Overcapacity period in China's machine tool industry (2012-2018)

Since 2012, demand in the machine tool market has decreased significantly as economic growth has slowed and investment has been depressed. Domestic machine tool production and sales decreased year by year (2014 and 2017 there was a slight rebound), a large number of enterprises in trouble. Especially in the period of high-speed growth, all kinds of ownership enterprises have invested in expanding production, resulting in a sharp expansion of the volume-type low-end machine tool production capacity, enterprise debt increased sharply, weakening the ability to resist risks.

According to the National Bureau of Statistics, in the first half of 2019, the operating income of enterprises above the industry-wide scale fell by 2.3% YoY (the key gold-cut enterprises contacted by the Association decreased by 33%), and profits decreased by 21% (the loss side of key gold-cut enterprises was about 40%). Especially in the low-end product sand area, overcapacity is serious, enterprises compete for price, raw materials and manpower costs rise, heavy tax burden, financing difficulties, industry losses are high.

From the product structure, the decline of gold cutting machine tools is larger, especially the backbone of heavy-duty machine tool enterprises market demand fell to about 20% of the normal year. In the past two years, Dalian machine tools and Shenyang machine tools, as the industry leader, have gone bankrupt and restructured. Metal forming machines declined less, with several years benefiting from a modest increase in the automotive and consumer electronics markets and a further decline since 2015.

China's Machine Tool Production and Sales Since 2011-2018 (US$ billion)

Source: China Machine Tool Industry Association