Machine Shops Industry Profile

Companies in this industry use machine tools to modify metal, plastic, and composite materials to produce finished products. No major companies dominate the industry.

The US machine shops industry includes about 20,000 companies with combined annual revenue of about $40 billion. The output of machine shops in the US is expected to grow at a slow rate in the next two years. Key drivers of growth include production in major customer industries such as aerospace and automotive.

COMPETITIVE LANDSCAPE

Demand depends on US manufacturing activity. The profitability of individual companies is linked to engineering expertise and operating efficiency. Larger shops have the ability to invest in advanced production machinery. Smaller shops can compete effectively by serving specialized customers, or by providing engineering services. The industry is highly fragmented: the 50 largest companies generate about 10 percent of revenue.

PRODUCTS, OPERATIONS & TECHNOLOGY

Machine shops are intermediaries in industrial production. They work on a job basis: generally, they receive unfinished parts or raw materials from a manufacturer, perform various operations, and return the parts to the manufacturer for further processing. They own and operate special machine tools that can perform a variety of operations, including drilling; boring (enlarging an existing hole); tapping (cutting threads inside a drilled hole); threading (cutting threads on a bolt); cutting; milling (removing material from a surface); and grinding (usually a finishing operation). These operations involve material removal, frequently with great precision. The ...