Machine Tools & Accessories

The Hindu Business Line  Aug 9  Comment 
HMT Machine Tools’ Bengaluru Complex has successfully developed CNC Oil Country Lathe against an order from ONGC, Baroda, as an import substitution product under ‘Make In India’ initiative for the fi...
Automotive World  May 31  Comment 
Three KUKA robots from the KR QUANTEC pro family are in operation at the plant of Bizerba SE & Co. KG. They guarantee that aluminum housings are reliably fed to two grinding machines where they are rough and fine-ground and polished. The aluminum...
Wall Street Journal  Mar 27  Comment 
The U.S. is losing the battle to supply the kind of cutting-edge production machinery behind the new automated factory floor, from digital machine tools to complex packaging systems and robotic arms. The equipment increasingly has to be imported...
Benzinga  Feb 9  Comment 
USD/JPY is trading at 112.18, up 0.21. Japan's Machine Tool Builders Association (JMTBA) reported that year over year machine tool orders in Japan eased to a rise of 3.5 percent during January after showing a year over year rise of 4.4 percent...
The Economic Times  Nov 25  Comment 
Old timers like Nagi remember how Batala’s factories, dating back to pre-Partition days, used to supply foundry and machine tools not just in India but to the world.
Automotive World  Nov 16  Comment 
NSK Ltd. (NSK; Headquarters: Tokyo, Japan; President and CEO: Toshihiro Uchiyama) today announced that it has developed an ultra high-speed angular contact ball bearing using the new SURSAVE cage, which can be applied to the NSKROBUST™ series of...
The Hindu Business Line  Oct 31  Comment 
Rajagiri School of Engineering & Technology (RSET), Kakkanad and HMT Machine Tools Ltd, Kalamassery have signed a MoU to promote training and research collaboration. The objective is to impart ...
The Hindu Business Line  Aug 15  Comment 
The machine tool industry is key to the government’s flagship ‘Make in India’ and ‘Skill India’ initiatives, given that it makes the machines required for the manufacturing sector. V Anbu, Director Ge...
The Hindu Business Line  Jun 24  Comment 
HMT Machine Tools has launched a new product — Flexible Manufacturing System (FMS) — for educational and training purposes at the Bengaluru Complex. The FMS has a CNC lathe, CNC machining centre, aut...
The Economic Times  Mar 4  Comment 
Shares of HMT surged nearly 14 per cent amid reports that the government was looking to revive two of firm's loss-making subsidiaries, Heavy Engineering Corporation (HEC) and HMT Machine Tools, due to their 'strategic' importance.


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 automotive industry to the energy industry. China is the number one consumer of machine tools, amassing 23% of the total world consumption.[1] The industry is an oligopoly, as it is dominated by three companies: 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 seen adjustment periods 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, 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.


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


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 automotive industry and aerospace & defense industry.

Companies that Manufacture Bearings

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

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 defense to oilfield services to wind energy..[4]TKR leads the industry in market cap and total revenue.[5] 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).[6] 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. [7]

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.[8] 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%.[9]


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.[10] 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.[11]

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.[12]

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 and energy[13] 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.[1]

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.[14] Airbus and Mitsubishi Heavy Industry are both large customers, and have awarded FLOW multi-million dollar contracts, including a $30 million contract from Airbus.[15]

Competition Timken Company (TKR)[16] Stanley Works (SWK)[17] Kennametal (KMT)[18] Kaydon (KDN)[19] RBC Bearings (ROLL)[20] Flow International (FLOW)[21] Hardinge (HDNG)[22] Thermadyne Holding (THMD)[23] CompX International (CIX)[24] NN (NNBR) [25]

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
Revenue $Mil 217.28 5,236.02 493.98 177.68 356.32 306.06 421.29 2,385.49 4,483.80 451.38
Gross Profit $Mil 92.14 1,053.83 154.35 45.23 107.41 100.11 84.27 841.56 1,692.20 184.30
Net Profit Margin % 2.00% 4.19% 2.14% 5.05% 4.19% 9.30% -0.28% 7.50% 7.51% 17.22%
Operating Margin % 2.37% 6.22% 8.97% 8.75% 6.42% 16.96% 2.65% 11.29% 10.06% 24.65%

Industry Trends and Forces

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

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 (TKR, KMT, and SWK) were affected by the declining U.S. Housing Market and automotive industry. Home construction is a primary buyer of SWK products, as consumers use SWK tools for do-it-yourself 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.[26] This gave RBC a backlog of $217.7 million, a 23% growth from 2007 due to increased military replacement parts for the Iraq War.[27] 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[28] making it the world's second-largest wind energy market after Germany.[29] The U.S. invested $9 billion in wind energy in 2007, and is projected to invest $65 billion from 2007 to 2015.[30] In Q3 2008, KDN's wind energy products had $60 million backlog, contributing to the company record $201.5 million backlog in that quarter.[31]

Machine Tools Companies are Pressured by Rising 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, scrap metal price has grown from $75 per ton to over $550 per ton.[32] 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.[33]

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.

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

To safeguard against a potential 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.[34]. India's gross domestic product increased 9.0% from fiscal 2007-2008.[35] The U.S. gross domestic product increased 2.2% in 2007.[36] 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.

Timken has opened facilities in China and India, which led to annual sales in each country increasing 30%[37] and 20%[38] , 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.[39]


  1. 1.0 1.1 HDNG 2007 Annual Report
  2. 2.0 2.1, "Cutting Tools"
  3., "Grinding Machine"
  4. TKR 2007 10-k, Item 1: Business, page 1
  5. Yahoo! Finance: Machine Tools & Accessories, Leaders and Laggards
  6. Yahoo! Finance: Machine Tools and Accessories Leaders and Laggards
  7. SWK 2007 10-k, Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations, page 18
  8. KMT 2007 10-k, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operation, page 12
  9. Seeking Alpha, "Kennametal Inc. F3Q08 Earnings Call Transcript," 04/28/08
  10. Yahoo! Finance: Machine Tools and Accessories Leaders and Laggards
  11. Yahoo! Finance: Machine Tools and Accessories Leaders and Laggards
  12. ROLL 2008 10-k, Item 1: Business, page 5
  13. Hardinge website, "About Us"
  14. Flow website, "Company"
  15. MarketWatch, "Flow International Corporation to Begin Work on the Airbus Contract"
  16. TKR 2007 10-k, Item 6: Selected Financial Data, page 18
  17. SWK 2007 10-k, Item 6: Selected Financial Data, page 14
  18. KMT 2007 10-k, Item 6- Selected Financial Data, page 11
  19. KDN 2007 10-k, Item 6: Selected Financial Data, page 9
  20. ROLL 2007 10-k, Item 6: Selected Financial Data, page 18
  21. FLOW 2007 10-k, Item 6: Selected Financial Data, page 18
  22. HDNG 2007 10-k, Item 6: Selected Financial Data, page 21
  23. THMD 2007 10-k, Item 6: Selected Financial Data, page 18
  24. CIX 2007 10-k, Item 6: Selected Financial Data, page 15
  25. NNBR 2007 10-k, Item 6: Selected Financial Data, page 17
  26. ROLL 2008 10-k, Item 1: Business, page 8
  27. ROLL 2008 10-k, Item 1: Business, page 5
  28. New York Times, "Move Over, Oil, There’s Money in Texas Wind," 02/23/08
  29. Seeking Alpha, "Kaydon Corp. Remains a Compelling Long-Term Opportunity," 2/25/08
  30. New York Times, "Move Over, Oil, There’s Money in Texas Wind," 02/23/08
  31. Seeking Alpha,"Kaydon Corp Not Particularly Sexy but Definitely Worth Picking Up," 8/15/07
  32. Forbes, "Timken Steeled by Steel," 4/30/08
  33. KMT 2007 10-k, Item 1: Business, page 1
  34. China View, "China targets 8% GDP Growth in 2008," 03/05/08
  35. Wall Street Journal, "India Defies Turmoil With Growth of 8.8%"
  36., "National Income and Products Accounts Table"
  37. Timken Company website, 2007 Annual Report
  38. The Hindu Business Line, "Timken India Plans to Tap Infrastructure Boom," 10/1/2007
  39. KMT 2007 10-k, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operation, page 12
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