Analysis of economic operation of machine tool industry in 2013

In 2013, China's machine tool market remained sluggish, with Jinchee machine tools being the most affected and imported machinery also experiencing a sharp decline. Amid intense competition, the mismatch between industry structure, product composition, and market demand became more evident, particularly as demand for low-end products dropped significantly. Meanwhile, the international market showed signs of recovery, but Chinese machine tool exports saw only modest growth throughout the year. **I. Import and Export of China’s Machine Tool Industry** In 2013, the total import and export volume of machine tools reached $25.62 billion, a decrease of 12.9% compared to the previous year. Exports amounted to $9.53 billion, representing a 3.2% increase, while imports totaled $16.09 billion, down 20.2%. The trade deficit stood at $6.56 billion, a drop of 40.1% from the prior year. **1. Sharp Decline in Imports** The cumulative import value of machine tools was $16.09 billion, a significant 20.2% drop year-on-year. Specifically, metalworking machine tools imports fell by 26%, with CNC machine tools declining by 26.5%. Among these, gold-cutting machine tools imports dropped 28.4%, and CNC gold-cutting machine tools imports declined by 28.3%. The import of forming machines decreased by 15.5%, with CNC forming machines down 13.9%. This sharp decline was partly due to years of rapid import growth, which led to overcapacity in various industries. As a result, there was a need for time to adjust and digest high-end equipment. Unlike the 2009 downturn, the 2013 decline marked a turning point, and it is unlikely that machine tool imports will return to historical high-speed growth. **2. Export Growth Remains Stable** Despite the challenging environment, machine tool exports reached $9.53 billion, up 3.2% year-on-year. Metalworking machine tools exports rose 4.4%, with CNC machine tools increasing by 5.8%. Gold-cutting machine tools exports grew by 1.3%, and CNC gold-cutting machine tools by 3.2%. Forming machine tools exports increased by 10.7%, with CNC forming machines rising 18.4%. While the global demand for machine tools was limited, the fluctuation in exports was also influenced by the adaptability of Chinese companies to international markets. **II. Performance of China’s Machine Tool Industry** **1. National Bureau of Statistics Data** - **Overall Machine Tool Industry**: Total sales revenue reached 802.63 billion yuan, an increase of 13.7% year-on-year. Profit was 49.59 billion yuan, up 8.8%. - **Jinchee Machine Tool Industry**: Sales revenue was 150.26 billion yuan, a slight increase of 0.8%. However, profit dropped by 23.1% to 5.30 billion yuan. Output of gold-cutting machines was 725,851 units, with CNC machines at 209,287 units, showing a -1.5% and +2.4% change respectively. - **Forming Machine Tool Industry**: Sales revenue reached 75.52 billion yuan, up 16.1%. Profit was 5 billion yuan, an increase of 10.5%. Output was 233,438 units, up slightly by 0.1%. **2. Key Enterprise Performance** - **Key Industrial Enterprises**: Total value reached 112.86 billion yuan, down 4.5% year-on-year. Sales revenue fell by 13.8%, and profit dropped by 33.4%. - **Gold-Cutting Machine Tool Industry**: Production value was 52.39 billion yuan, down 11.7%. Sales revenue fell 11.1%, and profit plummeted by 80%. - **Forming Machine Tool Industry**: Output value was 13.37 billion yuan, down 0.6%. Sales revenue increased by 2.9%, but profit fell 1.8%. Machine tool output dropped by 8.1%, with CNC forming machines up 3.8%. **3. Annual Production and Consumption of Metalworking Machines** Data from the State Administration of Manpower and industry experience varied, so the association collected data from key enterprises and conducted research. Based on this, the main business situation for the year was estimated. **4. Operating Characteristics of the Industry** - **Fixed Asset Investment Declined, Market Demand Fell Overall**: The sharp drop in machine tool imports signaled reduced investment and overall lower demand. Some industries had already reached peak investment levels, leading to slower growth in fixed asset investment. This created a supply-demand imbalance, with economic slowdowns affecting demand structure, industrial structure, and factor structure. - **Demand Structure Upgraded, Quality Emphasized**: Market demand shifted toward high-end products. The average unit price of imported CNC machines rose 28.8% year-on-year. The rise of the robotics market also presented new opportunities for machine tool companies, though caution was needed to avoid overcapacity and resource waste. - **Overcapacity Issues Prominent, Vicious Competition Needs Control**: Overcapacity was a major challenge, with a 20.4% increase in enterprises and 137.5% rise in output since 2011. Heavy-duty machines had the lowest utilization rates, with revenues dropping 45–50% for two consecutive years. Other products also faced low utilization, leading to fierce competition. Without control, this could threaten the safety of the entire industry. - **Profitability Declined, Liquidity Tightened**: The profit margin for key enterprises was only 3.6%, with Jinchee machine tools at just 0.7%. Inventory and accounts receivable rose, and liquidity became tighter. Despite these challenges, many companies adapted, innovated, and restructured. At the CCMT2014 exhibition, several firms launched new intelligent and specialized products, signaling hope for future growth. **III. Outlook for 2014** - **Macroeconomic Situation**: The global economy continued its slow recovery, but uncertainties remained. In China, the central economic work focused on stability, though downward pressure persisted. Structural issues and overcapacity in some industries were not yet resolved. - **Industry Outlook**: The machine tool industry relies heavily on fixed asset investment. With limited growth expected, the industry's upward momentum may be insufficient. Key enterprise order books declined by 2.2% at the end of 2013, and the number of exhibitors at CCMT2014 dropped by 40.9%. Gold-cutting and CNC machine tool turnover fell by 45.6% and 41.3%, respectively, indicating no significant improvement in the first half of 2014. **Conclusion** As shown in Figure 1, after a decline in 2012, product sales revenue continued to fall in 2013, but the fluctuation was minimal—only 0.9 percentage points. Figure 2 shows that orders have been negative for two months in a row, with only a 2.2% decline at the end of 2013. Despite this, the overall trend suggests a slowdown rather than a complete collapse. While the industry has not fully recovered, it is moving toward a more stable path. It is expected that the second half of 2014 will see some improvement, but the industry will likely remain in a period of adjustment.

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