Production Machining

DEC 2017

Production Machining - Your access to the precision machining industrial buyer.

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for new vehicles during mid-2017 have exceeded $3,500, an increase of approximately 10 percent over 2016's average financial incentive level. Low-interest financing and longer duration loans have incentivized many consumers to finance vehicles at low monthly payment levels, which they may not be able to otherwise afford. However, data shows dollar lease volumes peaked at the end of 2016 and have moved lower throughout 2017. While it is likely that 2017 sales volumes will show a modest decline over the prior year's sales volumes, that is not to indicate that the industry should prepare for a significant decline. An examination of the last several decades of total vehicle sales data shows that vehicle sales peaks can be followed by many years of healthy sales. Vehicle sales in 2000 at 17.8 million vehicles were followed by two years of healthy sales volumes of 17.5 and 17.1 million units, respectively. e transformation taking place in the automotive industry presents significant opportunities for the machine tool industry. As the industry moves toward new powertrain models including hybrid and fully-electric vehicles as well as toward autonomous vehicles, the need for manufacturing and technological partnerships become obvious. Most, if not all, major car manufacturers have formed partnerships with multiple technology firms to produce what each anticipates will be a winning platform in a few short years. e regula- tions in the U.S., Europe and China are quickly moving away from the traditional internal combustion engine and instead toward highly efficient models. is has pushed the expected number of new models in 2018 and 2019 to new heights compared with recent history and may bolster machine tool consumption along much of the automotive supply chain. Aerospace. e aerospace industry has experienced Car sales: Total, (#, SA) Truck sales: Total, (#, SA) Total Cars and Trucks Sold (#,SA) incredible growth in recent years as evidenced by a $1 trillion backlog of jet orders split almost evenly between Boeing and Airbus at the beginning of 2017. e demand for new jets has been driven in large part by the demand for highly efficient narrow-body jets, including Boeing's 737 model and Airbus' A320 family of models. With such strong aircraft demand, jet engine manufacturers are also experiencing robust demand for their latest turbines. Gardner Business Index data reported by the aerospace industry provides clear evidence of the strong growth through 2016 and 2017. Overall, passenger and freight demand in recent years has been excellent. According to the International Air Transport Association, full-year global passenger traffic in 2016 grew seven percent over the prior year, beating the 10-year average growth rate of 5.5 percent. at growth in only 2016 represents 242 million air trips. e Asia Pacific region in 2016 also retained its title as the largest by number of passengers with 35 percent market share and 1.3 billion passengers, an increase of 11.3 percent annual growth. Europe and North America ranked second and third, respectively, with 26 percent (992 million passengers) and 24 percent (912 million passengers) market shares. Next year looks like it will ride the wave of growth first started in late 2016 and early 2017. Gardner Intelligence believes that machine tool consumption will increase between five and 10 percent at least through the first half of 2018 and potentially climaxing in September at the International Manufacturing Technology Show (IMTS). e shops that will succeed in the coming years will be those that find sales opportunities in the midst of the transformation taking place in the automo- tive industry as new partnerships evolve between traditional car manufacturers and new technology firms. Demand in the aerospace industry for extremely efficient aircraft and especially engines will create opportuni- ties for machine tool builders able to provide the high-tech, high-precision, intricate part machine tools necessary to meet strict environ- mental rules and desired low operating costs by airlines. Other industries such as medical and energy will also undergo their own transforma- tions, and those machine tool builders able to keep abreast of the changes taking place in these industries will find themselves outper- forming their counterparts. CONTRIBUTOR Michael Guckes is senior economist at Gardner Intelligence, the research and market intelligence division of Gardner Business Media. He provides forecasting, modeling and consulting services to GBI clients and content for all Gardner brands. For more information about GBI, visit :: 29 SPECIAL REPORT

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