Are lasers riding the 2018 global machine tool boom?
There is no question that the China situation, either as an importer or exporter, is on every industrial laser company's mind.
In the most recent issue of Modern Machine Shop magazine, chief data officer Steve Kline, Jr. summarizes the 2018 World Machine Tool Survey from Gardner Intelligence: world machine tool consumption was up in 12 of the top 15 countries except for China, the world's leading consumer, which dropped 5.9%. He cites the trade war between the United States and China as one cause for this anomaly, but posits the decrease was isolated to the domestic machine tool market.
The Gardner Survey counts lasers for cutting/forming in their report, so my antenna—which is always tuned to lasers—focused on corroboration from China's laser market. Two of the world's Billion-Dollar Club members are Coherent and IPG Photonics, so I turned to their latest quarterly reports released at the end of April, which seem to complement Gardner's conclusions. Coherent management identified "…conflicting signals in the Chinese market," and cited "trade issues and weakened domestic demand" as the cause. Even encouraging business news from the recent LASER World of PHOTONICS China tradeshow only produced this comment: "We are taking a more measured view and believe the recovery will be slow and steady."
IPG Photonics' CEO, citing improved business trends in China, stated that the company "….made competitive challenges head-on" in terms of manufacturing costs and introduced a "made-to-order product that improves our process flexibility and quality for our customers." He did, however, temper his upbeat comments with "We expect pricing headwinds related to competition in China to continue." This seems to be in response to the reported 24% decline in year-to-date China sales that represents 36% of the company's total market.
There is no question that the China situation, either as an importer or exporter, is on every industrial laser company's mind. As it should be at a nominal third of all industrial laser revenues, when China hiccups, it gets everyone's attention.