Machine Tool Business Gears Up

Sellers of robots and other equipment for factories were optimistic at the International Manufacturing Technology Show in Chicago this week. James R. Hagerty

CHICAGO—Makers of factory-floor equipment predict an upswing in U.S. demand next year on an improving U.S. economy and rising sales of cars, appliances and jets, all requiring metal cutting and shaping machinery.

Machine shop operators crowded the floor this week at the International Manufacturing Technology Show, which drew an estimated 110,000 visitors through Thursday. Many were collecting price sheets and quotes in a sign a recent downturn may be grinding to an end.

 

"I'd like to get something going by the end of the year," said James Martin, owner of Martin Sheet Metal Inc. in Cleveland, who was looking for robotic painting and welding equipment to make cabs for forklift trucks.

John Johnston, owner of Electro-Way Co. in Fraser, Mich., said he would be buying new equipment early next year. Electro-Way specializes in electrical-discharge machining, which shapes and forms metal through the use of electrical currents rather than grinding or drilling.

Mr. Johnston said his business has been booming recently from industrial customers that use Electro-Way to bore holes in very small metal parts.

Rising demand for precise parts for autos, commercial motors and the energy industry has Mark Mohr, president responsible for the Americas for Japan-based machine manufacturer DMG Mori Seiki Co. 6141.TO +2.95% , projecting his firm's U.S. sales should expand about 4% this year and at least 10% in 2015.

"There's a need [for equipment] out there," he said while taking a break from customer meetings at the show. DMG Mori Seiki supplies metal cutting machines for auto makers and others. A shortage of capacity at some larger machining companies has them shipping work to smaller shops, boosting the need for machinery, he said.

Brian Papke, president of Mazak Corp., the U.S. arm of Japan's Yamazaki Mazak Corp., another machinery maker, is preparing for a rebound. Mazak is expanding its factory in Florence, Ky., to about 800,000 square feet from 600,000, a $40 million project. "We're great believers in manufacturing in North America," Mr. Papke said.

Equipment makers entered the year expecting a rebound after a 5.4% order drop in 2013 in the about $5 billion a year U.S. business. The severe cold early in the year helped extend the slump. Through July 31, U.S. orders for machine tools and related equipment used to cut and transform metals and other raw materials were down 2.3% from a year earlier, according to the Association for Manufacturing Technology, a trade group.

In part, industry executives cite jitters over the sustainability of the economic upturn for some of the past reluctance to invest. Some U.S. manufacturers remain nervous about prospects for the economy, and others are shopping for used machinery to hold down costs, they said.

Gretchen Zierick, president of Zierick Manufacturing Corp., a family-owned maker of electronic connectors in Mount Kisco, N.Y., with annual sales of more than $10 million, said she is hesitant to invest heavily in equipment because she thinks a sluggish economy won't lead to much demand growth. She also finds turmoil in Ukraine and the Middle East unsettling. "Every day there is something new," she said. "None of it is good."

Ms. Zierick may buy a used metal-cutting machine instead of a new model, which would cost around $250,000.

Gardner Research says its surveys of metalworking equipment buyers indicate spending may jump 37% next year to the highest level in seven years.

The resurgence will be led by automotive, aerospace, pump- and plumbing-products makers and industrial motors, said Steven Kline Jr. , director of market intelligence for Gardner. Based on past patterns, the market is likely to hit a cyclical peak in 2015 or 2016 and then weaken again, Mr. Kline said.

Herb Miller, owner of Miller Machine Inc., is expecting to purchase computer-controlled metalworking equipment for his shop in Scales Mound, Ill. "We're looking to buy this year," he said. "We've already selected one or two models and we're comparing features and prices."

Doug Conrad, co-owner of Metal Technologies Inc. in Bloomfield, Ind., said his company has already purchased 20 Makino-brand machining centers this year, raising the company's total by about 30%. Metal Technologies, which employs 270 people in its machining operation, specializes in cutting and shaping aluminum. As the automotive industry switches to lighter-weight aluminum from steel, Metal Technologies is busy machining engine blocks, cylinder heads and other cast aluminum components used by auto makers.

"We've been at it since the mid-1990s and this is the biggest growth spurt we've seen," he said.

Write to Bob Tita