Output falls as profits dip

Machine Tools

The Machine Tool Technologies Association expects UK demand for machine tools to fall by 6% this year from its 1997 high of just over £1bn.

This will follow a drop in exports of 11% in 1997, following periods of strong export growth averaging 21% over two years. The combined effect will be a cut in total production in 1997 of around 8%, to around £774m compared with £860m in 1996, measured at today’s prices.

Exports, though, should recover in 1998, based on a recovery within mainland European economies. Imports are expected to slow to £710m, representing year-on-year growth of 4%, but from an already high level, leaving a widening trade gap of £205m.

But this deficit, according to the MTTA, is a blip, representing the working through of large projects, including delivery of high-value special-purpose machines for semiconductor manufacture.

To defend market share, many builders cut prices by reducing margins. Sales into the European Union, the sector’s largest market, were sluggish and competition tough.

There is one glimmer of light: the strong pound will lower the cost of high-value imports such as a CNC controller, which can amount to half the cost of a new machine tool.

Sue Stuckey