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  • Writer's pictureCaelen Phillips

Will Machine Shops Ever Rule the World?

I don't mean literally; it would be a scary world indeed of Denny were King. We'd all be required to wear Vans t-shirts and cowboy boots or risk being caught and forced to walk through his haunted house, unaccompanied.

What I'm really asking is, will American machine shops ever become major players on the world stage like first-tier suppliers like Honeywell and Collins Aerospace have?

According to the IBISWorld Market Report* (2020), precision parts machining (33271) is not currently a consolidated industry, making it highly competitive. There are many small organizations (including some who work out of their garage!) and a few bigger players like PCC There are relatively low barriers to entry, and the ability to diversify industries because of the universality of precision machining can be a huge benefit. For example, the aerospace industry took a major hit due to COVID-19 (Deloitte, 2021), while the medical industry faced growth so large that equipment shortages were a major issue (Ranney et. al. 2020).

It is in part because of this ability to easily diversify that I propose that it is extremely likely that machine shop will continue to grow, particularly in Arizona (Foldy, 2021). There are many opportunities to secure profit in the long term, with minimal risk. The increasing standard of tolerances, quality, and machine capabilities will ultimately make CNC machinery and 3D printing much more exclusive to larger machine shops. Large quantities demanded in certain industries also contribute to the increasing need for major manufacturing suppliers to play a role in the global supply chain. Ultimately, this will help to create greater economies of scale which benefits the end customers of machined parts.

Low quantities of imports from other countries proves that this would be a sound investment by the government, as well. American manufacturing benefits from the Country of Origin Effect in this field of work. This means that not only are American-made parts being primarily used in the US, but there is also a chance for parts to be sought after by other countries because of America's manufacturing reputation. I'm sure you can see why this looks good for American precision manufacturers to potentially become a global superpower!

One of the major drawbacks, however, is the increasing price of steel. It is currently a vital material for all industries precision machining is required in due to its strength. However, steel prices are expected to begin a downward trend so we can only keep a close eye on this cost for the potential revenue generation of the industry.

Another hurdle that needs to be overcome is the decreasing employment pool of machinists, deburr, and other essential services offered in this kind of manufacturing (US Bureau of Labor Statistics, 2021). To address this, organizations should begin offering more competitive wages for the the skill (Cohen, 2021) and offering trade school programs as part of the hiring package when reaching out to schools. We are in a very different labor market than years past; workers from Gen X to Gen Z demand as much from their employer as their employer demands of them (King et. al., 2019).

In the end, someone always needs precision manufactured parts. If businesses capitalize on the opportunities before them, we could be set to see major changes in the industry. While this is a simplified look at machine shops as an industry and its possible future, it proves that with the right resources put in, machine shops can in fact be masters of their own universe.

*Anything unreferenced is information gathered from this marketing report

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