Metal Cutting and Machine Tools Market Forecasts and Helpful Tips for Machine Builders, Technology Vendors, and Manufacturers

As the metal cutting and machine tools market increasingly places digital transformation at the heart of operations, learn how the market will unfold through 2032 and what moves industry players need to make.

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Market Overview

Below is a list of the latest development and revenue forecasts for the global metal cutting and machine tools market.

  • The greatest challenge facing machine tool builders is the differing perceptions about digital transformation within the industry. Machine tool builders, notably in the United States, have been very conservative in terms of innovation.
  • Companies hesitant about digital transformation, such as Hardinge and Hurco, will see their market share dwindle as forward-thinking firms like EMAG and Makino rise to the top.
  • Machine tool manufacturers, such as DMG MORI, GROB, and the Gleason Corporation, are now starting to realize that they must invest in software to complement hardware—reacting to the need for turnkey, as-a-Service solutions.
  • Growing at a Compound Annual Growth Rate (CAGR) of 4.3%, the machine tool market will reach a Market Value Added (MVA) of more than US$245 billion in 2032.
  • China (US$68.8 billion) and the United States (US$30 billion) are the two largest regional markets in the machine tool space. Japan and Germany are the next two most significant regional markets (US$22.1 billion and US$21.1 billion in machine tool revenue, respectively, by 2032). Unsurprisingly, these four countries make up 58% of manufacturing revenue.
  • The three most significant market drivers for machine tools are:
    • New products facilitate the need for new machine tools.
    • Old equipment reaching the end of its lifecycle and requiring replacement.
    • New machine tool solutions being provided and incentivizing upgrades.
  • Special die and tool, die set, jig, and fixture manufacturing (NAICS 333514) is the most revenue-generating use case (27.5% of machine tool market MVA).

“The German machine tool market is forecast to see the highest CAGR (7.1%) due to the rapid changes in the industries it serves, such as automotive, currently undergoing an Electric Vehicle (EV) and autonomous platform shift, and the presence of large innovative machine builders, such as DMG MORI and GROB.” – James Prestwood, Analyst at ABI Research


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Key Decision Items

The following sections provide recommendations for the following machine tools market players: machine builders, technology vendors, and manufacturers—all of which have a vested interest in the digital transformation of metal cutting and machine tools.

These first two sections are for machine builders aiming to develop solutions that resonate with enterprises.

Machine Builders Must Adopt a Solution Business Model, Rather than a Product-Oriented One

Overall, software, services, and digital transformation are required for a standout sales pitch in the current machine tools market. Manufacturers are increasingly calling for machine builders to provide full turnkey solutions, where the product is designed, built, and installed fully and ready to operate. As supporting software is becoming one of the most critical elements of new machine design, machine builders can go a step further and sell their machines as a subscription service, with the provider managing and maintaining the asset.

A subscription-based model provides manufacturers with the option to avoid significant upfront Capital Expenditure (CAPEX) costs and instead transition these to Operational Expenditure (OPEX) costs, providing them with a greater incentive to integrate newly updated machinery into their production process. For these reasons, machine builders need to change their current go-to-market model from product-focused to solution-focused.

Establish Deep Ties with Leading Industrial Software Vendors

Industrial software is not only the future backbone of machine tools, but it’s a key pillar already today. Machine builders, as they are being called upon to design assets that work with both legacy forward-looking technologies, should view strategic partnerships with technology vendors as a critical step in achieving this balance.

As an example, striking a partnership with leading technology vendors in the Manufacturing Execution System (MES) software space would enable machine builders to better design their machines to integrate with future software. In the same vein, cloud hyperscalers, such as Amazon and Microsoftwill allow machine builders to develop a deeper understanding of how their products will need to function within the digital thread of smart factories. That’s because these cloud-based companies are the shopfront for the design and adoption of new software.

The next two sections provide guidance for technology vendors targeting the metal cutting and machine tools market.

Technology Vendors Need to Be Agile, Open, and Easy to Work With

Technology vendors focusing on the machine tools market must act as the technical bridge between the old and new forms of manufacturing. Their provision of technologies, such as data processing and management software, cloud, and industrial networks, to provide low-code, many-to-one, and agile software development, is critical to help propel manufacturers from their current state to building smart factories.

New software and solutions should be compatible with both legacy and new equipment, allowing this transition to be as smooth as possible. As machine builders increasingly integrate their own software into machine tool assets, technology vendors need to identify the gaps in the digital thread and fill them. Vendors that can provide the widest range of end-to-end solutions will be the most successful market players and always have the missing piece required for manufacturers as they implement new machine tools and build their digital threads.

Advocate for the Use of New Connected Machine Tools and Design Solutions

Industrial technology vendors touch almost every part of the production processes of manufacturers, which provides a unique position to advocate for smart machinery and smart factory adoption. Therefore, these companies must emphasize the value case and time frame for technology linkage and integration on the factory floor to highlight why this will benefit manufacturers.

Additionally, industrial technology vendors need to exemplify the use cases and Return on Investment (ROI) of new software that underpins new smart machine tools. Essentially, the more machine tools manufacturers purchase, the larger the market share available for supporting software and technology solutions. Technology vendors should be heavily championing the value of these new machines and design their software to encourage and enable their use.

Now, we take a look at some moves that manufacturers should make as they plan to digitally transform their operations and adopt new smart machine tool solutions.

Manufacturers Should Start Investing in New, Forward-Looking Machinery and Software

While retrofitting old legacy equipment with the Internet of Things (IoT) sensors and their supporting systems is more cost-effective than a complete replacement of legacy machinery, this is only a short-term fix. The elephant in the room is that legacy equipment is simply not designed for the smart factory world. For this reason, ABI Research expects the most competitive manufacturers to invest capital into new assets (e.g., machinery that fits into an open ecosystem and, software) and build comprehensive digital webs across their factories. This is in contrast to the manufacturers that apply a Band-Aid fix and attempt to digitally transform with legacy equipment.

Attract Talent by Amplifying Smart Manufacturing Technologies

Although it might appear counterintuitive, adopting a digital-driven approach and more technology—commonly associated with replacing labor, rather than attracting new labor—this practice is essential to bringing younger talent into traditional manufacturing industries. New digitally-able workers want to work with companies that share their vision and enthusiasm for the use of technology.

These young and talented workers will have seen and worked with cutting-edge technologies during their studies and will look to companies that will allow them to continue to engage with them. As the younger workforce continues to be less driven by compensation and more by interesting work conditions and learning opportunities, digitally forward-thinking companies will be those that see the most success in securing this coveted market talent. An excellent example of success in this is Tesla, which was able to apply the shine of Silicon Valley tech work to the unattractive features of automotive manufacturing.

Key Market Players to Watch

Dig Deeper for the Full Picture

In ABI Research’s Digital Transformation in the Metalworking and Machine Tool Industry research report, our analysts provided:

  • A detailed breakdown of the global machine tools market using revenue forecasts based on region and use cases.
  • An identification of how forward-looking technologies can be applied to manufacturing operations, including three useful case studies.
  • Insight into how machine tool builders and technology vendors can win over enterprises with software-first approaches.

The report also contains an overview of 24 solution providers’ efforts. To access this content, get the report today.

Not ready for the report yet? Check out our Digital Manufacturing Summit 2022: People at the Center of Digital Transformation Analyst Insight. This content is part of the company’s Industrial & Manufacturing Technologies Research Service.

Research report download on digital transformation in the machinery manufacturing industry