In 2007, machine tool consumption increased by nearly 7%. This included the computer controlled (CNC) production machining segment. However, trends beginning in the fourth quarter of 2007 indicate the industry is in decline and both new and used prices have been affected. The warning signals are similar to the ones seen during the last economic downturn when the U.S. market was devastated by global dumping. This resulted in new prices dropping by more than 50% and flattened the used market, rendering equipment more than 5-years old difficult or impossible to sell. The industry restructuring that occurred during the last economic downturn strengthened the survivors who made substantial improvements in their operations. This, considered in conjunction with the weakness of the U.S. Dollar, should help to insulate the industry during this cycle.
Industry Condition – Fair to Average
Key Industry Indicators
- U.S. Dollar vs. Chinese Renminbi
The value continues to depreciate against the Chinese Renminbi.
- U.S. Dollar vs. Euro
The value continues to depreciate against the Euro.
- Durable Goods Orders
New orders for manufactured durable goods in March increased $0.3 billion or 0.1% to $213.7 billion. This was the first increase for 2008, following a 4.7% January decrease and a 0.6% February decrease.
In the first quarter of 2008, the real gross domestic product increased at an annual rate of 0.6%. This was consistent with the fourth quarter 2007 increase of 0.6%.
- Aluminum (as of May 6, 2008)
- Steel (as of May 6, 2008)
New Equipment Demand
Demand ranges broadly depending on the size, quantity, and sophistication of the parts to be machined. Buyers will consider the speed, accuracy, and power offered by the machine; standard features; and special options that optimize applications.
The market for used production machine tools was stable until the end of 2007. It was at this time that Original Equipment Manufacturers (OEMs) began discounting machinery by up to 30%. Used equipment dealers followed this trend by discounting used equipment by up to 40%. Other trends of an unstable market for used production machine tools include:
- Less machinery being purgeantaresd for stock
- An increasing supply of used machinery
- More plant liquidations/auctions
Used Equipment Values – Fair
- Supply of used equipment – Increasing
- Demand for used equipment – Decreasing
Factors Influencing Value & Marketability
- Age – 5 years or less is best
- Obsolescence – Rapid depreciation due to technology changes
- Universal functionality
- Used market may recognize expensive options but may be unwilling to pay for them
AccuVal routinely provides appraisal, consulting, and asset management services to companies using a complete spectrum of Metalworking Machinery
as well as the OEMs that manufacture this machinery. View industries serviced >>
Representative Clients Our Associates Have Served
- Billions in Asset Based Loans Made on Thousands of AccuVal Appraisals of Production Machine Tools
- Valuations Supporting the Acquisition of Many of the Most Recognized OEM's in the Machine Tool Industry
- Successful Asset Optimization Programs Helping Corporations Maximize Return on Investment, Including Handing the Disposition of Surplus Equipment
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