INDUSTRY TRENDS AND OPPORTUNITIES

• Demand Indicators - Demand indicators for the industry look good so far this year. Consumption of durable goods is up, the automobile industry have only slightly declined, and machine tool consumption is rising. All of these are good indicators that the demand for machine shop work is steady.
• Outsourcing - The development of lean manufacturing techniques and Just in Time Inventory, has favored outsourcing to machine shops that can guarantee quality and on time delivery.
• Unattended Operations - Many CNC machines can work on parts without an operator present. Many traditional machines have been reconfigured to make unattended operation easier as well. For instance, traditional horizontal lathes can be replaced with vertical, spindle-inverted turning machines that can more easily accept parts on their work platform.
• Ceramic Cutting Tools - Many super hard materials cannot be adequately machined with traditional metal cutting tools. Ceramics technology has produced cutting tools made from ultrahard mineral composites like silicon nitride and silicon carbide, which while more expensive than steel, are more durable.

“Things to know before buying an Machine Shop business”
If you are considering buying a machine shop there are a lot of factors to consider. Since several associates at Murphy have expertise in the industry and we know the major factors in the industry to consider. We know the trends and opportunities in the industry and can help you capitalize on that knowledge. Here are some important items to consider.

• How does the company manage changes in the manufacturing industry demand? Demand for machining services depends on the level of US manufacturing activity, which can vary significantly from year to year
• What computer programs are company engineers and designers using to develop products? Most machine shops are using Computer Aided Design (CAD) Software
• What type of machinery does the company have? Machine shops have large investments in machinery and equipment. Typical equipment includes NC machines, CNC machines, lathes, drilling presses, milling machines, and machining centers.
• Does the shop have any advanced equipment like laser cutting or electrical discharge machines (EDM)? Advanced machines such as these enable machine shops to bid on more technically advanced jobs.
• What is the typical bidding process to acquire new jobs? Understanding how the company prepares its bids for contracts is crucial since accurate bidding on jobs affects the profitability of the company.
• Does the company get a large percentage of work from just a few customers or one end- use industry such as the automobile industry? When a company generates most of its revenues from a few customers, there is a greater risk associated with the company. A company that generates revenues from a large customer base or from several different industries reduces its risk significantly.