Machine Tool Industry: Business Climate Improvement and Pattern Optimization Private Machine Tools to Meet the Development Opportunities

Machine tool industry: 100 billion output value, large but not strong. Machine tools mainly include metal cutting machine tools, metal forming machine tools, woodworking machinery and other eight sub-industries, downstream customers include automotive, rail transportation, defense industry, aerospace, engineering machinery, consumer electronics and other fields. In 2019, the domestic machine tool production value is about 19.4 billion U.S. dollars, the global share of 23.1%, is the world's largest machine tool manufacturer. Domestic machine tool industry as a whole is large but not strong, long-term in the industrial chain at the low end, and the core components of the external dependence is high. In terms of business climate, benefiting from the overall rebound in domestic manufacturing investment, the machine tool industry is ushering in a recovery, in April-July, Jinche machine tool production achieved 10%-20% year-on-year growth.

Industry Cycle: Or the beginning of a round of update cycles. Domestic machine tool production and output peaked in 2011 and have since entered a decade-long downward cycle, with output falling by about 30% in 2019 from the highs. In terms of volume, the current domestic machine tool stock of about 8 million units, more than 10 years of service of traditional machine tools more than 60%, that is, more than 4.5 million machine tools in the end-of-life stage, meaning that there is a huge demand for machine tool replacement. According to our estimates, 2020 may be the starting point for an update cycle.

Competition pattern: private machine tools to meet the development opportunities. On the one hand, the old machine tool leader represented by "18 Rohan" has been gradually marginalized and mediocrity in the past ten years, and there has been no major breakthrough in scale effect and core technical capability. On the other hand, since 2015, private machine tools have become the backbone, but showing the characteristics of "small and scattered", 2016-2018 with the promotion of supply-side reform, environmental costs from external costs to internal costs, generally improve the survival threshold of enterprises, the downstream demand of the machine tool industry presents "head, centralization, high-end" characteristics, which will force the private machine tool market concentration.

Who is the leader of the national brand? As the core value link of equipment manufacturing, China's machine tool industry urgently needs to develop its own brand, only the "artisan spirit and market-oriented strategy" can break through.