COVID-19 Impact on Global Machine Tool Market

Market Leadership - COVID-19 Impact on Global Machine Tool Market

Post COVID-19, the global machine tool market is projected to reach USD 68.9 billion by 2021 from an estimated USD 65.6 billion in 2020, at a CAGR of 5.0%. The projections were based on the ongoing automotive industry production drop, which is the biggest consumer of machine tools and, additionally, the supply chain disruptions caused by the COVID-19 pandemic in the manufacturing industry.

 The machine tool market reached an all-time high in 2018. However, with the continuous decrease in automotive production over the last 2-3 years, the trade war (between the US and China) on tariffs creating weak demand in downstream industries and the uncertainty in the international relations has impacted investment decisions, resulting in ~11% decline in the machinery demand for 2019.

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However, economies rely on machinery for production, and machine tools form the crux of it. Thus, companies are expected to recover from the recession slowly by taking preventive measures to meet production needs. Chinese firms have also become creative and resourceful to recruit workforce. Some firms negotiated with local governments for permission to send in charted buses and even airplanes to bring back the workforce from remote regions. Others have started to adopt automation to make up for labor shortages. Some are also applying technologies to do crash training for newly recruited manual labor workforce. In some firms, salaried workers are temporarily taking on the work of hourly labor workforce in certain critical production areas.

During the period of economic depression, the difficulties that machine tool manufacturers and their customers face is accessing to credit which strongly affects the sector as credits are critical for investments. Even as the economy is set to recovery after two or three years, the machine tool industry will be the last to recover as business confidence takes some time to be restored. Another factor that delays recovery in the machine tool industry is that the time lag between orders and production changes takes anywhere between six to nine months

Currently all manufacturers are controlling the spread of the virus through limiting the production to bare minimum or even by closing down the factories, major machine tool manufacturers are providing remote services.
DOOSAN MACHINE TOOLS - Due to the current situation, the company has adopted a remote working policy. Service engineers will support by phone or e-mails during normal working hours. All service visits, except emergency service visits, have been postponed delayed until April. However, the company has assured the delivery of the orders in the given timeline by using appropriate safety measures. However, the current situation clearly states the company is ready to witness the decline in revenue in the coming quarters.

JTEKT Corporation has witnessed a decline in profits in the 3rd quarter of FY2019 despite cost improvement. This decline is profit can be attributed to a reduction in sales, decreasing exchange rates, and fixed costs such as R&D. The company was preparing itself for a further decline in sales for the coming fiscal estimating slowdown in the US, Europe, and ASEAN markets. The sales further eroded due to the impact of COVID-19 virus on all leading economies as machine tool production activities will be halted in Germany, France, the US, and India for at least a month. And per suggestion from the Indian government, Companies have to pay full or at least some part of salary to permanent employees during the lockdown period, which will decrease the profit of margin for companies this year.

Related Reports:

COVID-19 Impact on Global Machine Tool Market by Machine Type (Cutting and Forming), Automation Type (CNC and Conventional), Industry (Automotive, Sheet Metal, Capital Goods and Energy), Sales Channel (Direct Sales, Events & Exhibitions and Dealer & Distributor) and Region - Global Forecast to 2021

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Report Code
AT 7618
RI Published ON
4/29/2020
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