Machine Tools Market

Market Overview

The global machine tools market size was valued at USD 104.12 billion in 2022. It is estimated to reach an expected value of USD 210.93 billion in 2031, growing at a CAGR of 8.2% over the forecast period (2023–2031). The implementation of ICT-based services has driven the advancement of production lines in enterprises operating within the region. This has led to the increased use of machine tools.

'Machine tools' is commonly used to define a cluster of equipment that transforms metals or other materials into different machine parts. Alternatively, a machine tool is defined as a power-driven machine devised to cut or give some structure to metals. The machine tools sector is essential to the worldwide industrial industry. The level of competitiveness in the manufacturing sector relies heavily on the caliber of tools employed in metal forming and metal cutting operations.

The machine tools industry plays a vital role in supplying essential components to every field of manufacturing. The machine tools industry's success substantially impacts the expansion of the country's manufacturing sector. Manufacturing in several sectors, including automotive, heavy equipment, defense, aerospace, and casting, heavily relies on a robust machine tools industry.

Market Dynamics

Market Drivers

Industrial and Economic Growth in Asia-Pacific

Emerging Asia-Pacific nations have been challenging their developed counterparts in global manufacturing in recent decades. These economies are experiencing strong economicCarbon Steel growth, have markets with potentially high consumption, and are becoming more competitive in manufacturing and industrial processes. Low- and medium-technology companies that use machine tools account for up to 65% of production, and their economies are expanding across the board in the industrial sector. With precise parts being a crucial component, the Asia-Pacific region currently accounts for 45-50% of the share of high-tech manufacturing. High-tech majors in sectors such as automotive, aerospace, electronics, and medical devices are planning to move the value chain further in the coming years. Top manufacturing centers in Asia, such as India and China, are investing in major infrastructure development.

Another major reason for the rise in manufacturing centers in Asia-Pacific is the proximity to large consumption markets that are set to expand faster than developed markets. India and China hosted more than 36% of the world's population in 2020, representing consumers with rapidly rising disposable incomes, an attractive demographic dividend, and constructive regulatory regimes. This makes these markets most attractive for varied end-user products ranging from automotive, aircraft, watches, electronic appliances, and healthcare equipment. As a result, an increase in Asia-Pacific's manufacturing dominance is expected over the next decade. This offers promising opportunities for ancillary and precision parts contract manufacturers and power tools manufacturers for high-end specialized assembly actions in the form of a large end-user base and collaborations with players in emerging countries to cater to this high demand growth.

Rising Infrastructure Development

The pre-COVID-19 scenarios across the globe suggested that infrastructure was the primary focus for governments, leading to machine tool growth. However, infrastructure development has reached different levels in recent times. In addition, the EU developed a series of programs under the European Digital Agenda. The European Union (EU) focused on strengthening innovation and investment in ICT-based services to improve public services and quality of life. The concept of smart cities is gaining momentum to achieve these targets. It is an effect of major technological, economic, and environmental changes, including climate change, economic restructuring, and the move to online retail and entertainment. ICT-based services pushed the development of the production line among companies operating in the region. This has driven the utilization of machine tools.

Market Restraint

Rising Material Cost

Machine tools incur the highest expenses from raw materials. These costs account for around 50% to 60% of the total production cost. The primary essential components for the machine tools business encompass ferrous and non-ferrous metals, particularly steel and aluminum. The production and sales of raw materials experienced substantial volatility as a result of the COVID-19 pandemic. The fluctuation in costs of raw materials presents a significant risk to the profit margins of vendors. Moreover, there has been a significant rise in other operating expenses, such as labor wages. These elements are imposing a heavy load on market participants who are endeavoring to manufacture power tools that are both highly efficient and inexpensive to deal with the growing rivalry in the industry.

Moreover, steel prices have become highly unpredictable in international markets. As a result, the costs of raw materials for numerous businesses that rely on steel have experienced significant fluctuations. Carbon steel is the primary material used in machine tools, and changes in its price will have a negative effect. The fluctuation in costs of raw materials also impacts the projections and forecasts of suppliers and industries that use these materials, disrupting their growth strategy. Hence, variations in the pricing of primary materials, particularly carbon steel, aluminum, and tungsten, have the potential to impede the expansion of the machine tools industry.

Market Opportunities

Growth in Automotive Sector

The emergence of developing economies has significantly influenced the expansion of the world's automotive industry. The rising demand for automotive vehicles in emerging economies presents lucrative prospects for industry players to exploit. Moreover, industry participants have endeavored to distinguish their products through product differentiation with the increasing rivalry among various Original Equipment Manufacturers (OEMs) in emerging markets. Motor vehicles remained one of the key machine tools consuming sectors.

In Europe, the composition of investments in machine tools consuming industries suggests that the motor vehicle sector has emerged as a leader in key countries. The region will have significant sales based on the sales outlook of lesser cap nations in Europe like Finland, Austria, and others. As a result, the use of machine tools in the area is influenced by the popularity of motor vehicles. Over the past few years, Asia has experienced rapid expansion driven by swift economic growth in nations like India, China, and Indonesia. They are the primary nations that help meet demand in the automotive industry. Such factors create opportunities for market growth.

Regional Analysis

Region-wise, the global machine tools market is segmented into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa. 

Asia-Pacific Dominates the Global Market

Asia-Pacific is the most significant global machine tools market shareholder and is anticipated to grow at a CAGR of 8.8% during the projected period. China accounted for a major share of the global market in Asia-Pacific and globally. This is because government spending on defense aircraft and equipment has grown year over year in major regional economies, and investments in fully automated industrial machines have also been on the rise. Due to its heavy reliance on industrial industries, the Chinese market desperately needs machine tools. Moreover, the market is being by increasing investments in the industrial sector and the ongoing trend of urbanization.

Europe is expected to grow at a CAGR of 7.7% during the forecast period. Germany led the region in production since there was a strong need for machine tools there. Robotics in Europe is witnessing huge growth in regional markets such as the UK, Germany, and France, and these devices are fast gaining popularity among end-users. The industries that use machine tools the most in Europe are automotive, industrial machinery, metal, and medical, which fuels the region's growth.

In North America, the demand for machine tools is higher in the automotive and industrial machinery sectors. The United States and Canada are significant drivers of the demand for machine tools in North America, with the United States accounting for around 90% of the region's consumption and output. North America is a major contributor to global steel production and is expected to drive demand for machine tools from the metals industry. With increasing applications of technology and improved purchasing power of people, the North American machine tools market is expected to grow at a decent pace during the forecast period.

Latin America is leading the Middle East and Africa by a slight margin as the market emphasizes infrastructure standards. The business-friendly policies in small economies such as Peru, Colombia, and Chile attracted large-scale investments from the private sector post-2020. The robust project pipeline in Chile is boosting the purchase of machinery and equipment in the region. Colombia's economy is being driven by expansion in public infrastructure and investments in the oil and gas industry. Expansion initiatives and the requirement for larger equipment will enhance the range of machine tools. Moreover, the rising consumer confidence and low-interest rates in countries such as Brazil support the automotive sector's growth.

Mexico and Argentina also added to the growth of the automotive sector and maintained their titles as two of the largest automotive industries in Latin America. Thus, the growth of the automotive industry is expected to support the demand for metal cutting, munching, and other machine tools widely used in automotive manufacturing.

Segmental Analysis

The global machine tools market is bifurcated based on tool type, technology, and end-user. 

Based on tool type, the global machine tools market is segmented into metal forming (machining centers, lathe, grinding and polishing, laser, electrical discharge machines (EDMs), and other tools, other metal cutting tools), and metal cutting (bending and forming, pressing, punching and shearing, and other metal forming tools). 

The metal-cutting segment dominates the global market and is estimated to exhibit a CAGR of 8.31% during the forecast period. Metal cutting tools are higher in demand and constitute a variety of machines with different functionalities. Cutting tools are characterized by technological improvements, with many companies vying for larger market shares. In most countries, metal-cutting tools have a higher market share, taking over two-thirds of the sales contribution. Moreover, the sales of metal-cutting tools are substantial in critical sectors such as aerospace, defense, automotive, shipbuilding, and other non-electrical industries. Metal-cutting tools are also customized to a large extent. All such factors lead to segment growth.

The metal-forming tools shape the metal through shearing, hammering, and other methods. Manufacturers are using cutting-edge technologies to make end users' work easier and increase productivity and effectiveness. Metal forming is one such method and is evolving significantly. Several developments have been made in sheet metal working, including cutting, forging, bending, and punching. Other major end-users boosting the demand for metal-forming tools include railway, defense, and industrial machinery.

Additionally, metal forming technologies are a prominent part of several end-user industries, specifically automotive, and are highly responsible for the growth of end-user markets. This is driving the demand for metal-forming machine tools. Moreover, the market is booming with the rising number of new entrants in end-user industries and increasing focus on the value that advanced solutions or systems will bring to manufacturing.

Based on technology, the global machine tools market is segmented into CNC and Non-CNC. 

The CNC segment owns the highest market share and is estimated to grow at a CAGR of 8.9% during the forecast period. CNC is an essential technology in today's times. Various machines used in numerous sectors are focused on automation. With Industry 4.0 and smart factory development, manufacturers across the globe prefer CNC machine tools. In addition, modern CNC systems execute machine components design and manufacturing flawlessly and automatically. CNC machine tools have numerous benefits, including accuracy, prompt execution, and substantial cost reduction. Moreover, the cost-effectiveness of operations over an extended period will drive demand in well-developed nations such as the United States and Europe.

Conventional machine tools are the predominant instruments utilized in manufacturing setups. Despite the widespread popularity and extensive usage of CNC machine tools, many end-users still utilize non-CNC equipment. Primary industry users such as automotive, aerospace and defense, railways, capital goods, and consumer-durable sectors see a high demand for non-CNCs since the employer force is already trained in them.

Based on end-users, the global  market is segmented into automotive, industrial machinery, metal industry, medical industry, electrical and electronics, heavy equipment, aerospace and defense, marine and offshoring, and others. 

The automotive segment dominates the global market and is estimated to exhibit a CAGR of 7.9% during the forecast period. The automotive industry is among the highest contributors to the global economy and thrives in most regions. Emerging nations constitute around 60% of global automotive production. Therefore, the demand for machine tools from the automotive industry is expected to be driven primarily by developing countries. However, with globalization, many international players are scaling up their operations and expanding their presence to benefit from favorable FDIs and other corporate-friendly policies.

Recent Developments

• May 2023 - Amada Co., Ltd. launched sales of Livlots, a new DX solution to support manufacturing sites. Livlots accelerates the digitization of manufacturing workplaces by seamlessly connecting customer offices, programming rooms, processing machines, and the manufacturing workplace, including gaining a more accurate understanding of the progress and work hours for each product in the factory overall.
• March 2023 - Amada Press System Co., Ltd. (Isehara, Kanagawa, Japan) launched the "LM-16A" sales. The LM-16A is a wire rotation torsion spring machine with a wire-rotating mechanism, eight processing slides, and 15-axis control. Torsion spring machines are spring formers that specialize in torsion springs but can also be used for all types of wire processing forming, including extension, compression, and other spring forms.