Industry > Business & Financial Indexes
Machine Shops Growth Slows
“In October machine shops grew less rapidly and the delinquency rate on machine tool leases increased moderately but was still about one-third of the rate on home mortgages. In contrast to the housing and mortgage markets, which are in such bad shape that they are severely damaging the rest of the economy, machine shops are growing and machine tool leases are solid. Shops are uniformly in good financial shape judged by their ability to pay their bills. Some of the continued growth, despite the housing market and oil prices, is due to increased exports driven by the lower U.S. $ and some work coming back from China,” commented Harry Moser, Chairman of Agie Charmilles. (See Fig. 1)
Type of Debt |
30 Day Delinquency Rate |
Machine Tool Leases |
<2% |
Credit Cards |
4.39% |
Home Mortgages |
6.55% |
|
Figure 1
The Agie Charmilles Machining Business Activity Index decreased to 56 in October from 73 in September. The Index is created by surveying machine tool users concerning their current business level versus three months earlier (July 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 activity in U.S. machining industries. Business activity was strongest in the EDM Job Shop Category and the Central and Midwest Region. Historical data is shown in Figure 2.
Figure 2
The Agie Charmilles/USBEF Machining Industry Financial Strength Index was 500 in October 2007, unchanged from September 2007, one of the highest readings on record, and up strongly from 345 in September 2006 and 55 in January 2002, the worst 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 tool users’ liquidity and consistent profitability) are at a rate below the average rate of 1990 to 1999. In October the 30 day delinquency rate on machine tool leases remained close to 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). As profitability rises liquidity rises, delinquencies fall and the Index rises. Historical data is shown in Figure 3 and is available at the Agie Charmilles URL mentioned above.
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 Index lags business activity and leads capital investment.
Business Machining Index by Geographic Region
 |
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
 |
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.
|
