The downturn in the machine tool industry continues to linger through a harsh winter. According to an analysis of operational data released by the Machine Tool Association, in the first ten months of the year, 217 enterprises under the association's supervision achieved a total industrial output value of nearly 80 billion yuan, marking an 18% year-on-year decline. Among these, the rolling function and CNC system sectors experienced the steepest drop, with declines exceeding 35%, while cutting tools and machine tool electrical components also saw significant drops, though slightly less, at over 4%.
Although the association did not release specific profit figures for its key companies, data from the National Bureau of Statistics suggests that the cutting machine industry recorded a profit of 3.53 billion yuan in the first nine months, a 39% decrease compared to the same period last year. The product sales revenue margin dropped to 3.6%, a decrease of 1.8 percentage points. Meanwhile, the forming machine tool industry reported a profit of 2.62 billion yuan, down 4.5% year-on-year, with a profit margin of 6.2%, a 0.6 percentage point decline.
It’s clear that the cutting machine sector is facing more severe challenges than the forming machine industry. Zhang Zhigang, chairman of Jinan No. 2 Machine Tool, told China Industry News: "I just returned from the U.S. Out of the five press lines involved in the Ford project, one has already been installed and commissioned, another is en route, and a third is still in the factory. However, domestic orders for auto press lines have significantly decreased, making our situation even more difficult this year."
Jinchee Machine Tool, a leading domestic company with products spanning both cutting and forming industries, was previously celebrated for winning the Ford project last year. But now, it's struggling amid reduced demand.
Huang Zhao, chairman of Wuhan Heavy Machine Tool Group and former association chairman, said the heavy-duty machine tool industry has been in a sharp decline since last year. Orders are shrinking, inventory is piling up, and users are delaying deliveries or even canceling advance payments.
The market slump has not only led to declining profits but also a surge in inventory. From January to September, finished product inventories in the machine tool industry rose by 22.7% year-on-year, with cutting machine tools growing by as much as 44.8%. By the end of October, inventories across seven key industries had increased by 31.9% year-on-year, with total inventory hovering around 15 billion yuan since April.
While some sectors like machine tool accessories and electrical components saw smaller inventory increases, others faced sharper growth. Gold cutting machine tools rose by 34.3%, rolling function components by 40.9%, and numerical control systems by a staggering 100%.
Wang Liming, executive vice president of the Machine Tool Association, attributed the crisis to a slowdown in China’s macroeconomic growth since last year, tighter domestic manufacturing investment, weak demand, and the ongoing impact of the international financial crisis and European debt crisis. As a result, many companies are turning their attention to the global market.
Despite this, exports remained stable in the first ten months, though the growth rate has been steadily decreasing. By August and October, some months even showed negative growth, signaling a downward trend in the international market.
Structural imbalances within the industry require transformation. While the overall market is weak, demand for medium and high-end CNC machines and custom products is rising. Import data supports this, showing a 5.6% increase in metal processing machine tool imports from January to October, with the growth rate remaining upward despite a slight slowdown in October.
Chen Huiren, deputy secretary general of the association, pointed out that current industry challenges include weak competitiveness in high-end products, production capacity imbalances, and increasing homogenization. He emphasized that the gap between domestic and foreign high-end machine tools remains significant, with most domestic products still in early imitation stages, failing to meet actual needs.
This lack of innovation stems from past technological transformation efforts, which focused heavily on hardware rather than soft infrastructure like R&D and innovation capabilities. As a result, many products remain mid- to low-end and highly standardized.
Product homogenization has led to price wars, and the situation is further complicated by Japanese and German companies expanding into the mid-range market, intensifying competition for Chinese manufacturers.
Despite the difficulties, some industry leaders remain optimistic. He Minjia, chairman of Guangzhou CNC, noted that while the numerical control system sector has suffered, the robot business is growing rapidly. Similarly, Zhang Wanmou of Yantai Global Machine Tool Accessories Group acknowledged current struggles but expressed long-term confidence.
Industry officials, including Wang Weiming from the Ministry of Industry and Information Technology and Yu Bin from the State Council’s Development Research Center, believe the environment will improve as special projects and strategic emerging industries gain momentum. They also highlighted the need for enterprises to focus on long-term development, product quality, and innovation rather than short-term gains or scale expansion.
As the industry navigates this challenging phase, transformation is essential. Companies must shift from quantity-driven growth to quality-focused development, addressing structural issues and enhancing competitiveness. Though the road ahead is tough, the foundation built over the past decade provides hope for future growth.
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