The Computer Numerical Controls (CNC) market imploded during 2009. After nearly seven years of continued growth leading up to the financial crisis in 2008, the CNC market had surpassed the $6 billion mark. The seven-year growth cycle of the CNC market came to a dramatic halt in the last quarter of 2008 as a result of the global financial crisis, the bankrupt automotive sector, and collapse of oil prices.
“The Computer Numerical Control market in 2009 reflects how the market reacted to these adversities. However, it is equally important to plan for the rebound,” according to research director Sal Spada, the principal author of ARC’s “Computer Numerical Controls Worldwide Outlook”.
Capital Equipment Surplus
During the rapid growth period, machine tool builders scaled up businesses for what seemed to be a new level of demand for capital equipment in the market. Many of the serial machine builders in Japan, Korea, and Taiwan built up inventory in the channel, creating a tremendous surplus in machinery that would not be depleted until the second quarter in 2010. Furthermore, manufacturers that had purchased capital equipment to meet the increasing demand for finished goods were faced with overcapacity in their operations.
Machine Tool Builders Suffer
The economic downturn hit the discrete manufacturing industries particularly hard, placing enormous business pressure on the OEM machine tool builders that serve these industries. In today’s tight, risk-averse, capital environment, end-user manufacturers only purchase new equipment when they can no longer effectively redeploy existing equipment, delaying capital equipment purchases until the last possible moment. The recession that began in 2008 significantly impacts the way today’s manufacturers conduct business. Pressure points mount for machine tool builders of standard machines and custom-engineered machines, as past business models no longer match current economic realities.
Emerging Markets Drive Future Growth
The regions that will experience the largest growth over the next several years will be South America and Asia. Western Europe will continue to remain a dominant region, but the focus will remain on the high-performance and high-valued machinery. Over the course of the forecast period it is expected that the emerging markets will expand beyond the low valued machinery market and make inroads into the midrange performance in machine tools. This is inevitable as the domestic manufacturers seek to improve their manufacturing competency.
For more information on this study, visit ARC's Market Research section.
