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  1. Cutting Tools

Cutting Tool Orders Signal a Rebound

Nov. 18, 2020
A +14% increase in September consumption adds to the impression that manufacturers have begun their recovery, though double-digit year-over-year deficits show the scale of the recession.

Machine shops and other U.S. manufacturers purchased $156.1 million worth of cutting tools during September, +14.7% more than during August but -20.5% below the September 2019 total. As cutting-tool consumption is an index to the current rate of overall manufacturing activity, the September results reinforce the impression that domestic manufacturers are beginning the process of recovery from a recession that has been in process for about 12 months, but made more complicated by the halt in industrial activity due to the COVID-19 pandemic.

Through September, cutting-tool consumption totals $1.4 billion, meaning that the 2020 purchases trail the January-September 2019 volume by -23.1%.

All the figures are supplied by AMT-the Assn. for Manufacturing Technology and the U.S. Cutting Tool Institute in their jointly compiled Cutting Tool Market Report (CTMR.)

AMT/USCTI
A graph comparing the 12-month moving averages for durable goods shipments and cutting tool orders, demonstrating the relation of cutting tools to manufacturing activity. The September 2020 consumption total of $156.1 million was up 14.7% from August’s $136.1 million, but down -20.5% versus $196.3 million reported for September 2019.
A graph comparing the 12-month moving averages for durable goods shipments and cutting tool orders, demonstrating the relation of cutting tools to manufacturing activity. The September 2020 consumption total of $156.1 million was up 14.7% from August’s $136.1 million, but down -20.5% versus $196.3 million reported for September 2019.

"The year-over-year and year-to-date percentages seem to be correcting in the right direction as of September 2020,” observed Big Kaiser Precision Tooling president and CEO Chris Kaiser. “Back in April, the ‘doom and gloom’ forecast showed the year ending down 40% and fortunately that does not seem to be the case.”

The September U.S. Manufacturing Technology report, AMT’s monthly index to future manufacturing demand, showed strong indications of recovery in mold/die and housing-related manufacturing, but ongoing weakness in aerospace and oil-and-gas.

“Many of us in the cutting-tool industry also watch the machine tool orders and those numbers improved in the recent month as well,” Kaiser continued. “At this point we are optimistic about the fourth quarter. We are not counting on a large Christmas present but just looking for some steadiness in the market and no further shutdowns.”

AMT/USCTI
The month-by-month direction of cutting-tool consumption, September 2016 to September 2020. For the current year to-date, U.S. cutting-tool consumption stands at $1.4 billion, meaning 2020 is down -23.1% compared with the January-August 2019 period.
The month-by-month direction of cutting-tool consumption, September 2016 to September 2020. For the current year to-date, U.S. cutting-tool consumption stands at $1.4 billion, meaning 2020 is down -23.1% compared with the January-August 2019 period.
The CTMR presents cutting-tool consumption as an indicator of overall manufacturing activity, as cutting tools are used in production of components used by virtually every industrial sector. The consumption totals are reported by participating companies that represent the majority of the U.S. market for cutting tools, and the wide application of cutting tools across multiple industries is comparable to durable-goods orders, according to the report's authors.

According to Brad Lawton, chairman of AMT’s Cutting Tool Product Group, “we have seen an improvement of sales numbers, which is a whisper to reduce the uncertainty from the 2020 year of trauma. The cutting tool industry will recover, but we all know it will take time and we must be patient. Stay focused and we will see the numbers continue to improve.”