The blend of demand with technology transformation
Besides the massive effects from the COVID-19 pandemic, several external and internal effects are leading to declining demand in the machine tool market. The transformation of the automotive industry from internal combustion engines to electric drivetrains represents a significant challenge for the machine tool industry. While an internal combustion engine requires many highly precise metal parts, the same is not true for electric drivetrains, which have fewer tooled parts. Aside from the impact of the pandemic, this is the main reason why orders for metal cutting and forming machineries declined significantly in the past 18 months.
Besides all the economic uncertainty, the industry is in a serious disruption phase. Never before have machine tool builders experienced such a major change in their industry as the one driven by digitalization and new technologies. The trend towards greater flexibility in manufacturing drives product innovations like multitasking and additive manufacturing as suitable alternatives to traditional machine tools.
Digital innovations and profound connectivity represent valuable features. Sensor integration, utilization of artificial intelligence (AI), and the integration of sophisticated simulation features enable advancements in machine performance and overall equipment effectiveness (OEE). New sensors and new ways of communication, controlling, and monitoring enable new opportunities for smart services and new business models in the machine tool market. Digitally enhanced services are about to become part of each OEM’s portfolio. The unique selling proposition (USP) is clearly shifting towards digital added value. The COVID-19 pandemic may further accelerate this trend.
Current Challenges for Machine Tool Builders
Capital goods industries are sensitive to general economic downturns. Since machine tools are mainly used to produce other capital goods, this applies especially for the machine tool industry, making it vulnerable to economic fluctuations. The recent economic downturn triggered by the pandemic and other negative effects was mentioned as the biggest challenge faced by most machine tool builders.
In 2019, growing economic uncertainty through geopolitical events like the US China trade war and Brexit led to a slowdown of the global economy. Import duties on raw materials, metal components, and machinery affected the machine tool industry and the export of machine tools. At the same time, the growing number of competitors in the low quality segment, mainly from China, challenged the market.
On the customer side, the paradigm shift in the automotive industry towards electric drivetrains has resulted in a structural crisis. The corresponding decline in demand for cars powered by internal combustion engines leads to a drop in demand for many manufacturing technologies in the automotive drivetrain. Car manufacturers are reluctant to invest in new production assets due to the uncertain future of conventional engines, while the ramp-up of new production lines for e-cars is still in the early stages. This mainly affects machine tool builders that focus on specialized cutting machine tools for the automotive industry.
However, it is rather unlikely that the declining demand for machine tools can be fully replaced by the new production lines since the production of e cars requires fewer high-precision metal parts. But the diversification of the drivetrain beyond combustion and battery-powered engines will require new production technologies in the next years.
Consequences of the COVID-19 Crisis
The enormous impact of COVID-19 is felt in the machine tool industry as well as in most other industries. The general economic downturn due to the global pandemic led to a massive drop in demand in the first two quarters of 2020. Factory shutdowns, interrupted supply chains, a lack of sourcing parts, logistics challenges, and other problems aggravated the situation.
Among the internal consequences, two-thirds of the companies surveyed reported general cost cutting due to the current situation. Depending on the vertical integration in manufacturing, this resulted in longer periods of short-time work or even layoffs.
More than 50 percent of the companies are about to rethink their strategy regarding the new circumstances of their market environment. For one-third of the companies, this results in organizational changes and restructuring activities. While SMEs tend to respond with more radical changes to their operative business, most large companies adjust their existing structure and organization to better align with the new situation.
Long-term consequences for the machine tool industry are difficult to predict, but the changing supply chain requirements and increasing demand for digital services are likely to become permanent. Since services are still necessary to keep the installed machines productive, OEMs and suppliers expand their service portfolio focused on digitally enhanced service innovations like remote services. The new circumstances and the social distancing lead to a growing demand for advanced digital services.
On the customer side, permanent changes are more clearly visible. The aerospace industry is suffering from worldwide travel restrictions. Airbus and Boeing announced plans to reduce their production for the next few years. The same applies to the shipbuilding industry, where the demand for cruise ships has dropped to zero. These production cutbacks will also have a negative impact on the machine tool demand in the next couple of years.
Potential of New Technological Trends
Changing Customer Requirements
Mass customization, reduced time-to-consumer, and urban production are a few trends that require enhanced machine flexibility. Besides core aspects like price, usability, longevity, process speed, and quality, greater machine flexibility becomes more important as one of the main characteristics of new machinery.
Plant managers and responsible manufacturing managers recognize the increasing importance of digital features to improve the productivity and efficiency of their assets. Data security, open communication interfaces, and newest information and communication technology (ICT) are essential to integrate digital applications and solutions for a higher degree of automation and serial production. Today’s shortage of digital know-how and financial resources and time constraints hinder the implementation of digital enhancements and new services for end users. Furthermore, consistent tracking and storage of process data becomes important and a mandatory requirement in many customer industries.
Positive Outlook for the Automotive Industry
Despite some headwinds, automotive industry looks bright, globally. According to industry sources, global light vehicle production units have been remarkable and is expected to continue to grow. APAC is expected to register the highest growth rates in terms of production volumes followed by North America. Furthermore, Electric Vehicles sales and manufacturing is increasing at a record pace, which creates a demand for the machine tools and other equipment associated with manufacturing process. Machine tools has wide range of applications in automotive industry like CNC milling (gearbox cases, transmission housings, engine cylinder heads, etc.), turning (brake drums, rotors, fly wheel, etc.) drilling, etc. with the advent of advanced technologies and automation, the demand for machine is only going to increase to gain productivity and precision.
CNC machine tools are expected to dominate the market globally
The computer numerical control machines streamline many operational processes by reducing production time and minimizing human error. The growing demand for automated manufacturing in the industrial sector has resulted in the increasing usage of CNC machines. Also, the establishment of manufacturing facilities in Asia-Pacific has spurred the usage of computer numerical controls in the sector.
A highly competitive market has compelled players to focus on efficient manufacturing techniques trying to gain competitive advantage by redesigning their facilities, which include CNC machines. Apart from this, the integration of 3D printing with CNC machines is a unique addition to some of the new production units, which is expected to offer better multi-material capability, with little resource wastage.
Along with this, with the rising concerns over global warming and depleting energy reserves, CNC machines are actively being used in power generation, as this process requires wide-scale automation.
The machine tools market is fairly fragmented in nature with the presence of large global players and small and medium sized local players with quite a few players who occupy the market share. Major competitors in global machine tools markets include China, Germany, Japan, and Italy. For Germany, apart from several hundred sales and service subsidiaries or branch offices of German machine tool manufacturers throughout the world, there are probably less than 20 German corporations producing complete units abroad currently.
With the increasing preference for automation, the companies are focusing on developing more automated solutions. The industry is also witnessing the trend of consolidation with mergers and acquisitions. These strategies help the companies to enter new market areas and gain new customers.
The Future Of Machine Tools
Advancements in hardware and software are changing the machine tool industry. Industry trends in the coming years are likely to focus on these advancements, especially as they pertain to automation.
The machine tool industry is expected to see advancements in:
Inclusion of smart features & networks
Automated and IoT-ready machines
Artificial intelligence (AI)
CNC software advancements
Inclusion Of Smart Features And Networks
Advancements in networking technology have made it easier than ever to connect smart devices and build local networks.
For example, many devices and industrial edge computing networks are expected to use using single-pair Ethernet (SPE) cables in the coming years. The technology has been around for years, but companies are beginning to see the advantage it provides in building smart networks.
Able to transfer power and data simultaneously, SPE is well suited to connecting smart sensors and networked devices to the more powerful computers driving industrial networks. Half the size of conventional Ethernet cable, it can fit in more places, be used to add more connections in the same space, and be retrofitted to existing cable networks. This makes SPE a logical choice for building smart networks in factory and warehouse environments that may not be suitable for current generation WiFi.
Low-power wide-area networks (LPWAN) allow data to be transmitted wirelessly to connected devices over a greater range than previous technologies. Newer iterations of LPWAN transmitters can go a full year without replacement and transmit data up to 3 km.
Even WiFi is becoming more capable. New standards for WiFi currently in development by the IEEE will use 2.4 GHz and 5.0 GHz wireless frequencies, boosting strength and reach beyond what current networks are capable of.
The increased reach and versatility provided by new wired and wireless technology make automation possible on a grander scale than before. By combining advanced networking technologies, automation and smart networks will become more common across the board in the near future, from aerospace manufacturing to agriculture.
Automated And IoT Ready Machines
As the industry continues to adopt more digital technologies, we’ll see the manufacture of more machines built for automation and the industrial internet of things (IIoT). In much the same way we have seen an increase in connected devices — from smartphones to smart thermostats — the manufacturing world will embrace connected technology.
Smart machine tools and robotics will likely handle a greater percentage of the work in industrial settings as technology advances. Especially in those situations where the work is too dangerous for human beings to perform, automated machine tools will become more widely used.
As more internet-connected devices populate the factory floor, cybersecurity will become an increased concern. Industrial hacking has resulted in several worrying breaches of automated systems over the years, some of which could have resulted in the loss of life. As IIoT systems become more integrated, cybersecurity will only increase in importance.
Especially in large-scale industrial settings, the use of AI to program machines will increase. As machines and machine tools become automated to a greater degree, programs will need to be written and executed in real-time to manage those machines. That’s where AI comes in.
In the context of machine tools, AI can be used to monitor the programs the machine is using to cut parts, making sure they don’t deviate from the specifications. If something goes wrong, AI could shut the machine off and run diagnostics, minimizing damage.
AI can also assist in machine tool maintenance to minimize and address problems before they happen. For example, a program was recently written that can detect wear and tear in ball screw drives, something that had to be done manually before. AI programs like this can help keep a machine shop running more efficiently, keeping production smooth and uninterrupted.
CNC Software Advancements
Advancements in computer-aided manufacturing (CAM) software used in CNC machining allows for even further precision in manufacturing. CAM software now allows machinists to use digital twinning — the process of simulating a physical object or process in the digital world.
Before a part is physically manufactured, digital simulations of the manufacturing process can be run. Different toolsets and methods can be tested to see what is likely to produce the optimal result. That reduces cost by saving material and man-hours that might have otherwise been used to refine the manufacturing process.
Newer versions of machining software like CAD and CAM are also being used to train new workers, showing them 3D models of the parts they’re making and the machine they’re working with to illustrate concepts. This software also facilitates faster processing speeds, meaning less lag time and quicker feedback for machine operators while they work.
Multi-axis machine tools are more efficient, but they also come at a higher risk for collision as multiple parts work at once. Advanced software cuts down on this risk, in turn cutting downtime and lost materials.
Machines Working Smarter
The machine tools of the future are smarter, more easily networked, and less prone to error. As time goes on, automation will become easier and more efficient through the use of machine tools guided by AI and advanced software. Operators will be able to control their machines via computer interface more easily and make parts with fewer errors. Networking advancements will make smart factories and warehouses easier to achieve.
Industry 4.0 also has the ability to improve utilization of machine tools in manufacturing operations by cutting idle time. Industry research has indicated that machine tools are typically actively cutting metal as less than 40% of the time, which sometimes go to as low as 25% of the time. Analyzing data related to tool changes, program stops, etc., helps organizations determine the cause of idle time and addressing it. This results in a more efficient use of machine tools.
As Industry 4.0 continues to take the whole manufacturing world by storm, machine tools are also becoming a part of the smart system. In India too, the concept, though in nascent stages, is slowly gaining steam, especially among large machine tool players who are innovating in this direction. Primarily, machine tools industry is looking at Industry 4.0 to meet increasing customer requirement for improved productivity, reduced cycle time and greater quality. Thus, adopting Industry 4.0 concept is at the crux of achieving the ambitious target of making India a global hub for manufacturing, design and innovation, and augmenting the share of manufacturing in the GDP from the current 17% to 25% by 2022.
Post time: Aug-28-2022