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Commercial aerospace and transportation manufacturing

Revenue in the Machine Shop Services industry has experienced robust growth during the five years to 2014, overcoming the negative impact of the recession. After a poor performance in 2009, the industry posted revenue growth in each of the past five years. As the industry's major markets, including commercial aerospace and transportation manufacturing, picked up in 2010 and 2011, industry revenue expanded. IBISWorld Economic Analyst Stephen Morea says in the updated report, “Nearly all of this industry's downstream markets have thrived recently and are currently operating with improved market conditions and, as a result, industry revenue is expected to increase during the five years to 2014.” Machinists' postrecessionary recovery has been strong and is expected to continue trending upward, with revenue forecast to increase in 2014.

Technological advancement in machining is largely driven by the defense and aerospace markets. These markets require parts that are as light as possible, made to exceptionally tight tolerances and shaped into complex geometries. Industry operators serving these markets have increased their investment in computer numerical control (CNC) machines that increase automation and precision during the past five years, prompting a sizeable increase in capital investment for many machinists. As defense spending has tapered off due to the United States' withdrawal from Iraq and scaling back in Afghanistan, many of these operators' machines have been repurposed to satisfy growing demand from the manufacturing sector. Consequently, productivity improvements driven by high-tech markets have aided industry operations. Higher productivity has allowed for a smaller industry workforce. Consequently, industry wages as a proportion of revenue are expected to shrink from 2009 to 2014. This industry has low market share concentration since its four largest companies hold less very little of the market. Market share concentration has increased slightly over the past five years as firms have exited the industry and opened up new opportunities for remaining companies. At the same time, merger and acquisition activity has taken place among larger firms.

During the five years to 2019, Machine Shop Services operators will devote further resources to satisfying growing demand from manufacturers in industries like automobile manufacturing, commercial aircraft manufacturing and metal forging. “Demand from medical device manufacturers is also expected to increase, due to a progressively aging US population with an increasing need for medical care. This, in turn, will heighten the need for micromachined products,” Morea says in the updated report. As a result, industry revenue is forecast to grow during the next five years.

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