RALEIGH, North Carolina, Oct. 16, 2019 /PRNewswire/ — The global machining market is currently estimated to be worth $341.91 billion and is growing at a CAGR of 6-7 percent till 2022, according to Beroe Inc., a procurement intelligence firm. Precision machining holds a market size of 70 percent, with conventional machining having 30 percent. Increasing demand from end-use sectors, like the automotive and electrical industries, is driving the market growth.
The Asia Pacific is considered the largest demand region for the machining market, with a global market share of 35 percent, followed by Europe with 25 percent, North America with 21 percent, Latin America with 10 percent and the MEA with 9percent. China has the largest market for machining, estimated to be worth $54.71 billion and growing at an annual rate of 6.6 percent.
Beroe, which is based in North Carolina, further stated that procurement experts can access this report on its recently launched market intelligence platform Beroe LiVE: live.beroeinc.com
The automotive and transportation industry accounts for 30-32 percent of the demand for machining, growing at a rate of 7-8 percent, followed by the electrical/electronics industry for 16-17 of the demand, growing at 4-7 percent. Lack of viable substitutes coupled with extensive demand from end-user segments is driving the growth of the machining market. Shortage of suitable labor, global economic recovery, and fluctuations in commodity prices affecting raw material costs are major constraints faced by the market.
Milling, turning, drilling, grinding and cutting are some of the key machining techniques, where CNC or conventional machines are using widely to perform the process. In the coming years, more conventional machines will be replaced by CNC technology to improve output and precision, owing to the stringent requirement from the end-user. The milling machines segment is expected to grow at a CAGR of 8-9 percent owing to features such as multi-functionality and reduction in setup time.
- The 5-axis machine tools have created a huge difference in the machining market by increasing efficiency, reducing cycle time, and reducing material wastage. These kinds of innovations in machine tools are further expected to drive the machining market.
- Labor cost plays a vital role in the determination of the overall cost structure depending on the skill set involved, the complexity of the end product. Regional price differences on labor rates and power can play a crucial factor for sourcing decisions
- The global machining industry is highly fragmented and comprises of several small and medium-scale enterprises that offer their services. The supplier base is fragmented for machining due to which the buyer can bargain to reduce costs.
- The present technological substitutes like 3D printing and additive manufacturing offer reduction of lead time and less waste, they are yet to be made commercially viable. Lack of viable substitutes are expected to sustain the machining market in the short-term.
- Even though the profit margin is 10–15 percent, given the current economical situation, it is very difficult to maintain the profit percentage, since the machining work decreased and the suppliers were forced by the customer to reduce the prices.
The research methodology adopted for the report included:
- Experts with twenty years of domain experience
- Interaction with buyers
- Inputs from supply chain partners
Materials represent approximately 37 percent of the total costs, followed by labor for 39 percent, energy for 19 percent and overheads for 4 percent. The cost and proportion of input materials for machining differ based on the type of metal to be machined and the commodity cost fluctuations which are generally passed on to the customers. Design and complexity of the product, wastages, material availability/cost by region are other key factors influencing the cost structure.
The report also includes:
- Industry Classification
- Global Market Overview
- Key End-user Industry
- Global Market Maturity
Regional Market Analysis:
- Porter’s Five Force Analysis
- Drivers and Constraints
- Cost Structure Analysis
- Commodities Price Trend
- Industry Practices
- Value Chain
- Emerging Trends
About Beroe Inc.:
Beroe is the world’s leading provider of procurement intelligence and supplier compliance solutions. We provide critical market information and analysis that enables companies to make smart sourcing decisions—leading to lower costs, greater profits and reduced risk. Beroe has been providing these services for more than 13 years and currently works with more than 10,000 companies worldwide, including 400 of the Fortune 500 companies.
To learn more about Beroe Inc., please visit: http://www.beroeinc.com
SOURCE Beroe Inc.