Machine Shops
Description
Companies in this industry use machine tools to modify metal, plastic, and composite materials to produce finished products. No major companies dominate the industry.
Worldwide, revenue for machine shops varies with manufacturing output. Because machine shops play a manufacturing support role, often operating as de facto subsidiaries of their customers, their work tends to be local.
The US machine shop industry includes about 18,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $37 billion.
COMPETITIVE LANDSCAPE
Demand depends on manufacturing activity. The profitability of individual companies is linked to engineering expertise and operating efficiency. Larger shops have the ability to invest in advanced production machinery. Smaller shops can compete effectively by serving specialized customers, or by providing engineering services. The US industry is highly fragmented: the 50 largest companies generate about 10% of revenue.
PRODUCTS, OPERATIONS & TECHNOLOGY
Machine shops are intermediaries generally performing various operations on unfinished parts or raw materials from manufacturers which are then returned. These parts or raw materials are returned to the manufacturer for further processing. They own and operate special machine tools that can perform a variety of operations, including drilling; boring (enlarging an existing hole); tapping (cutting threads inside a drilled hole); threading (cutting threads on a bolt); cutting; milling (removing material from a surface); and grinding (usually a finishing operation). These operations involve material removal, frequently with great precision. The bulk of machine shop work is performed on metal, but plastics and composite materials are also machined.
Major products and services of machine shops include machine shop job work and job orders, which account for more than 90% of the industry revenue. Other services include manufacturing of precision turned products, weldments and fabricated steel, and metal processing.
The machines that perform these operations are usually expensive and often computer-controlled. Machine tools vary by the type of operation they perform, the size of a piece they process, and the precision of their operations. Many are operated with computer numerical controls (CNC). Machine shops may own dozens of different machine tools produced by a variety of manufacturers. Modern machine shops are highly automated, with computer programs aiding the design of parts, as well as controlling the machines that are used to manufacture them. Parts may be moved from one machine to another manually or using robotics. Aside from a few US companies, many major machine tool makers are German, Japanese, or Swiss.
As the methods for machining have become more technologically complex, so too have the tools for managing shop operations. Many providers of customer relationship management (CRM) and enterprise resource planning (ERP) software, particularly those aimed at the small and mid-size business segments, offer application suites tailored for the manufacturing sector. There are also software vendors dedicated specifically to developing tools for managing machine shop processes. Such software can help businesses submit bids, order materials, schedule jobs, manage inventory, and track shipments.
Four major operating activities in machine shops are pre-production, machine setup, actual production, and quality control. Machine setup for a particular job can be time-consuming and can hugely affect costs. Major material costs for machine shops are the expensive, specially hardened l bits consumed in the various operations, including drilling bits, milling heads, cutting tools, and abrasives.
Worldwide, revenue for machine shops varies with manufacturing output. Because machine shops play a manufacturing support role, often operating as de facto subsidiaries of their customers, their work tends to be local.
The US machine shop industry includes about 18,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $37 billion.
COMPETITIVE LANDSCAPE
Demand depends on manufacturing activity. The profitability of individual companies is linked to engineering expertise and operating efficiency. Larger shops have the ability to invest in advanced production machinery. Smaller shops can compete effectively by serving specialized customers, or by providing engineering services. The US industry is highly fragmented: the 50 largest companies generate about 10% of revenue.
PRODUCTS, OPERATIONS & TECHNOLOGY
Machine shops are intermediaries generally performing various operations on unfinished parts or raw materials from manufacturers which are then returned. These parts or raw materials are returned to the manufacturer for further processing. They own and operate special machine tools that can perform a variety of operations, including drilling; boring (enlarging an existing hole); tapping (cutting threads inside a drilled hole); threading (cutting threads on a bolt); cutting; milling (removing material from a surface); and grinding (usually a finishing operation). These operations involve material removal, frequently with great precision. The bulk of machine shop work is performed on metal, but plastics and composite materials are also machined.
Major products and services of machine shops include machine shop job work and job orders, which account for more than 90% of the industry revenue. Other services include manufacturing of precision turned products, weldments and fabricated steel, and metal processing.
The machines that perform these operations are usually expensive and often computer-controlled. Machine tools vary by the type of operation they perform, the size of a piece they process, and the precision of their operations. Many are operated with computer numerical controls (CNC). Machine shops may own dozens of different machine tools produced by a variety of manufacturers. Modern machine shops are highly automated, with computer programs aiding the design of parts, as well as controlling the machines that are used to manufacture them. Parts may be moved from one machine to another manually or using robotics. Aside from a few US companies, many major machine tool makers are German, Japanese, or Swiss.
As the methods for machining have become more technologically complex, so too have the tools for managing shop operations. Many providers of customer relationship management (CRM) and enterprise resource planning (ERP) software, particularly those aimed at the small and mid-size business segments, offer application suites tailored for the manufacturing sector. There are also software vendors dedicated specifically to developing tools for managing machine shop processes. Such software can help businesses submit bids, order materials, schedule jobs, manage inventory, and track shipments.
Four major operating activities in machine shops are pre-production, machine setup, actual production, and quality control. Machine setup for a particular job can be time-consuming and can hugely affect costs. Major material costs for machine shops are the expensive, specially hardened l bits consumed in the various operations, including drilling bits, milling heads, cutting tools, and abrasives.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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