Is there a future for the machining industry?
The answer is yes, but it is low-end production capacity that will be eliminated, not the entire industry.
Small workshops that focus on low prices and compete for labor and price will be eliminated at an accelerated pace, while factories that follow the path of precision, digitalization, specialization, and service will reap the dividends of the future manufacturing industry. The industry is undergoing a complete structural reshuffle.
Machining is the core foundation of all equipment manufacturing. High-end industries such as new energy, aerospace, medical equipment, and semiconductors are inseparable from precision machining and are irreplaceable.
The overall market of the industry continues to expand, and the demand for high-end precision parts is exploding year by year.
At the policy level, continued support for high-end manufacturing, specialization and upgrading of smart factories, clearing out low-end production capacity, and filling gaps in high-end production capacity will be a fixed trend in the next decade.
There is no sunset industry in the industry, only a sunset production method.
However, the machining industry currently faces many difficulties.
First of all, low prices have been deeply involved, and profits have been extremely compressed.
The vast majority of small and medium-sized processing plants have highly homogeneous equipment, processes, and products. There are no technical barriers and they can only rely on low prices to grab orders.
The industry’s low-end production capacity is severely overcapacity, and the capacity utilization rate is low. The net profit of most ordinary processing plants is less than 5%, and they are trapped in an endless cycle of “the busier they are, the less they make money.”
At the same time, the diversion of low-end orders from Southeast Asia and the return of overseas manufacturing have further squeezed the living space of ordinary processing plants.
Secondly, due to artificial faults, labor costs continue to rise.
Young people are reluctant to enter workshops, there is a serious shortage of machining technicians, skilled masters are scarce, and wages are rising year by year.
The technical backbone that small and medium-sized enterprises have worked hard to cultivate is easily lost, resulting in unstable processes and fluctuations in yield rates, forming a vicious cycle of difficulty in recruiting and retaining workers. The traditional model of relying on manual labor to increase production has completely failed.
Furthermore, the debt period is under great pressure and cash flow is tight.
Downstream OEMs and large customers generally implement accounting terms of 3 to 6 months, and acceptance bills have become the mainstream settlement method.
The funds of small and medium-sized processing factories have been occupied for a long time, and the risk of bad debts has increased. Many factories are in the embarrassing situation of “daring not to accept orders, and not making money after accepting them.”
Finally, the threshold for transformation is high and small and medium-sized enterprises are in a dilemma.
High-end five-axis machining, ultra-precision technology, and digital production require large investment in equipment and technology.
Small and micro factories have meager profits and are unable to continuously upgrade; blindly following the trend of transformation can easily fall into the transformation trap of high investment and low returns.
Moreover, domestic high-end technology and industrial software still rely on external introduction, which creates great resistance for small and medium-sized enterprises to upgrade.
In the future, there are three core trends in the machining industry.
The first is to shift from “fighting for output” to “fighting for precision and craftsmanship.”
In the future, ordinary rough machining and ordinary turning and milling will continue to be rolled in, and profits will approach zero infinitely.
Micron-level precision machining, special-shaped complex parts, and new material processing will become high-profit tracks.
Customers no longer compete for price, but for stability, yield, and delivery accuracy. Process capabilities will become the core barrier.
The second is to shift from “pure processing” to “digital flexible manufacturing”.
Traditional large-volume production orders continue to decrease, and small-volume, multi-variety, and expedited customized orders have become the mainstream.
Factories that survive in the future must be flexible factories with fast line changes, quick machine adjustments, stable quality products, and flexible delivery.
Through basic digital accounting and production data management and control, it is the lowest-cost upgrade path for small and medium-sized factories to reduce human errors and improve production efficiency.
The third is to shift from “selling work hours” to “selling solutions and services.”
High-quality processing plants no longer rely solely on working hours to bill, but provide integrated services such as process optimization, tooling design, incoming material adaptation, and full quality assurance.
Factories with the ability to analyze front-end processes, solve deformations, control tolerances, and reduce costs have absolute pricing power and can completely get rid of low-price involution.
Factories of different sizes have different strategies to break the situation.
Small processing plants should focus on fine segmentation and flexible supporting, rather than being large and comprehensive, specializing in 1 to 2 subcategories, focusing on small batches of precision proofing and expedited orders, so as to increase the flexible supporting production capacity of large factories.
Do not blindly purchase expensive equipment, optimize existing processes, strictly control yield rate and delivery speed, and rely on reputation and response speed to stabilize customers.
Medium-sized factories must build process barriers, bind high-quality customers, deeply explore high-end tracks such as new energy, medical care, and automation accessories, and polish core processes such as super-fine grinding, mirror processing, and complex special-shaped parts processing.
Connect with high-quality downstream companies and become a fixed supporting supplier to get rid of loose orders and improve order quality and profit margins.
Steadily promote automation transformation and reduce manual dependence.
Large-scale factories need to undergo digital upgrades, provide integrated services, build digital production systems, and achieve production visualization, quality traceability, and parameter standardization.
From a single processing service, we have upgraded to a full-chain service of design, technology, processing, testing, and delivery, creating brand and scale advantages, and undertaking high-end and high value-added batch orders.
Machining practitioners must have correct core knowledge.
What will be eliminated are people, not industries. The manufacturing industry will always be in urgent need. What will be eliminated are low-end workshops with old ideas, extensive management, and no technological capabilities.
Profits come from differences, not hard work. Only unique craftsmanship, stable quality, and high-quality services can earn premium profits.
Stability is more important than anything else. During the industry reshuffle, blind expansion of production will lead to death. Only by carefully controlling costs, stabilizing cash flow, stabilizing processes, and stabilizing customers can we overcome the cycle.
The future of the machining industry is very clear: the low-end will die if it competes with price, the mid-end will maintain its capital stably, and the high-end will get rich if it competes with craftsmanship.
There will be no dead end machining industry in the future, only processing plants that are unwilling to upgrade and stick to the old model.
For machining practitioners between 30 and 50 years old, there is no need to worry about the decline of the industry. They only need to give up low-end involution, deepen their craftsmanship, refine their operations, and steadily digitally upgrade. They can gain a firm foothold in the industry reshuffle and continue to make stable profits.
