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New Drop in Cutting-Tool Orders Shows Depth of Decline

June 17, 2020
April orders fell below $150 million, down -24.7% from the previous month and -14.4% year-over-year. Year-to-date orders have fallen -14.4%.

U.S. manufacturing activity plunged from March to April 2020, as shown by the -24.7% drop in cutting-tool consumption reported in the latest Cutting Tool Market Report. The result is somewhat expected, as April represents the first calendar period during which businesses paused in the effort to contain the spread of the novel Coronavirus.

“The latest data from April simply quantifies ‘how bad’ the news is for our industry. It also appears the bad news will continue through the months ahead. The drop in oil prices along with COVID-19’s impact on automotive, aerospace, and support industries, has left its trail of destruction,” commented Steve Stokey, EVP and owner of Allied Machine and Engineering, a developer and manufacturer of cutting tools.

Cutting tools are a primary consumable for all manufacturing processes, and manufacturers’ consumption parallels for manufacturing activity in general, comparable to durable goods shipments. The Cutting Tool Market Report is issued jointly by the U.S. Cutting Tool Institute and AMT – the Assn. for Manufacturing Technology, and presents cutting-tool consumption based on the totals reported by participating companies, which represent the majority of the U.S. market for cutting tools.

During April, U.S. machine shops and other manufacturers consumed $142.9 million, down -24.7% from March's $189.8 million and down -31.1% from the April 2019 total of $207.5 million. For the current year to-date, U.S. cutting-tool consumption stands at $717.5 million, meaning 2020 is down -14.4% compared with the January-April 2019 period.

According to Bret Tayne, president of USCTI, “The precipitous drop in April cutting-tool industry sales numbers confirms what many of us have experienced. The good news is that some economic forecasts and macro market indicators point to improvement as we enter the second half of the year.”

According to Stokey: “Survival and understanding the ‘new normal’ is what is driving most decisions nowadays. One positive tidbit to note is the resiliency of our industry. Companies have implemented changes and innovated at unprecedented speeds. The phrase ‘Innovate or Die’ has never been more relevant than it is today.”

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