Industry > Business & Financial Indexes
Machine Tool Lease Delinquencies
at an All-Time Low
"In April, the delinquency rate on machine tool leases was at an all-time low and about one-third of the rate on home mortgages. In contrast to the mortgage market, there do not appear to be many "sub-prime" machine tool leases. Shops are uniformly in good financial shape judged by their ability to pay their bills," commented Harry Moser, President of Agie Charmilles. (See Figure 1.)
Type of Debt |
30 Day Delinquency Rate |
Machine Tool Leases |
<2% |
Credit Cards |
4.37% |
Home Mortgages |
4.95% |
|
Figure 1
The Agie Charmilles Machining Business Activity Index increased to 67 in April from 61 in March. The Index is created by surveying machine tool users concerning their current business level versus three months earlier (January 2007). Any reading above 50 indicates that business activity has improved. The Index was inaugurated in October 2004 and is the only known monthly index of business in U.S. machining industries. Business activity was strongest in the Medical Device Category and the Midwest region. Historical data is shown in Figure 2.
Figure 2
In April, the 30 day delinquency rate on machine tool leases reached the lowest level on record, approaching 1%, which is much lower than the 4.37% credit card (Source: Moody Credit Card Index) or the 4.95% home mortgage delinquency rates (Source: Mortgage Bankers Association). The Agie Charmilles/USBEF Machining Industry Financial Strength Index was 526 in April vs. 417 in March 2007, 285 in April 2006, 55 in January 2002, the worst reading on record and 438 in June 2005, previously the best reading on record. Any reading above 100 indicates that US Bancorp Equipment Finance's (USBEF's) machine tool lease payment delinquencies (a good measure of machine tools users' liquidity and consistent profitability) are at a rate below the average rate of 1990 to 1999. As profitability rises liquidity rises, delinquencies fall and the Index rises. Historical data is shown in Figure 3.
Figure 3
The approximately 126,000 U.S. companies that use machine tools have about 2 million machine tools and 750,000 to 1,000,000 directly related employees (toolmakers, machinists, operators, programmers, etc.). Almost all mid-size to large manufacturing companies use, and periodically purchase or lease, machine tools. Thus, these indices give timely insight into the condition of U.S. manufacturing. The Machining Business Activity Index is a coincident indicator of this key manufacturing sector. The Financial Strength lags business activity and leads capital investment.
Business Machining Index by Geographic Region
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Survey responses are sorted geographically, using the same regional breakdown as does the USMTC (US Machine Tool Consumption) survey which is provided by AMT and AMTDA. |
Business Machining Index by Business Category
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Survey responses are also sorted by the primary Business Category of the respondent, defined by the kind of workpiece that is machined. |
About Agie Charmilles
Agie Charmilles, a Swiss company, is the North American leading supplier of wire EDM, CNC, diesinking and manual EDM systems and high speed/performance and 5-axis CNC milling machines. For more information on the company's products and services, contact Gisbert Ledvon, Agie Charmilles, 560 Bond St., Lincolnshire, IL 60069-4224, Tel: 1-800-CTC-1EDM. Gisbert.Ledvon@AgieCharmilles.us, Fax: 847-913-5340, or visit http://www.gfac.com/us.
About US Bancorp Equipment France
The Machine Tool Finance Group of US Bancorp Equipment Finance (USBEF) offers manufacturers and vendors, flexible and competitive lease financing for metal cutting, fabrication and plastics and wood manufacturing equipment. As a subsidiary of U.S. Bank, USBEF is one of the largest bank-affiliated equipment finance companies in the nation. Telephone (800) 255-8029 ext. 492.
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