The U.S. machine tool industry is the industry that has been hit the most by this wave of epidemics, including smart machinery and Industry 4.0, which are still the unchanged development trends for machine tool manufacturers in the future.
In 2021, the U.S. government proposed the IPEF (Indo-Pacific Economic Framework) policy, which stated that infrastructure and decarbonization, taxation, and anti-corruption favor economic cooperation, while fair trade and resilient supply chains partially cover national security issues. Unlike the tariff relief of a traditional FTA, the Indo-Pacific economic architecture is paving the way for future digital trade agreements.
US Machine Tool Market Trends:
In 2021, the United States will be the second largest consumer and second-largest importer of machine tools in the world. At the same time, the United States is also the second largest exporter of Taiwanese machine tools, and Taiwan is the fifth largest importer of American machine tools. In 2022, Taiwan's export of machine tools to the United States will grow significantly, accounting for 14.0% of the overall machine tool exports in the first five months, showing the importance of the US market. The return of the US manufacturing industry and the gradual fermentation of the USMCA agreement USMCA will stimulate the market demand for machine tools. The market demand for machine tools in the United States is based on imported machines, and its import dependence is maintained at about 56.2% on average, while the average output value of machine tools in the United States is about 34.2% to meet export demand. In recent years, the consumption pattern of machine tools in the United States has tended to increase the proportion of local manufacturing the United States. In addition to the products provided by domestic manufacturers in the United States. There are foreign-funded enterprises from the original importing countries, which are close to the market and set up factories in the United States to provide after-sales maintenance services for products and machines. Especially foreign machine tool companies to meet the needs of American automobile Manufacturers set up factories in the United States. The U.S. machine tool market output value was US$20.34 billion in 2019 and is expected to reach US$22.95 billion by 2025, with a CAGR of 2.1% from 2020 to 2025, mainly due to automotive, aerospace, defense, and other applications The high demand for metal products in the industry will push up the demand for metal forming machines.
In April 2020, the U.S. Department of Commerce proposed to revise some of the rules on Chinese exports, requiring new restrictions on aircraft parts and other related exports, and even requiring foreign companies to obtain U.S. consent when exporting U.S.-made products to China. The U.S. Department of Commerce has drafted regulations that will restrict U.S. companies from selling to the outside world without a license, which will inevitably affect the export of machine tool-related application industries to the Chinese market. Due to the considerable degree of competition between the machinery industries on both sides of the strait, China used to compete at low prices to seize the market, posing a serious threat to Taiwan's machinery industry. However, with the US-China trade war, the US began to impose tariffs on Chinese goods, which is quite beneficial to Taiwan's machinery industry, and can obtain the benefit of transfer orders from the United States.
With the official introduction of 5G in the United States. In addition to the fact that factories no longer need complex cables for data transmission and alleviate the problems of aging and inconvenient migration of machine tool lines, in the era of the Internet of Everything, 5G can be used to solve the problem of factory intranets. Mass data transfer of devices and reduced transmission delay. The United States regards the revitalization of the manufacturing industry as an important policy and improves the competitiveness of its domestic manufacturing industry by integrating ICT and advanced manufacturing technology into the original manufacturing system and promoting the application and development of smart manufacturing. When the U.S. government promotes U.S. manufacturing, it is expected that U.S. manufacturers will have more demand for machine tools. The BTA agreement allows Taiwanese machine tool manufacturers to sell into the U.S. market at a more reasonable price, benefiting both parties. At present, the United States is the second largest market for Taiwan's machine tool exports, but Taiwan's machine tool sales in the United States are still subject to tariffs of about 2% to 6%, while rival South Korea's machine tools have long been exempted from tariffs. For Taiwan's manufacturing industry, the Taiwan-US BTA will allow Taiwan's machine tool manufacturers to have a fairer opportunity in the US manufacturing and consumer market.
Overview of the US Machine Tool Application Industry:
Most US machine tool manufacturers are small and medium-sized enterprises. They are found in various states of the country and are highly dispersed, but they are concentrated in the industrial areas around the Great Lakes region in the Midwest, California, and Texas. The Midwest is known for its industrial manufacturing, which extends to nine states and accounts for about 44% of the U.S. machine tool manufacturing industry. The US machine tool application industry includes industrial machinery, automobiles, and aerospace defense, as well as construction, mining, energy, and other markets. Machine tool manufacturers only need to focus on a single product field instead of producing many machineries, which then brings advantages to small and medium-sized companies.
- Industrial machinery:
Most of the industrial machinery manufacturers in the United States are small and medium-sized enterprises, and their production is concentrated in the Midwest, California, and Texas. Most of the companies that manufacture small components and machinery import machine tools from Taiwan, China, Japan, and South Korea. The industrial chain is relatively closed, and the top two industrial machinery applications are agricultural machinery and construction machinery. The products are marketed in North America and Europe. In addition to domestic sales, it is sold to Canada, Mexico, and the European Union. Among the various industrial machinery manufactured in the United States, construction machinery, engine equipment, industrial process control, agricultural equipment, and turbine generator sets are the main export items of the United States. Compared with electric vehicles, and marine/aerospace/defense applications, industrial machinery requires looser precision and tolerances for equipment. Customers choose equipment suppliers based on price, delivery time, and after-sales service. In recent years, the United States has pushed forward the American manufacturing policy, and the demand for machine tools for industrial machinery will continue to grow.
- Automotive industry:
The auto industry is relatively open, and most of the equipment procurement in the U.S. auto industry adopts international standards. Different from advanced countries such as Germany and Japan, its domestic automobile industry has a close cooperative relationship with specific machine tool brands. The U.S. auto manufacturing industry is more likely to accept overseas equipment from China, Japan, and Taiwan. Growth in the auto industry has slowed, with total U.S. auto sales in 2021 of just under 15 million vehicles, still below the 17 million units sold in the year before the outbreak. U.S. electric vehicle (EV) sales in 2021 will increase 83% annually to 434,879 units, accounting for 3% of U.S. light vehicle sales. The demand for new cars for fuel vehicles will gradually decline, replaced by the value of the after-sales maintenance market. Sales of automotive components will reach $433 billion in 2021, up 8.3% from 2020. Therefore, companies that produce auto parts in the United States will gradually increase the demand for machine tools in the future.
- Aerospace defense:
Aerospace defense is the second largest application industry, and the overall demand for machine tools in the US marine, aerospace, and defense industries is relatively high. The market size in 2020 was US$2.99 billion and is expected to reach US$4.18 billion in 2025. The aerospace defense industry chain is relatively closed, and the marine, aerospace, and defense industries have high requirements for technology, precision, and national security. Therefore, related equipment manufacturers prefer to use locally-made machine tools in the United States rather than overseas imported machine tools. Enter the supply with components and stand-alone machines, because the domestic supply system in the United States is complete and not easily shaken, which is different from the current equipment manufacturers who seek to provide turn-key solutions for the entire line. The chain builds industry Know-How from it. Many manufacturers in Taiwan have become parts supply or logistics maintenance manufacturers for US aerospace/defense. Machine tool equipment manufacturers can establish cooperation methods and market models with these manufacturers.
