Abstract This article interviewed the Secretariat of the Tool Branch and several tool companies (mainly tool companies) by the Machine Tool Association through visits and letter adjustments, and gained a preliminary understanding of the operation of the small tool industry in China and the current status of the company, and formed some rough understandings. A brief summary is as follows. 1. Industry and enterprise...
Recently, in accordance with the work plan of the media department of China Machine Tool Industry Association, the author interviewed the Secretariat of the Tool Branch and several tool companies (main tool companies) through visits and letter adjustments. A preliminary understanding has formed some superficial understandings, which are briefly summarized as follows.
1. Industry and corporate profile
It is understood that 2017 is a rare good year in the history of the tool industry. It has maintained a boom in production and sales for four consecutive quarters. Sales revenue has increased by more than 20% year-on-year, and exports have also hit a new high in recent years. Entering 2018, the tool industry first continued the rapid growth of 2017 and continued to maintain rapid growth. However, with the gradual decline of the 3C and automotive industries, starting from the second half of 2018, the growth rate of the tool industry (mainly the small tool industry) has slowed. By the first half of 2019, the tool industry was consolidating at a high level, with a steady decline. From the relevant data of the 40 member companies participating in the monthly report of the Tool Branch, the year-on-year increase in sales revenue in the five months of April, May, June, July and August was -3.3%, -3.4%, -4.4% and -6.7%, respectively. -8.1%, sales revenue increased by -5.2%, -10.4%, -4.6%, -19.3%, and 2.7%, respectively, and profit increased by -9.9%, -14.4%, -6.5%, -8.8%, and- 10%, downward pressure is increasing month by month. At the same time, the export of tool products in the first quarter of 2019 also fell sharply, with a year-on-year increase of -15.2%. Considering the overall situation of the machine tool industry, the decline of the tool industry, especially the small tool industry, has a strong correlation with the general environment and is slightly lagging behind. It is more affected by the obvious decline in user fields such as automobiles and 3C.
Specific to the enterprise level, the situation is different.
According to the statistical data of China Machine Tool Industry Association, Shanghai Tool Factory Co., Ltd. (Shanggong) has been operating well in recent years, and its annual total sales and total profits are at a relatively good level. According to the data from January to May 2019, the sales of Shanggong's high-speed steel twist drills, high-speed steel wire cones, and solid carbide tools have declined to a certain extent, but due to its insistence on technological innovation and structural adjustments, it is also used in construction machinery and aviation. Aerospace and other fields performed well, and its total product profit increased by 10.5% year-on-year. In the first half of 2019, domestic and foreign sales of Zhuzhou Diamond Cutting Tools Co., Ltd. (Zhuzhou Diamond or Zhuzhu) declined slightly year-on-year, but through active adjustments to market strategies, sales rebounded in May from the previous month, while the year-on-year decline narrowed, and the downward trend in marketing was effectively suppressed . Guilin Guanglu Digital Measurement & Control Co., Ltd. (Guilin Guanglu or Guanglu for short) produced a slight decrease of about 1%, and sales increased by 15% (30% in the first quarter). From the second quarter onwards, it was obvious that orders fell seriously. Quarterly sales are the same as last year, which is rare in Guanglu in the past three or four years. Sentai Inge (Chengdu) Numerical Control Tool Co., Ltd. (Sentai Inge) performed well in the first half of 2019, with a gross production value of approximately 120 million yuan, a year-on-year increase of 21%; newly signed contracts were about 83 million yuan, a year-on-year increase of 16% . Hangzhou Hangbeng Tools Co., Ltd. (including Hangzhou Hanggong Tools Co., Ltd., referred to as Hangbeng) in the first half of 2019 has a steady growth in production and basically balanced production and sales. The output of taps, dies and set cutting tools has increased rapidly year-on-year. Xiamen Jinlu Special Alloy Co., Ltd. (Jinlu or Xiamen Jinlu for short) reflects that the growth rate of order demand has slowed down compared to 2018, but it is still in normal operation. Zhejiang Xinxing Tools Co., Ltd. sales grew by 35.1% in the first half of the year, exports grew by 41.1%, and production and sales grew rapidly.
In the first half of 2019, tool companies were more or less affected by Sino-US trade frictions. The most directly affected is Zhuzhou Diamond. First of all, a 25% increase in tariffs increased the export and promotion costs of cutting tools, which weakened their competitiveness in the US market. Secondly, the current tax list includes a large number of tool application industries such as engines and electric motors, which will indirectly cause a significant decline in exports of related products. In addition, some user companies may consider transferring production lines from domestic to Vietnam, ASEAN and other countries, resulting in shrinking tool demand. If the United States further implements an increase of 25% tariffs on 3C industries such as mobile phones and tablet computers, it will cause a greater drop in the demand for cutting tools in related industries. The Sino-US trade friction has a greater indirect impact on Guanglu Company, and the overall decrease in tool orders due to the impact of its service areas. Hangbian Tools also stated that the Sino-US trade friction caused its orders in foreign markets, especially the US market, to become unstable in the first half of 2019. It is expected that US customers will significantly reduce orders and demand price cuts in the second half of 2019, which will impact its export market.
From the feedback of enterprises, the demand for tools in different fields and the market performance of different tool varieties are very different, which fully reflects the specific and subdivided characteristics of the tool industry. At present, the areas with good demand for cutting tools mainly include aerospace, military, energy, construction machinery, rail transit, and heavy machinery industries. Shanggong said that as the country attaches great importance to national defense and aerospace industry, the aerospace industry will become another field of vigorous development after the automotive industry. Especially in the field of aerospace parts processing, it has almost become the starting point of various tool manufacturers at home and abroad, and they have launched a series of special aviation tools. Although the overall scale effect of aviation is not enough at present, since various tool manufacturers have not entered the formal application system, the market still needs a process of cultivation, but the development potential is huge. At the same time, construction machinery, rail transit and other general machinery fields have developed relatively well in the past two years. The heavy machinery industry has ushered in a new round of economic upswing, and demand-side new kinetic energy conversion continues to accelerate. Among them, the metallurgical industry, mining, etc., after continuing to heat up in 2018, still maintained a growth trend in the first half of 2019.
In terms of tool types, overall, the market demand for high-end products with high technical content that can replace imports is strong, and orders are good. Different companies have different types of tools. New products such as economical hydraulic tool holders, quick-change adhesive chucks and high-efficiency reaming systems launched by Sentai Inge in 2019 have been highly praised by the market and have driven sales growth. The taps, dies and set cutting tools of Hangbian Tools grew rapidly year-on-year. Guanglu's micrometer varieties and vernier calipers have saturated orders and are in short supply.
2. Main problems and difficulties
The size is small and the attention is insufficient. Due to the small size of the tool industry, the market size is only tens of billions, and it is even less than the annual marketing income of a single company in some fields. For a long time, it has been regarded as a subsidiary of machine tools and has not received enough attention. The state supports the industry. Strength needs to be strengthened. Insufficient investment in basic industry research and product R&D. The mid-to-high-end market has long been occupied by brands such as Europe, America, Japan and South Korea, and it is difficult for domestic products to make major breakthroughs. In fact, as an important part of cutting processing, cutting tools directly affect the level of cutting processing and are one of the important factors to measure the level of manufacturing in a country.
The problem of talent is outstanding. The problem of talents is a very prominent common problem in my country's machine tool industry and even the entire machinery manufacturing industry. It has been serious enough to restrict the overall progress and development of the industry. Zhuzhou Diamond believes that the domestic tool industry started late and has a weak foundation. The development process in just a few decades is far from sufficient in terms of technology precipitation or talent reserve. Sentaiying said that the most important problem facing companies is the shortage and loss of high-end technical talents. Xiamen Jinlu believes that the tool industry has a greater demand for professional and management talents, but it is currently difficult to recruit. Guanglu reported that the company is located in an underdeveloped area like Guangxi, and the overall wage level is not high. It is difficult to recruit high-end R&D talents, and the current problem is difficult to alleviate.
Some companies reflect limited capital investment. Shanggong reflects that due to the continuous increase in the price of raw materials for upstream products, the production costs of products continue to rise, and product exports are affected. At the same time, due to the slowdown in capital turnover, market demand has fallen, customer inventories have continued to rise, and the overall market situation is not optimistic. Guanglu also encountered financial problems, mainly due to fierce competition among peers, low product profits, and because of the small size of the measuring tool market, the slow growth rate, the lack of policy and financial support, and the limited investment by the company’s own funds, and the inability to accelerate technology The pace of innovation and product innovation. Companies such as Xiamen Jinlu also reported rising operating costs and greater pressure on cash flow.
In addition, some companies report increasing pressure on environmental protection. For example, Shanggong is located in the international metropolis of Shanghai, but it is dominated by traditional manufacturing. How to ensure that the production process meets environmental protection requirements while ensuring that production capacity is not or less affected has become a more difficult problem for the company.
3. Work hard to transform to meet the needs of mid-to-high-end markets
Similar to the whole machine tool industry, most of the high-end market in my country's tool industry is occupied by imported brands. According to the Secretariat of the Tool Branch of the Machine Tool Association, of my country's total consumption of 42.1 billion tools in 2018, imported tools (including overseas brands produced and sold in China) accounted for 14.8 billion, accounting for 35%. In the face of increasing operating pressure in 2019 and beyond, tool companies are striving to explore the path of transformation and upgrading.
Achieve breakthroughs in key areas: Regarding the current economic situation, Zhuzhou Diamond believes that the macro economy may still be under downward pressure. Under the influence of many factors such as Sino-US trade friction, the cutting tool industry may continue to fall in the second half of the year. Zhuzhou Diamond will continue to take proactive measures to respond to changes in the market situation. On the one hand, it will continue to strengthen market promotion in the second half of the year, deepen its key application markets, and increase market share; on the other hand, it will continue to focus on aerospace, military, automotive, energy, etc. The medium and high-end cutting tools in key industries carry out special research and development to further expand the market, and strive to break through more foreign technical barriers, and occupy a larger share in the medium and high-end cutting tool market.
Shanggong has conducted a lot of research on my country's aviation manufacturing industry, which is in a period of rapid development, and pointed out that the development of new aircraft and large aircraft poses challenges for aviation manufacturing and processing, and puts forward higher requirements for the overall application of tools. From the perspective of the machined parts of the aircraft, the required tools can be subdivided into processing tools such as engines, wings, fuselages, landing gears, etc. The processing of engines can also be divided into gates, blades, blisks, diffusers, and bearing shells. Body etc. From the perspective of different processed materials, it can be subdivided into special tools for processing different materials such as HRSA high-temperature heat-resistant alloys, aluminum alloys, titanium alloys, carbon fiber reinforced plastics, and high alloy steels. In terms of tool types, it can be subdivided into overall high-speed steel tools, solid carbide tools, indexable tools, and PCD welded tools. According to statistics, in the field of aircraft manufacturing, high-speed steel tools account for about 60% of the total amount of cutting tools, cemented carbide tools account for about 35% of the total number of tools, and superhard tools (cubic boron nitride, diamond) The total amount of all tools does not exceed 5%. This has a lot of room for development in terms of relatively obvious advantages in the design, manufacturing, and application of high-speed steel tools, but the overall matching capabilities of tools need to be further improved.
Targeting the mid-to-high-end market: On the basis of the original product series, Guanglu will increase the research and development of high-end series products, aiming at the international high-end similar product technology, and compete with the international high-end technology. The target market is the replacement of advanced products, and then the development of the international high-end market. Guanglu stated that it will unswervingly follow the mid-to-high-end route, take technology research and development as the pioneer, consolidate the company's basic strength, and create higher value for customers. Hangbian Tools stated that it will pay more attention to the export market, pay attention to the impact of Sino-US trade friction, adjust product layout in time, and further develop markets in Europe and Southeast Asia. At the same time, improve product quality, increase investment in technological transformation and production scale, and promote and improve digitalization and 8S management.
Broaden the user area. Regarding the development strategy and prospect forecast for the second half of 2019, Sentai Inge said that the decline in the automotive manufacturing industry in the first half of the year has affected growth expectations to a certain extent. In the second half of the year, efforts will be made to expand the user area, targeting the energy and power industry and construction machinery. Layout in key industries such as electronics, electronics and aerospace; at the same time, it is necessary to meet the requirements of more auto manufacturing companies to reduce costs and increase efficiency, and to improve product quality and stability; in the next few years, we will strive to improve our own strength and consolidate Foundation, seize opportunities, and stand out in the wave of transformation and upgrading.
Shanggong believes that in the field of construction machinery and rail transportation, the demand for traditional tools, especially large-size tools, has increased, such as large-size high-speed steel drill bits, large-size spiral flute taps above M36, and solid carbide internal cooling The market demand for deep hole twist drills and other products has increased.
Regarding the future development prospects of the industry, the interviewed companies are able to rationally view the current situation and future trends, and are full of confidence and expectation in the policies adopted by the state to support entities and reduce taxes and fees. At the same time, he said that according to its own characteristics and industry situation, it will actively take practical and important measures to improve product technology and quality, strengthen management, promote the integration of informatization and industrialization, participate in the construction of information technology, and will become passive in response to the impact of Sino-US trade friction. Take the initiative to better develop domestic cutting tools, strive to realize import substitution, and make greater contributions to the revitalization of the machine tool industry.
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