Events of late have caused a massive resurgence in demand for manufacturing capacity in America. We are hearing of average backlogs at 12 weeks+ from many of our customers. Industrial segments like semiconductor processing, robotics, defense hardware, and medical components have continued on a growth trajectory unabated, while other sectors are still catching up from 2020 parts shortages due to runs on various industrial goods.
Several conversations with CNC toolmakers and distributors indicate very robust market conditions for machine tool sales and we are hearing that a few of the suppliers are out of stock for at least a quarter. This seems especially acute in turning machinery. Some of it is due to the aforementioned catch-up on parts shortages. This includes electronics components which are in short supply across a variety of sectors. It’s a very different market from a year ago.
Many of the factory spaces we have visited in the quarter are either planning or executing an expansion of footprint. In some cases, factory layouts are being redesigned to accommodate more machines in a workflow pattern to drive increased efficiencies. The rate at which this work is getting done is impressive. Coupled with the low interest rate environment, this is a major catalyst for continued growth
More frequently, we are seeing precision machining companies, at full capacity or more, outsourcing much of the rough machining work to subcontractors while they focus their existing machines and more experienced staff on the final precision work that differentiates them from others. This strategic flex move is enabling an entire network of smaller shops an opportunity to participate in the growing wave of local production and perform these operations at a fraction of the shop rate of doing this coarse-grain work in-house for the larger vendor.
We’ve had the good fortune of meeting with dozens of great innovators in the precision component industry during the last 12 months. There are some very consistent themes we’re hearing across these meetings.
- Ownership has a mandate to find increased productivity out of their workforce and equipment. Information systems have not kept pace with modern factory workflows. The information is not current, relevant and something is always lost in translation, requiring interpretation and additional data input.
- With backlogs as deep as they are, asking people on the floor to do anything but run more machines is a non-starter. The need for information to increase productivity is clear, but that information needs to be delivered in a non-disruptive fashion that keeps machinists engaged with their jobs, not distracted from them.
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