Machine tools are known as the "industrial mother machine", is an important basis for equipment manufacturing, is a measure of a country's industrialisation level of one of the important indicators. The tool as the machine tool "teeth", its performance and quality directly affect the machine tool production efficiency and processing quality of good or bad.
For a long time, China's high-end CNC machine tools, CNC tools by a few top foreign manufacturers monopoly, 2019, the World Science and Technology Innovation Forum released "China's heavy reliance on imports of 20 technology products" survey report, pointed out that high-end CNC machine tools, CNC tools, chips, lithography and operating systems are still China's heavy reliance on imports of products. Along with the promotion of national strategies such as industrial structure upgrading and adjustment, Made in China 2025, and the escalation of international trade friction, the import substitution and independent innovation breakthrough of high-end CNC machine tools and CNC cutting tools is imminent.
The National Bureau of Statistics released the "Strategic Emerging Industries Classification (2018)", which lists cutting inserts depth machining and CNC inserts as key products and services. In addition, in October 2019, the National Development and Reform Commission issued the "Industrial Structure Adjustment Guidance Catalogue (2019)" clearly listed "high-grade CNC machine tools and supporting CNC systems: five-axis and above linkage CNC machine tools, CNC systems, high precision, high-performance cutting tools, gauges and abrasives" as an encouraged industry. Benefit from the national policy of encouragement and support, CNC tool industry will usher in a new round of rapid growth cycle.
Current situation of the tool industry
(1) Global Cutting Tools Market Situation
According to the analysis report of QY Research, the global cutting tools consumption was US$33.1 billion and US$34 billion in 2016 and 2017 respectively, and is expected to grow to US$39 billion by 2022. the average CAGR from 2016 to 2022 is 2.7%.
(2) China's cutting tool market situation
With the transformation and upgrading of China's modern manufacturing industry, the total consumption of tools nationwide has shown rapid growth since 2016, increasing from 32.15 billion yuan in 2016 to 42.1 billion yuan in 2018, with an average compound annual growth rate of 14.43%. At the same time, the overall level of the CNC tool industry is also improving, domestic brands to replace imports, short delivery time, fine service and other advantages are more obvious. 2016 to 2018 imported tools accounted for the proportion of the total national consumption of tools from 37.17% to 35.15%, to a certain extent, indicating that China's reliance on imported high-end tools is reducing year by year, domestic high-end CNC tools grow year by year. In the future, as international trade friction intensifies, the trend of localization of high-end tools accelerates, and the market capacity of high-end tools in China will still maintain a rapid growth trend.
Total annual consumption of tools in the country from 2005-2018
China has ranked first in the world in terms of machine tool consumption for many years in a row, with metalworking machine tool consumption reaching US$23.46 billion in 2018. Tools are used with machine tools, in Germany, the United States, Japan and other developed countries, modern CNC machine tools and CNC tools are coordinated with each other, the law of balanced development is very obvious. China's tool and machine tool consumption ratio is low, but growing faster, has grown from 16% in 2011 to 22% in 2018. Compared to the 40% consumption ratio of tools to machine tools in developed countries, there is still huge room for improvement in China's tool consumption level.
With more complex product structures, machining accuracy and efficiency requirements continue to improve, machine tools are gradually moving towards CNC. Made in China 2025" planning clearly put forward the "high-end CNC machine tools and infrastructure equipment" goal, to 2025, high-grade CNC machine tools and basic manufacturing equipment domestic market share of more than 80%. And in 2018, China's new metal cutting machine tool CNC rate of 39.02%, compared to Japan and other developed countries close to 100% machine tool CNC rate, China's metal cutting machine tool CNC degree of upgrading space is very large, as the main consumables of CNC cutting machine tools, high-end CNC tool market prospects.
In summary, the domestic high precision, high performance cutting tool demand is expected to further increase, the domestic high-end CNC tool manufacturing enterprises will fully benefit.
(3) China's import and export of cutting tools
With the international trade friction, export controls intensify, the lack of key core technology will certainly tie the industry and economic development. As a strategic emerging industry of CNC cutting tools, accelerate its localization and achieve import substitution, which is of great significance to national economic security. According to the estimates of the China Machine Tool and Tool Industry Association Tool Branch, the total consumption of tools in China reached 42.1 billion yuan in 2018, of which the annual consumption of domestically produced tools was about 27.3 billion yuan and imported tools was about 14.8 billion yuan (including domestic production of foreign brands). Although domestically produced tools dominated China's tool consumption market with a market share of 2/3 in total, the overall market was dominated by mid- and low-end products. Of the 14.8 billion yuan of imported tools, the vast majority are high-efficiency tools that are urgently needed in modern manufacturing.
Since 2016, domestic enterprises have partially increased investment in research and development and innovation, through the introduction of re-absorption and other ways, breaking through the technical bottleneck in the field of some high-end CNC tools, and one after another developed a number of high-end tools that can be compared with advanced foreign products, China's CNC tool import dependence is gradually declining. According to the statistics of China Machine Tool & Tool Industry Association Tools Branch, in 2019, China's tool exports amounted to RMB 18.4 billion, up 6.92% year-on-year with 2018; imports amounted to RMB 11.1 billion, down 4.4% year-on-year with 2018. However, it is worth noting that for the same type of tool products, the price of imported tools is much higher than the export price, for example, the difference between the import and export price of coated inserts is 3.37 times, milling cutters is 2.34 times, boring reamers 94 times and super hard boring reamers 29 times. It can be seen that the road of localization of high-end CNC tools still has considerable potential, import substitution will become one of the most important development trends of China's high-end CNC tool industry in the future.
Industry development trend
(1) encouraged by national policies and downstream demand market, the rapid development of CNC tooling industry
In recent years, with the upgrading of industrial structure and the promotion of high-end manufacturing and other national strategies, the launch of various national policies to encourage the healthy and stable development of China's tool industry has laid the policy foundation. The "Thirteenth Five-Year Plan" in the field of advanced manufacturing technology, science and technology innovation special planning "high-grade CNC machine tools and basic manufacturing equipment" as one of the main directions to carry out key tasks to deploy, clear "focus on aerospace and automotive two Key service areas, focusing on tackling high-grade CNC systems and functional components and other bottlenecks". In addition, the "Strategic Emerging Industries Classification (2018)" will be "cutting insert depth machining (CNC inserts, welding inserts, general indexable inserts, etc.), CNC inserts (aerospace, automotive industry, high-end equipment manufacturing)" as key products and services, while the "Guidance Catalogue for Industrial Structure Adjustment (2019) High-grade CNC machine tools and supporting CNC systems: five-axis and above CNC machine tools, CNC systems, high-precision, high-performance cutting tools, gauges and abrasives" is clearly listed as an encouraged industry.
CNC tools are widely used in automotive, aerospace, energy, rail transportation, mould manufacturing, engineering machinery, consumer electronics, military, petrochemical and other fields, the above-mentioned areas are mostly the future focus of development of the industry, its market size and development of CNC tool industry has an important impact. China has become a large manufacturing country, according to the National Bureau of Statistics, from 2004 to 2019, the scale of China's manufacturing industry continued to grow. 2019, China's manufacturing industry GDP scale reached 26.92 trillion, the rapid development of the manufacturing industry, bringing an increase in demand for CNC tools and other machine tool products. Take the field of aircraft manufacturing as an example, according to the "Commercial Aircraft Corporation of China Market Forecast Annual Report (2018-2037)", the combined market space in the field of aircraft manufacturing for the next 20 years is about 10.4 trillion, with a huge market capacity for downstream applications, which provides a strong market basis for the development and localization of high-end CNC tools.
(2) the localization of high-end CNC tools, import substitution urgency to enhance
The "Nineteenth National Congress" report points out that we should accelerate the construction of a strong manufacturing country, accelerate the development of advanced manufacturing industries, promote our industry to the high-end of the global value chain, and cultivate a number of world-class advanced manufacturing clusters. Therefore, the import substitution of high-end tools is a necessary stage for China to move towards a manufacturing power, and is also a major trend in foreign trade strategy. According to the General Administration of Customs import and export statistics, China's import substitution is mainly concentrated in the low and low-tech downstream industries, such as the white goods industry, the process of localization of medium and high technology products is not deep enough. Machine tool industry as one of the core upstream areas of the manufacturing industry, is an important direction for the future localization strategy.
High-end CNC tools are mainly used in aerospace, defense industry, nuclear industry and automotive ships and other high-end manufacturing fields, the above industries are related to the lifeblood of the national economy, and involves national defense security, national security. Domestic tool enterprises started late, in the technical level and processing technology compared to Europe and the United States, Japan and South Korea and other developed industrialized countries, tool enterprises have a certain gap. At present, the domestic CNC tool is still mainly low-end products, high-end CNC tool long-term dependence on imports, market share is such as Sandvik Group, Kennametal, Japan Kyocera, Mappa, ISCAR and other international giants monopoly, which is not conducive to the adjustment and upgrading of China's industrial structure, and the threat to our industry and national security, so high-end CNC tool localization and import substitution is very urgent.
(3) high-end, customization, one-stop product and solution providers have obvious competitive advantages
With the rapid and vigorous development of modern manufacturing industry, aerospace, defense industry, nuclear industry and ships and other high-end equipment manufacturing industry processing parts complexity and processing difficulty is increasingly high, the performance of CNC cutting tools and the degree of precision requirements are also increasingly high, high-end tools in the structure, materials, coatings and other aspects have advantages, to meet the modern manufacturing industry on the precision of the processing parts requirements.
On the other hand, with different end customers cutting technology to specialised and high-efficiency development, the customisation and personalisation of the tool requirements, tool suppliers need to design tooling solutions according to their processing environment, processing equipment and specific indicators of the parts being processed, and customised production and installation, which puts forward higher requirements for tool manufacturers' design capabilities, response speed, customised production and service capabilities, thus making the comprehensive tool manufacturers who provide cost-effective customised, one-stop products and tooling solutions in an advantageous position in the same industry competition.
Contact: Jacky Wang
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