Machine Tools & Accessories

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-[[Image:MTA_logo.jpg|left‎]] The Machine Tools & Accessories industry manufactures products used to manufacture other products. Bearings, waterjet cutting machines, and engine lathes are all manufactured by these companies and sold to several end markets -- from the [[Auto Makers|automotive industry]] to the [[Energy|energy industry]]. China is the number one consumer of machine tools, amassing 23% of the total world consumption.<ref name=AR>[http://www.hardingeus.com/index.asp?pageId=111 HDNG 2007 Annual Report]</ref> The industry is an oligopoly, as it is dominated by three companies: [[Timken Company (TKR)|Timken Company]], [[Stanley Works (SWK)|Stanley Works]], and [[Kennametal (KMT)|Kennametal]]. +The Machine Tools & Accessories industry makes tools used to manufacture other products. Bearings, waterjet cutting machines, and engine lathes are all made by these companies and sold to several end markets -- from the [[Auto Makers|automotive industry]] to the [[Energy|energy industry]]. Three companies dominate the machine tools & accessories market: [[Timken Company (TKR)|Timken Company]], [[Stanley Works (SWK)|Stanley Works]], and [[Kennametal (KMT)|Kennametal]].
-Since machine tools companies sell products to companies in other end markets, the success of machine tools companies depends upon the success of these end markets. Companies such as TKR and KMT have seen adjustment periods due to declines in the [[U.S. Housing Market]] and [[Auto Makers|automotive industry]], while companies such as [[RBC Bearings (ROLL)|RBC Bearings]] and [[Kaydon (KDN)|Kaydon]] have seen success creating niche products for the [[wind energy]] and [[Aerospace & Defense|U.S. Military]], respectively. The companies rebuilding from the automotive and housing decline have expanded internationally. China and India have had soaring GDPs in the past five years, so companies such as TKR and KDN have set up facilities in those countries. Also, machine tools companies have been pressured by rising [[steel prices]]. These companies have installed more efficient manufacturing operations and have tried to pass on these costs to consumers. +Since machine tools companies sell products to companies in other end markets, the success of machine tools companies depends upon the success of these end markets. Companies such as TKR and KMT have suffered due to declines in the [[U.S. Housing Market]] and [[Auto Makers|automotive industry]], while companies such as [[RBC Bearings (ROLL)|RBC Bearings]] and [[Kaydon (KDN)|Kaydon]] have seen success creating niche products for the [[wind energy]] and [[Aerospace & Defense|U.S. Military]] industries, respectively. The automotive and housing declines have enticed companies to expand internationally, particularly to the booming Chinese and Indian economies (China is the number one consumer of machine tools, amassing 23% of the total world consumption<ref name=AR>[http://www.hardingeus.com/index.asp?pageId=111 HDNG 2007 Annual Report]</ref>). Rising [[steel prices]] plague the industry wherever it goes, however, forcing many of them to install more efficient manufacturing operations and to pass on rising costs to consumers, reducing demand and putting heavy pressure on margins.
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*[[Thermadyne Holding (THMD)]] *[[Thermadyne Holding (THMD)]]
-===Bearings===+Yakang Bearing Supplies, having been engaged in bearing industry for many years, is a professional trading agent and exporter of world-famous brand bearings. We devote ourselves to providing original, company sealed and brand new SKF bearings, FAG bearings, INA bearings, NSK bearings,TIMKEN bearings, NTN bearings, Nachi bearings, KOYO bearings, IKO bearings, FYH bearings, etc. For so many years business cooperation, we had bulit strong business relationships with the mentioned brands' partners, so our company has great advantage over any other sources in supplying the above bearings.
-Bearings have "reinvented the wheel," such that bearings make wheels roll faster and smoother. Bearings are made from metals and plastics, and are often lubricated to eliminate friction. Every wheel-based creation, from military tanks to skateboards, are constructed using bearings. Given their friction-eliminating, motion-friendly properties, bearings are popular in the [[Auto Makers|automotive]] industry and [[aerospace & defense]] industry. +
-====Companies that Manufacture Bearings====+
-*[[Timken Company (TKR)]] + 
-*[[RBC Bearings (ROLL)]] + 
-*[[Kaydon (KDN)]]+ 
-*[[NN (NNBR)]]+In order to supply bearings timely, we have set up large warehouses in some main port cities in China, such as Hongkong, Shanghai, Shengzhen, Ningbo and Tianjin Ports, etc, which enables us to supply bearings direactly from stock and saves time spent in domestic transportation and export custom clearance. We mainly have stock of deep groove ball bearings,cylindrical roller bearings, taper roller bearings, self aligning ball bearings, thrust ball bearings, rolling mill bearings, spherical roller thrust bearings, etc. We can supply some uncommon bearings such as non-standard bearings, linear bearings, automobile bearings, Mega-bearings, railway bearings, joint bearings, high temperature, super precision bearings, etc as well.
 + 
 + 
 + 
 +In conclusion, our company has an abundant stockage of various bearings and quick delivery. You may just feel free to contact us whenever you are in need of any kind of bearings. It would be our great honor to develop business cooperation with esteemed companies in this field.
===Other Machine Tools & Accessories=== ===Other Machine Tools & Accessories===
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*[[CompX International (CIX)]] *[[CompX International (CIX)]]
*[[Milacron (MZIA)]] *[[Milacron (MZIA)]]
- 
-===[[Timken Company (TKR)]]=== 
-Timken is the world's largest manufacturer of tapered roller bearings and alloy seamless mechanical steel tubing, though it also makes other bearings and steel alloys for industries ranging from [[aerospace & defense|defense]] to [[oilfield services]] to [[wind energy]]..<ref>[http://www.sec.gov/Archives/edgar/data/98362/000095015208001527/l30237ae10vk.htm#112 TKR 2007 10-k, Item 1: Business, page 1]</ref>TKR leads the industry in market cap and total revenue.<ref>[http://biz.yahoo.com/ic/ll/624tor.html Yahoo! Finance: Machine Tools & Accessories, Leaders and Laggards]</ref> Steel alloy manufacturing makes TKR unique in the industry. 
- 
-===[[Stanley Works (SWK)]]=== 
-Stanley Works makes tools - construction tools, industrial tools, even the kind of tools you get at Home Depot and give your dad on Father's Day - as well as home security systems. In 2007, Stanley Works led the [[machine tools & accessories]] industry in market cap ($3.8 billion), return on equity (20.53%), and low P/E ratio (11.93).<ref>[http://biz.yahoo.com/ic/ll/624mkt.html Yahoo! Finance: Machine Tools and Accessories Leaders and Laggards]</ref> SWK has distinguished itself by using branding techniques, such as having a $42.5 million advertising budget in 2007 and having a sponsorship in NASCAR. <ref>[http://www.sec.gov/Archives/edgar/data/93556/000095013608000877/file1.htm SWK 2007 10-k, Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations, page 18]</ref> 
- 
-===[[Kennametal (KMT)]]=== 
-Kennametal is an industrial equipment manufacturer, particularly metal-cutting tools, drill bits, and other pieces of equipment where resistance to wear is required. Kennametal focuses on staying on the cutting-edge of manufacturing tools, so products made within the last five years contribute 40% to KMT sales.<ref>[http://www.sec.gov/Archives/edgar/data/55242/000095015207006922/l26682ae10vk.htm KMT 2007 10-k, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operation, page 12]</ref> KMT has cut costs using its Lean Initiative program; in the first year of the program, 2005, the company saved $35 million and increased net margins by 2.5%.<ref>[http://seekingalpha.com/article/73900-kennametal-inc-f3q08-qtr-end-03-31-08-earnings-call-transcript Seeking Alpha, "Kennametal Inc. F3Q08 Earnings Call Transcript," 04/28/08]</ref> 
- 
-==Competitors== 
- 
-===[[Kaydon (KDN)]]=== 
-Kaydon primarily sells friction control bearings and filtration products, and is the leading manufacturer of wind turbine bearings. KDN's sales total is 18% as large as KMT's sales total.<ref>[http://biz.yahoo.com/ic/ll/624mkt.html Yahoo! Finance: Machine Tools and Accessories Leaders and Laggards]</ref> To compete in the [[Machine Tools & Accessories|machine tools]] industry, KDN has established itself as the market sales leader of a booming niche market -- [[wind energy]]. This strategy gave KDN higher 2007 revenue growth than [[SWK]], [[TKR]], and [[KMT]].<ref>[http://biz.yahoo.com/ic/ll/624mkt.html Yahoo! Finance: Machine Tools and Accessories Leaders and Laggards]</ref> 
- 
-===[[RBC Bearings (ROLL)]]=== 
-RBC Bearings makes plain, roller, and ball bearings, and sells them to aerospace and industrial end markets. ROLL competes in the industry by producing niche military products. In 2008, ROLL had backlog of $217.7 million, a 23% growth from 2007 due to increased military replacement parts for the [[Iraq War]].<ref>[http://www.sec.gov/Archives/edgar/data/1324948/000114420408032396/v115639_10k.htm ROLL 2008 10-k, Item 1: Business, page 5]</ref> 
- 
-===[[Hardinge (HDNG)]]=== 
-Hardinge has manufactured engine lathes, a metal cutting machine, for other a century and is now selling these machines to large industrial markets such as [[aerospace & defense|aerospace]] and [[energy]]<ref>[http://www.hardingeus.com/index.asp?pageId=124 Hardinge website, "About Us"]</ref> Unlike its competitors, HDNG is based in Europe and has a strong sales presence outside of North America. European sales, at $170.9 million, accounted for half of HDNG's 2007 annual sales. HDNG was particularly strong in Germany and China. China is the number one consumer of machine tools with annual consumption of over $15 billion, approximately 23% of total  
-world consumption.<ref name=AR>[http://www.hardingeus.com/index.asp?pageId=111 HDNG 2007 Annual Report]</ref> 
- 
-===[[Flow International (FLOW)]]=== 
-In 2007, FLOW's sales total is 4.36% as large as its biggest machine tools competitor, TKR. FLOW has been able to compete in this industry by producing a niche product: waterjet machine tools. FLOW has claimed 60% of the global waterjet market.<ref name=FLC>[http://www.flowcorp.com/about-flow.cfm?id=102 Flow website, "Company"]</ref> [[Airbus]] and [[Mitsubishi Heavy Industry]] are both large customers, and have awarded FLOW multi-million dollar contracts, including a $30 million contract from Airbus.<ref>[http://www.marketwatch.com/news/story/flow-international-corporation-begin-work/story.aspx?guid=%7BEB40F94F-F7D0-496E-B102-8A6E1335EB3B%7D&dist=hppr MarketWatch, "Flow International Corporation to Begin Work on the Airbus Contract"]</ref> 
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| width="100" | [[NN (NNBR)]] <ref>[http://www.sec.gov/Archives/edgar/data/918541/000100579408000084/nn10k123107.htm NNBR 2007 10-k, Item 6: Selected Financial Data, page 17]</ref> | width="100" | [[NN (NNBR)]] <ref>[http://www.sec.gov/Archives/edgar/data/918541/000100579408000084/nn10k123107.htm NNBR 2007 10-k, Item 6: Selected Financial Data, page 17]</ref>
- 
-|- 
-|bgcolor="#ececec"| Market Cap $Mil 
-|299.57 
-|3,520.00 
-|228.32 
-|80.17 
-|161.20 
-|818.90 
-|206.27 
-|2,830.00 
-|3,800.00 
-|1,690.00 
|- |-
|bgcolor="#ececec"| Revenue $Mil |bgcolor="#ececec"| Revenue $Mil
-|217.28 
|5,236.02 |5,236.02
-|493.98+|4,483.80
-|177.68+|2,385.49
-|356.32+|451.38
|306.06 |306.06
 +|213.44
 +|356.32
 +|493.98
 +|177.68
|421.29 |421.29
-|2,385.49 
-|4,483.80 
-|451.38 
|- |-
|bgcolor="#ececec"| Gross Profit $Mil |bgcolor="#ececec"| Gross Profit $Mil
-|92.14 
|1,053.83 |1,053.83
 +|1,692.20
 +|841.56
 +|184.30
 +|100.11
 +|90.77
 +|107.41
|154.35 |154.35
|45.23 |45.23
-|107.41+|84.27
-|100.11+
-|84.27+
-|841.56+
-|1,692.20+
-|184.30+
|- |-
|bgcolor="#ececec"| Net Profit Margin % |bgcolor="#ececec"| Net Profit Margin %
-|2.00% 
|4.19% |4.19%
-|2.14%+|7.51%
-|5.05%+|7.50%
 +|17.22%
 +|9.30%
 +|8.72%
|4.19% |4.19%
-|9.30%+|2.15%
 +|5.05%
| -0.28% | -0.28%
-|7.50% 
-|7.51% 
-|17.22% 
|- |-
|bgcolor="#ececec"| Operating Margin % |bgcolor="#ececec"| Operating Margin %
-|2.37% 
|6.22% |6.22%
-|8.97%+|10.06%
 +|11.29%
 +|24.65%
 +|16.96%
 +|8.93%
 +|6.42%
 +|8.97%
|8.75% |8.75%
-|6.42% 
-|16.96% 
|2.65% |2.65%
-|11.29% 
-|10.06% 
-|24.65% 
|} |}
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===An oligopoly of [[Timken Company (TKR)]], [[Stanley Works (SWK)]], and [[Kennametal (KMT)]] dominate the industry.=== ===An oligopoly of [[Timken Company (TKR)]], [[Stanley Works (SWK)]], and [[Kennametal (KMT)]] dominate the industry.===
 +The machine tools and accessories industry is controlled by three companies: TKR, SWK, and KMT. Each of these three companies had 2007 revenues in excess of $2 billion. The rest of the companies in this industry had 2007 revenues less than $500 million. The rich get richer in this industry, and if a smaller-cap company is bidding for an acquisition, sponsorship, or new technology, one of the triad generally has the ability outbid with its pocket change.
 +
 +The smaller cap companies have competed with the oligopoly by focusing on manufacturing niche products for one end market. By focusing on one end market, the smaller-cap companies can create unique products and become experts for that industry. For example, KDN's sales total is 18% as large as KMT's sales total.<ref>[http://biz.yahoo.com/ic/ll/624mkt.html Yahoo! Finance: Machine Tools and Accessories Leaders and Laggards]</ref> To compete in the [[Machine Tools & Accessories|machine tools]] industry, KDN has established itself as the market sales leader of a booming niche market -- [[wind energy]]. This strategy gave KDN higher 2007 revenue growth than [[SWK]], [[TKR]], and [[KMT]].<ref>[http://biz.yahoo.com/ic/ll/624mkt.html Yahoo! Finance: Machine Tools and Accessories Leaders and Laggards]</ref> In 2007, FLOW's sales total was 4.36% of its biggest machine tools competitor, TKR. FLOW has been able to compete in this industry by producing a niche product: waterjet machine tools. Thanks to this focus, FLOW has claimed 60% of the global waterjet market.<ref name=FLC>[http://www.flowcorp.com/about-flow.cfm?id=102 Flow website, "Company"]</ref>
===End Markets determine Machine Tools Company Success.=== ===End Markets determine Machine Tools Company Success.===
-The primary consumer of machine tools products are companies of other industries. Hence, the success of machine tools companies is contingent upon the success of the companies they sell to. The oligopoly companies ([[Timken Company (TKR)|TKR]], [[Kennametal (KMT)|KMT]], and [[Stanley Works (SWK)|SWK]]) were affected by the declining [[U.S. Housing Market]] and [[Auto Makers|automotive industry]]. Home construction is a primary buyer of SWK products, as consumers use SWK tools for do-it-yourself and home construction. The [[Auto and Truck Industry|automotive industry]] affects Kennametal's second-largest end market, on-highway vehicles (28% of sales). Historically, the oligopoly has profited from the automotive and housing markets. Since the decline of these markets, the oligopoly companies have had to revamp their portfolios. +The primary consumer of machine tools products are other industries. Hence, the successes of machine tools companies are contingent upon the successes of the companies they sell to. The oligopolists ([[Timken Company (TKR)|TKR]], [[Kennametal (KMT)|KMT]], and [[Stanley Works (SWK)|SWK]]) were negatively affected by the declining [[U.S. Housing Market]] and [[Auto Makers|automotive industry]] in 2007 and 2008. Home [[construction]] is a primary buyer of SWK products, as SWK tools are used for do-it-yourself projects and home construction. The [[Auto and Truck Industry|automotive industry]] affects Kennametal's second-largest end market, on-highway vehicles (28% of sales). Historically, the oligopoly has profited from the automotive and housing markets. Since the decline of these markets, the oligopoly companies have had to revamp their portfolios.
-Other companies, such as [[RBC Bearings]] and [[Kaydon]], have seen success due to success in their niche product markets. In fiscal 2008, an estimated 21.5% of RBC Bearing's net sales were to the U.S. Military.<ref>[http://www.sec.gov/Archives/edgar/data/1324948/000114420408032396/v115639_10k.htmste ROLL 2008 10-k, Item 1: Business, page 8]</ref> This gave RBC a backlog of $217.7 million, a 23% growth from 2007 due to increased military replacement parts for the [[Iraq War]].<ref>[http://www.sec.gov/Archives/edgar/data/1324948/000114420408032396/v115639_10k.htm ROLL 2008 10-k, Item 1: Business, page 5]</ref> In 2007, KDN was the market leader in wind turbine bearing sales. [[Wind energy]] is a booming industry in the U.S.; installed wind energy turbines in the United States grew 45% in 2007<ref>[http://www.nytimes.com/2008/02/23/business/23wind.html?_r=1&ref=environment&oref=slogin New York Times, "Move Over, Oil, There’s Money in Texas Wind," 02/23/08]</ref> making it the world's second-largest wind energy market after Germany.<ref>[http://seekingalpha.com/article/65964-kaydon-corp-remains-a-compelling-long-term-opportunity Seeking Alpha, "Kaydon Corp. Remains a Compelling Long-Term Opportunity," 2/25/08]</ref> The U.S. invested $9 billion in wind energy in 2007, and is projected to invest $65 billion from 2007 to 2015.<ref>[http://www.nytimes.com/2008/02/23/business/23wind.html?_r=1&ref=environment&oref=slogin New York Times, "Move Over, Oil, There’s Money in Texas Wind," 02/23/08]</ref> In Q3 2008, KDN's wind energy products had $60 million backlog, contributing to the company record $201.5 million backlog in that quarter.<ref>[http://seekingalpha.com/article/44536-kaydon-corp-not-particulary-sexy-but-definitely-worth-picking-up Seeking Alpha,"Kaydon Corp Not Particularly Sexy but Definitely Worth Picking Up," 8/15/07]</ref>+Other companies, such as [[RBC Bearings]] and [[Kaydon]], have seen success due to success in their niche product markets. In fiscal 2008, an estimated 21.5% of RBC Bearing's net sales were to the U.S. Military.<ref>[http://www.sec.gov/Archives/edgar/data/1324948/000114420408032396/v115639_10k.htmste ROLL 2008 10-k, Item 1: Business, page 8]</ref> This gave RBC a backlog of $217.7 million - 23% growth from 2007 - due to increased military replacement parts for the [[Iraq War]].<ref>[http://www.sec.gov/Archives/edgar/data/1324948/000114420408032396/v115639_10k.htm ROLL 2008 10-k, Item 1: Business, page 5]</ref> In 2007, KDN was the market leader in wind turbine bearing sales. [[Wind energy]] is a booming industry in the U.S.; installed wind energy turbines in the United States grew 45% in 2007<ref>[http://www.nytimes.com/2008/02/23/business/23wind.html?_r=1&ref=environment&oref=slogin New York Times, "Move Over, Oil, There’s Money in Texas Wind," 02/23/08]</ref> making it the world's second-largest wind energy market after Germany.<ref>[http://seekingalpha.com/article/65964-kaydon-corp-remains-a-compelling-long-term-opportunity Seeking Alpha, "Kaydon Corp. Remains a Compelling Long-Term Opportunity," 2/25/08]</ref> The U.S. invested $9 billion in wind energy in 2007, and is projected to invest $65 billion from 2007 to 2015.<ref>[http://www.nytimes.com/2008/02/23/business/23wind.html?_r=1&ref=environment&oref=slogin New York Times, "Move Over, Oil, There’s Money in Texas Wind," 02/23/08]</ref> In Q3 2008, KDN's wind energy products had $60 million in backlog, contributing to the company's record $201.5 million total backlog in that quarter.<ref>[http://seekingalpha.com/article/44536-kaydon-corp-not-particulary-sexy-but-definitely-worth-picking-up Seeking Alpha,"Kaydon Corp Not Particularly Sexy but Definitely Worth Picking Up," 8/15/07]</ref>
-===Machine Tools Companies are Pressured by Rising [[Steel Prices]].===+===Machine Tools Companies adjust to Fluctuating [[Steel Prices]].===
-Steel is a prime commodity in the machine tools industry. All machine tools companies use steel in manufacturing products such as bearings, drills, and cutting machines. From 2004 to 2008, [[Steel Prices| scrap metal price]] has grown from $75 per ton to over $550 per ton.<ref>[http://www.forbes.com/2008/04/30/timken-steel-update-markets-equity-cx_ra_0430markets46.html Forbes, "Timken Steeled by Steel," 4/30/08]</ref> This spike in price has pressured machine tools companies to maintain margins. A majority of the companies have used pricing to past costs to consumers, while others have developed more efficient programs to cut costs and eliminate waste. For example, Kennametal installed the Lean Initiatives program in 2005, which saved them $35 million in that year.<ref>[http://www.sec.gov/Archives/edgar/data/55242/000095015207006922/l26682ae10vk.htm KMT 2007 10-k, Item 1: Business, page 1]</ref>+Steel is a prime input to the machine tools industry, used heavily in manufacturing products like bearings, drills, and cutting machines. From 2004 to mid-2008, [[Steel Prices| scrap metal prices]] have grown from $75 per ton to over $550 per ton.<ref>[http://www.forbes.com/2008/04/30/timken-steel-update-markets-equity-cx_ra_0430markets46.html Forbes, "Timken Steeled by Steel," 4/30/08]</ref> Scrap metal is used to make steel, so a rise in scrap metal prices causes a rise in steel prices. This spike has pressured machine tools companies to maintain margins. A majority of the companies have used increased pricing to past costs to consumers, while others have developed more efficient programs to cut costs and eliminate waste. For example, Kennametal installed the Lean Initiatives program in 2005, which saved them $35 million in that year.<ref>[http://www.sec.gov/Archives/edgar/data/55242/000095015207006922/l26682ae10vk.htm KMT 2007 10-k, Item 1: Business, page 1]</ref> Neither method, however, is very effective, as price increases can reduce demand while efficiency program savings are marginal at best. Steel prices, like other commodity prices, have declined since September 2008. The decline has given machine tools companies some breathing room for dealing with the [[2008 Financial Crisis]].
-Timken receives benefit to rising steel prices, however. Timken produces steel alloy using scrap metal, nickel and other alloys. Since TKR makes steel, it can use pricing to take advantage of fluctuating scrap metal prices. Also, increased steel prices increase demand for TKR's heavy bearings used in rolling mills to make steel more efficiently.+Timken is a company that benefits from rising steel prices; it produces steel alloy using scrap metal, nickel and other alloys. Since TKR makes steel, it can use pricing to take advantage of fluctuating scrap metal prices. Also, increased steel prices increase demand for TKR's heavy bearings, used in rolling mills to make steel more efficiently.
 + 
 +[[Image:Steel_pr.jpg‎]]<ref>[http://www.ttiinc.com/object/ME_Materials_Steel TTI Inc., "Steel Prices"]</ref>
===To Protect Against a [[U.S. Economic Cycles|U.S. Recession]], Machine Tools Companies have Expanded Internationally. === ===To Protect Against a [[U.S. Economic Cycles|U.S. Recession]], Machine Tools Companies have Expanded Internationally. ===
-To safeguard against a potential [[U.S. Economic Cycles|U.S. recession]], machine tools companies have looked to prosper in international economies. Mainly, companies have been expanding to two booming markets: China and India. China's gross domestic product increased 11.3% in 2007.<ref>[http://news.xinhuanet.com/english/2008-03/05/content_7720892.htm China View, "China targets 8% GDP Growth in 2008," 03/05/08]</ref>. India's gross domestic product increased 9.0% from fiscal 2007-2008.<ref>[http://online.wsj.com/article/SB121213639165032371.html?mod=googlenews_wsj Wall Street Journal, "India Defies Turmoil With Growth of 8.8%"]</ref> The U.S. gross domestic product increased 2.2% in 2007.<ref>[http://useconomy.about.com/gi/dynamic/offsite.htm?zi=1/XJ&sdn=useconomy&cdn=newsissues&tm=43&f=00&tt=11&bt=0&bts=0&zu=http%3A//www.bea.gov/national/nipaweb/SelectTable.asp%3FPopular%3DY About.com, "National Income and Products Accounts Table"]</ref> [[Hardinge (HDNG)|Hardinge]] is the only machine tools company not based in the U.S., so machine tools companies have been expanding internationally to lose dependence on the [[U.S. Economic Cycles|U.S. Economy]].+To safeguard against a [[U.S. Economic Cycles|U.S. recession]], machine tools companies have looked to prosper in international economies. Mainly, companies have been expanding to two booming markets: China and India. China's gross domestic product increased 11.3% in 2007.<ref>[http://news.xinhuanet.com/english/2008-03/05/content_7720892.htm China View, "China targets 8% GDP Growth in 2008," 03/05/08]</ref>. India's gross domestic product increased 9.0% from fiscal 2007-2008.<ref>[http://online.wsj.com/article/SB121213639165032371.html?mod=googlenews_wsj Wall Street Journal, "India Defies Turmoil With Growth of 8.8%"]</ref> The U.S. gross domestic product increased 2.2% in 2007.<ref>[http://useconomy.about.com/gi/dynamic/offsite.htm?zi=1/XJ&sdn=useconomy&cdn=newsissues&tm=43&f=00&tt=11&bt=0&bts=0&zu=http%3A//www.bea.gov/national/nipaweb/SelectTable.asp%3FPopular%3DY About.com, "National Income and Products Accounts Table"]</ref> [[Hardinge (HDNG)|Hardinge]] is the only machine tools company not based in the U.S., so machine tools companies have been expanding internationally to lose dependence on the [[U.S. Economic Cycles|U.S. Economy]]. U.S. manufacturing firms have reduced their demand for machine tools. On average, machine tools require a costly investment -- an investment few companies will make after the [[2008 Financial Crisis|crisis]]. Manufacturing firms in China and India, however, are looking to purchase machine tools to fuel their growing GDPs.
Timken has opened facilities in China and India, which led to annual sales in each country increasing 30%<ref>[http://www.timken.com/en-us/investors/FinancialReports/Pages/Home.aspx Timken Company website, 2007 Annual Report]</ref> and 20%<ref>[http://www.thehindubusinessline.com/2007/10/02/stories/2007100251360200.htm The Hindu Business Line, "Timken India Plans to Tap Infrastructure Boom," 10/1/2007]</ref> Timken has opened facilities in China and India, which led to annual sales in each country increasing 30%<ref>[http://www.timken.com/en-us/investors/FinancialReports/Pages/Home.aspx Timken Company website, 2007 Annual Report]</ref> and 20%<ref>[http://www.thehindubusinessline.com/2007/10/02/stories/2007100251360200.htm The Hindu Business Line, "Timken India Plans to Tap Infrastructure Boom," 10/1/2007]</ref>
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[[category:Manufacturing]] [[category:Manufacturing]]
 +
 +[[category:mature]]
 +[[Category:WikiData Seeded]]

Current revision

The Machine Tools & Accessories industry makes tools used to manufacture other products. Bearings, waterjet cutting machines, and engine lathes are all made by these companies and sold to several end markets -- from the automotive industry to the energy industry. Three companies dominate the machine tools & accessories market: Timken Company, Stanley Works, and Kennametal.

Since machine tools companies sell products to companies in other end markets, the success of machine tools companies depends upon the success of these end markets. Companies such as TKR and KMT have suffered due to declines in the U.S. Housing Market and automotive industry, while companies such as RBC Bearings and Kaydon have seen success creating niche products for the wind energy and U.S. Military industries, respectively. The automotive and housing declines have enticed companies to expand internationally, particularly to the booming Chinese and Indian economies (China is the number one consumer of machine tools, amassing 23% of the total world consumption[1]). Rising steel prices plague the industry wherever it goes, however, forcing many of them to install more efficient manufacturing operations and to pass on rising costs to consumers, reducing demand and putting heavy pressure on margins.


Products

Cutting Tools

Cutting tools have evolved over time, from the engine lathe of the early 20th century to the modern water-jet cutting machine, and have been in demand since their creation. The main cutting machines are lathes, shapers, planers, and power saws.[2] These tools are vital for manufacturing, as materials of all shapes and sizes need to be formed in order to meet manufacturing specifications. Metal cutting tools are the most popular type, and have been used to cut metal since 1864.[2]

Companies that Manufacture Cutting Tools

Yakang Bearing Supplies, having been engaged in bearing industry for many years, is a professional trading agent and exporter of world-famous brand bearings. We devote ourselves to providing original, company sealed and brand new SKF bearings, FAG bearings, INA bearings, NSK bearings,TIMKEN bearings, NTN bearings, Nachi bearings, KOYO bearings, IKO bearings, FYH bearings, etc. For so many years business cooperation, we had bulit strong business relationships with the mentioned brands' partners, so our company has great advantage over any other sources in supplying the above bearings.



In order to supply bearings timely, we have set up large warehouses in some main port cities in China, such as Hongkong, Shanghai, Shengzhen, Ningbo and Tianjin Ports, etc, which enables us to supply bearings direactly from stock and saves time spent in domestic transportation and export custom clearance. We mainly have stock of deep groove ball bearings,cylindrical roller bearings, taper roller bearings, self aligning ball bearings, thrust ball bearings, rolling mill bearings, spherical roller thrust bearings, etc. We can supply some uncommon bearings such as non-standard bearings, linear bearings, automobile bearings, Mega-bearings, railway bearings, joint bearings, high temperature, super precision bearings, etc as well.


In conclusion, our company has an abundant stockage of various bearings and quick delivery. You may just feel free to contact us whenever you are in need of any kind of bearings. It would be our great honor to develop business cooperation with esteemed companies in this field.

Other Machine Tools & Accessories

The four other types of machine tools include: power drills and drill presses, milling machines, grinding machines, and presses. Power drills and drill presses are used to impulse holes in hard materials. Milling machines remove metal from objects. Grinding machines include a rotating, abrasive, grinding wheel used to change the shape of a hard object. Machinists consider grinding machines to be the most accurate of the machine tools.[3] Presses are used to change the size or shape of a material (usually sheet metal). Other accessories include objects used to connect materials, such as washers, nails, screws, and bolts.

Conglomerate Machine Tool Manufacturers


Competition Timken Company (TKR)[4] Stanley Works (SWK)[5] Kennametal (KMT)[6] Kaydon (KDN)[7] RBC Bearings (ROLL)[8] Flow International (FLOW)[9] Hardinge (HDNG)[10] Thermadyne Holding (THMD)[11] CompX International (CIX)[12] NN (NNBR) [13]


Revenue $Mil 5,236.02 4,483.80 2,385.49 451.38 306.06 213.44 356.32 493.98 177.68 421.29
Gross Profit $Mil 1,053.83 1,692.20 841.56 184.30 100.11 90.77 107.41 154.35 45.23 84.27
Net Profit Margin % 4.19% 7.51% 7.50% 17.22% 9.30% 8.72% 4.19% 2.15% 5.05% -0.28%
Operating Margin % 6.22% 10.06% 11.29% 24.65% 16.96% 8.93% 6.42% 8.97% 8.75% 2.65%

Industry Trends and Forces

An oligopoly of Timken Company (TKR), Stanley Works (SWK), and Kennametal (KMT) dominate the industry.

The machine tools and accessories industry is controlled by three companies: TKR, SWK, and KMT. Each of these three companies had 2007 revenues in excess of $2 billion. The rest of the companies in this industry had 2007 revenues less than $500 million. The rich get richer in this industry, and if a smaller-cap company is bidding for an acquisition, sponsorship, or new technology, one of the triad generally has the ability outbid with its pocket change.

The smaller cap companies have competed with the oligopoly by focusing on manufacturing niche products for one end market. By focusing on one end market, the smaller-cap companies can create unique products and become experts for that industry. For example, KDN's sales total is 18% as large as KMT's sales total.[14] To compete in the machine tools industry, KDN has established itself as the market sales leader of a booming niche market -- wind energy. This strategy gave KDN higher 2007 revenue growth than SWK, TKR, and KMT.[15] In 2007, FLOW's sales total was 4.36% of its biggest machine tools competitor, TKR. FLOW has been able to compete in this industry by producing a niche product: waterjet machine tools. Thanks to this focus, FLOW has claimed 60% of the global waterjet market.[16]

End Markets determine Machine Tools Company Success.

The primary consumer of machine tools products are other industries. Hence, the successes of machine tools companies are contingent upon the successes of the companies they sell to. The oligopolists (TKR, KMT, and SWK) were negatively affected by the declining U.S. Housing Market and automotive industry in 2007 and 2008. Home construction is a primary buyer of SWK products, as SWK tools are used for do-it-yourself projects and home construction. The automotive industry affects Kennametal's second-largest end market, on-highway vehicles (28% of sales). Historically, the oligopoly has profited from the automotive and housing markets. Since the decline of these markets, the oligopoly companies have had to revamp their portfolios.

Other companies, such as RBC Bearings and Kaydon, have seen success due to success in their niche product markets. In fiscal 2008, an estimated 21.5% of RBC Bearing's net sales were to the U.S. Military.[17] This gave RBC a backlog of $217.7 million - 23% growth from 2007 - due to increased military replacement parts for the Iraq War.[18] In 2007, KDN was the market leader in wind turbine bearing sales. Wind energy is a booming industry in the U.S.; installed wind energy turbines in the United States grew 45% in 2007[19] making it the world's second-largest wind energy market after Germany.[20] The U.S. invested $9 billion in wind energy in 2007, and is projected to invest $65 billion from 2007 to 2015.[21] In Q3 2008, KDN's wind energy products had $60 million in backlog, contributing to the company's record $201.5 million total backlog in that quarter.[22]

Machine Tools Companies adjust to Fluctuating Steel Prices.

Steel is a prime input to the machine tools industry, used heavily in manufacturing products like bearings, drills, and cutting machines. From 2004 to mid-2008, scrap metal prices have grown from $75 per ton to over $550 per ton.[23] Scrap metal is used to make steel, so a rise in scrap metal prices causes a rise in steel prices. This spike has pressured machine tools companies to maintain margins. A majority of the companies have used increased pricing to past costs to consumers, while others have developed more efficient programs to cut costs and eliminate waste. For example, Kennametal installed the Lean Initiatives program in 2005, which saved them $35 million in that year.[24] Neither method, however, is very effective, as price increases can reduce demand while efficiency program savings are marginal at best. Steel prices, like other commodity prices, have declined since September 2008. The decline has given machine tools companies some breathing room for dealing with the 2008 Financial Crisis.

Timken is a company that benefits from rising steel prices; it produces steel alloy using scrap metal, nickel and other alloys. Since TKR makes steel, it can use pricing to take advantage of fluctuating scrap metal prices. Also, increased steel prices increase demand for TKR's heavy bearings, used in rolling mills to make steel more efficiently.

Image:Steel_pr.jpg‎[25]

To Protect Against a U.S. Recession, Machine Tools Companies have Expanded Internationally.

To safeguard against a U.S. recession, machine tools companies have looked to prosper in international economies. Mainly, companies have been expanding to two booming markets: China and India. China's gross domestic product increased 11.3% in 2007.[26]. India's gross domestic product increased 9.0% from fiscal 2007-2008.[27] The U.S. gross domestic product increased 2.2% in 2007.[28] Hardinge is the only machine tools company not based in the U.S., so machine tools companies have been expanding internationally to lose dependence on the U.S. Economy. U.S. manufacturing firms have reduced their demand for machine tools. On average, machine tools require a costly investment -- an investment few companies will make after the crisis. Manufacturing firms in China and India, however, are looking to purchase machine tools to fuel their growing GDPs.

Timken has opened facilities in China and India, which led to annual sales in each country increasing 30%[29] and 20%[30] , respectively. Further, China is the number one machine tools consumer by far, with 23% of the total world consumption. Similarly, Kaydon acquired Avon Bearings in China and opened a facility in Germany to bolster its wind energy product line. In 2006, KMT divested its J&L Industrials segment to make a slew of international acquisitions, including Camco and Sintec.[31]

References

  1. HDNG 2007 Annual Report
  2. 2.0 2.1 Answers.com, "Cutting Tools"
  3. Answers.com, "Grinding Machine"
  4. TKR 2007 10-k, Item 6: Selected Financial Data, page 18
  5. SWK 2007 10-k, Item 6: Selected Financial Data, page 14
  6. KMT 2007 10-k, Item 6- Selected Financial Data, page 11
  7. KDN 2007 10-k, Item 6: Selected Financial Data, page 9
  8. ROLL 2007 10-k, Item 6: Selected Financial Data, page 18
  9. FLOW 2007 10-k, Item 6: Selected Financial Data, page 18
  10. HDNG 2007 10-k, Item 6: Selected Financial Data, page 21
  11. THMD 2007 10-k, Item 6: Selected Financial Data, page 18
  12. CIX 2007 10-k, Item 6: Selected Financial Data, page 15
  13. NNBR 2007 10-k, Item 6: Selected Financial Data, page 17
  14. Yahoo! Finance: Machine Tools and Accessories Leaders and Laggards
  15. Yahoo! Finance: Machine Tools and Accessories Leaders and Laggards
  16. Flow website, "Company"
  17. ROLL 2008 10-k, Item 1: Business, page 8
  18. ROLL 2008 10-k, Item 1: Business, page 5
  19. New York Times, "Move Over, Oil, There’s Money in Texas Wind," 02/23/08
  20. Seeking Alpha, "Kaydon Corp. Remains a Compelling Long-Term Opportunity," 2/25/08
  21. New York Times, "Move Over, Oil, There’s Money in Texas Wind," 02/23/08
  22. Seeking Alpha,"Kaydon Corp Not Particularly Sexy but Definitely Worth Picking Up," 8/15/07
  23. Forbes, "Timken Steeled by Steel," 4/30/08
  24. KMT 2007 10-k, Item 1: Business, page 1
  25. TTI Inc., "Steel Prices"
  26. China View, "China targets 8% GDP Growth in 2008," 03/05/08
  27. Wall Street Journal, "India Defies Turmoil With Growth of 8.8%"
  28. About.com, "National Income and Products Accounts Table"
  29. Timken Company website, 2007 Annual Report
  30. The Hindu Business Line, "Timken India Plans to Tap Infrastructure Boom," 10/1/2007
  31. KMT 2007 10-k, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operation, page 12
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