to 10000 units. Based on an average price of 300000 yuan per machine, the market demand in the drilling and attacking field alone was 36 billion yuan in 2014, while the total sales volume of domestic machine tools in one year was only 200 billion yuan. Affected by the mobile phone industry, consumer electronics products such as laptops and rechargeable batteries are also popular with metal casings, which has led to a significant increase in orders for drilling centers and highlight machines.

FANUC and its brothers from Japan received the majority of the orders, and the remaining orders also made many domestic machining center manufacturers spend a long night.

Can the Diamond Attack Center maintain such popularity next year? I can be certain that it won't. Firstly, the market saturation is approaching full capacity, and the bankruptcy of several large mobile phone component manufacturers in Dongguan, Suzhou, and other places has endorsed this conclusion; The second reason is that the fashion trend of consumer electronics products changes rapidly, and the popularity cycle of the same style is short. No one can predict what kind of items will be popular next year, but it is not specified to be metal frames that have been popular for a year.

The inspiration brought to us by the trend of drilling and attacking centers triggered by the popularity of mobile phones is that the industry of machine tools has great potential. Digging deep into industry demand, laying out in advance, and quietly developing, being an invisible champion of the industry of machine tools is also a hero.

Riding on the concept of Industry 4.0, joining hands with robots to achieve phoenix rebirth

The German academic and industrial circles believe that in the next 10 years, the intelligence based on Cyber Physical Systems (CPS) will lead humanity into the fourth industrial revolution dominated by intelligent manufacturing. The core of the "Industry 4.0" strategy is to achieve real-time connectivity, mutual recognition, and effective communication between people, equipment, and products through CPS networks, thereby building a highly flexible, personalized, and digital intelligent manufacturing model.

Industry 4.0 is the lifeline for listed companies in the machine tool industry. Despite practical failures, the stock market saved their lives. At the end of 2014, with the strong rebound of the stock market and the concept of Industry 4.0, listed machine tool companies on the brink of collapse took advantage of the Industry 4.0 concept and won a large amount of investment funds, masking their poor market performance.

Industry 4.0 emphasizes personalized production and rapid response, which is completely different from the large-scale production model currently adopted by machine tool giants. May I ask, is it possible for a large and bloated bureaucratic system to achieve highly flexible personalized production? Industry 4.0 is actually a powerful weapon for small and medium-sized enterprises to fight against trust giants.

Industry 4.0 is a long-term vision, and currently the robotics industry is the one that can save the machine tool industry. In 2013, nearly 37000 robots were sold in the Chinese market, a year-on-year increase of 60%, accounting for about 1/5 of global sales and becoming the world's largest robot market. In 2014, China's robot sales reached a new high of 50000 units.

Joining forces with the robotics industry or installing robots on machine tools is like a powerful lifesaver. In fact, automated cutting production lines that integrate robots or robotic arms have become a powerful tool for many machine tool companies in the market, creating profits far exceeding those of general machine tool products. The actual customer application effects are impressive.

Some companies shout slogans and use the concept of robots to gain fame, deceiving investors with the story of robots, which can only be passed down as a joke.

The escalating price war

When the market is good, prices rise together, and when the market is sluggish, prices drop across the board, which is the most glaring ugly phenomenon in the machine tool industry.

The fierce price war of ordinary lathes has not yet dissipated, and vertical machining centers have become a new battlefield in the price war. Shenyang Machine Tool has just killed many vertical machining factories with a price of 189800 yuan for the 850 Ruijie milling machine, while Dalian Machine Tool has once again set a world record for the lowest price with a price of 158000 yuan for the 850 vertical machining center.

The winner or loser of the peak low price showdown between the two machine tool giants, Needle Point and Maimang, remains to be determined by the market. However, killing one thousand enemies and injuring eight hundred oneself not only destroys one's own profits, but also destroys the already unhealthy ecological environment of the machine tool industry. Do the top ten global machine tool companies still rely on price reductions to win the market?

Leading enterprises took the lead in lowering prices, and under inventory pressure, other manufacturers also took risks. The current price war has spread to various sub sectors of the machine tool industry. The price of flat bed CNC lathes confirms an old saying that there is no minimum, only lower prices. The market has seen the emergence of CNC lathes priced at 18800 yuan and wire rail flat bed CNC lathes priced at 28800 yuan. The unlimited price, meager profit margin, and huge cutting corners are all shocking to discerning people. The inclined bed CNC lathe has also entered the field of price war. The inclined bed lathe under 100000 yuan is not an isolated case, and surprisingly has good quality. High end fields such as gantry machining centers and horizontal machining centers have also seen the emergence of affordable product lines for the general public.

The machine tool industry in 2015 is destined to be a difficult yet hopeful year. Under the heavy impact of the economic crisis, the manufacturing industry is struggling to move forward. Where is the path for the machine tool industry to survive with low profits? Although there are different opinions on the current answer, there is a clearer and more specific argument: through innovation to enhance oneself, and thus promote the gradual upgrading and renewal of the manufacturing industry, the machine tool industry can achieve eternal life.