Exclusive Breaking News:

 Looking Rationally at the Industry Downturn              

Re-Establishing Healthy Ecology for Manufacturing

Lan Haixia，Media Dept. of CMTBA   

Industry statistics of the first half of 2015 was released. The major economic indicators of the industry continued to decline with the loss continuously to expand. The statistics of key liaison network of the industry in June shows that companies whose main business income, total industrial output value and sales value were declining on year-on-year basis had reached close to 70% out of all companies in the industry. Among them, unprofitable companies accounted for close to 40%.

How bad is the situation?

Such statistics will undoubtedly increase pessimism of the whole industry. The machine tool industry has been in downward trend for 4 years since the second half of 2011. The expected stabilized situation on touching the bottom has not appeared yet. Except that a small number of enterprises are growing against the trend, more and more enterprises couldn’t escape from the downturn. The whole industry seems to fall into "devastated" predicament.

Some of the latest changes in the user market made the industry's future more uncertain. For example, the automobile market has always been performing stably, but both of its production and sales were down in the first half of this year, resulting in machine tool enterprises, which provide equipments to automobile manufacturing industry, beginning to experience depression, adding more misfortunes to the machine tool industry operation. In addition, as an emerging market, the booming mobile phone manufacturing equipment in recent years also fell in the first half of the year, down by 13.6%. A large part of growing enterprises against the downturn trend in the industry benefited from the explosive growth of mobile phone consumer market, moreover, many enterprises are flooding into the said market. If the mobile phone market turns downward, the impact on the machine tool industry would be obvious.

How bad is the situation? When could the market stop falling and become stable? How long could the enterprises stick to? At this time, perhaps we should listen to the insights of the senior industrial professionals who are experiencing the continuing decline.

Zhang Zhigang, President of JIERMT, said the current adjustment of machine tool industry should be viewed as normal. A very important feature of machine tool industry is of a strong cyclical industry. Being the means of production industry, the development of machine tool & tool industry needs to be driven by investment, but investment itself has a cycle and never lingers in one field for a long time. China's machine tool industry has been through 10 years of rapid development, so the current adjustment is inevitable. Seeing from the time cycle, the adjustment period of 4 years is also in normal expectations.

In fact, this industrial feature is also reflected in the same industry in foreign countries. Machine tool industry in developed countries has been through a few rounds of such adjustments, and a considerable number of enterprises would be eliminated after each round. In Japan, for example, the number of Japanese machine tool factories has been reduced by half compared with twenty or thirty years ago.

Chen Huiren, president of CMTBA, said that the current understanding towards the industry should be rational and objective. Compared with developed countries, China's machine tool & tool industry is still in the infant stage. It follows the same industrial economic law and development path. A batch of enterprises would be eliminated amid the structural adjustment. Whether from a historical, global, or long-term perspective, this is a necessary stage of the process in industrial structure upgrading. It seems to be a bit of an exaggeration to describe the current difficulties as crisis. Perhaps it is more appropriate to call it an adjustment.

In fact, this is a time of change. Not only the machine tool & tool industry, but also the entire manufacturing industry and the entire national economy are all in the critical period of history in transforming and upgrading. In the background of the market downturn, the internet +, cloud computing, big data, and intelligent manufacturing---all these popular elements together as a whirlwind---are impacting the traditional manufacturing industry. The viewpoint of Internet + manufacturing has become the industry's catchword. So, what kind of change will the Internet + bring to the enterprise? Will Internet + become the winning magic to lead the manufacturing industry out of the bottom?

"Internet +" OR "+ internet"

The raging and coming Internet + is pushing traditional manufacturing industry to transform. For example, many manufacturing enterprises have begun to try to use the Internet to expand their marketing channels, and a number of enterprises started "reconstruction" of the production process to improve the quality and efficiency through internet. The deeper integration is to use internet thinking to reshape the enterprises’ value chain. The Internet + seems to have a magic making the manufacturing industry revitalized.

But if we calm down and analyze, we will see no matter how magical the Internet + is, at present, manufacturing process still needs to complete procedures step by step. Wang Xu, president of BYJC, expressed that in a certain extent, quality and reliability, etc. of domestic machine tool products at present, may not be able to support the internet +. To talk the internet thinking right now may be groundless. Machine tool & tool industry as an industry must be of enhancing basic work. As long as there is one part of a product not-well manufactured, the accuracy cannot meet the requirements. The Internet + is unable to solve these problems.

Currently, there are two extreme rational cognitions toward Internet in the industry. One is passive resistance that the machine tool & tool industry should play the craftsman spirit. The other is to blindly follow the trend believing the traditional industry has no future and it’s a must to engage in the Internet + and even there is a tendency of de-manufacturing. In fact, the entire industry is in an important gateway of an unprecedented transformation and upgrading and a new generation of information technology flourishing. The two trends historically land together to provide a rare historical opportunity to the machine tool & tool industry.

How to grasp this opportunity? Chen Huiren believes that the right attitude towards the Internet should be active integration. The essence of internet thinking, big data, etc. is providing more advanced tools enabling higher production efficiency for enterprises, closer communication with users, and more convenient of information acquisition. It is an important and effective means to achieve the traditional industrial upgrading. This also means that, the machine tool & tool industry being an industry of producing equipment, the Internet can only be a tool and means for development, and cannot be the subject. The subject can only be manufacturing, otherwise it is putting the cart before the horse.

Leaving aside the scientific and technological new product of the Internet +, cloud computing, and big data, in fact, intelligent manufacturing is not a new concept, it’s only in recent years the intelligent manufacturing has the basis of large-scale application along with the rapid development of communication technology and sensor technology. And the intelligent manufacturing is undoubtedly a major direction of transformation and upgrading for machine tool & tool industry.

Ye Jun, president of Suzhou Electro machining Machine Tool Research Institute Co., Ltd., said opportunities for high-end equipment in China's machine tool & tool market have been taken ahead by foreign companies, while the intelligent machine tools may be a new path for us to seize the high-end market in the future. We still have a lot of room for development in the field of intelligent products. For some unsolvable problems by our product in the past, through the intelligent manufacturing, products may be greatly improved which can solve the previous unsolvable problems. Such as CNC system newly released by Huazhong , which can detect spindle current for the 3C industry, and then according to the detection conducts digital processing, which can raise the processing efficiency by 20% and directly improve the international competitiveness.

Continuous improvement OR disruptive innovation

In the gust of hot winds of the Internet + blowing onto manufacturing industry, a word often heard is disruptive innovation. In fact, disruptive innovation is a rarest "high level" innovation. And relative to disruptive innovation, solid basic skills would be needed for manufacturing industry with continuous improvement being probably more effective. Some European and Japanese manufacturing companies with a history of hundreds of years are all talking about improvement and accumulation; continuous improvement bit by bit is the soul of these outstanding manufacturing enterprises.

And the root cause of the neglect of the continuous improvement in the industry lies, in many years, in extensive management and economic development environment with large-scale expansion as the priority. The typical characteristic of our manufacturing industry is impetuous. We’ve done a lot of things but we didn’t do them well enough. For example, the introduction of high-speed rail technology in China is a successful case of digestion and absorption of the introduction of technology. According to the relevant experts, the introduction of high-speed rail technology followed the principle of three words that are rigidity, fixation and optimization. Rigidity is the implementation of trivial details of introduction of the technology to the letter and to the extent of the rigidity so as to form the fixation. Only on the basis of fixation, can it go to optimization. And our introduction of 95% of technology ultimately failed, largely due to optimization from the start of introduction. In fact, the most essential and the most advanced things were “optimized”.  The essence of such an attitude is impetuous.

Zhang Mingzhi, president of CHMTI, said the machine tool & tool industry in the past ten years of rapid growth, a lot of enterprises relied more on feeling and luck. Once the market is not good, their adaptabilities are very poor. He believes that although the industry has been emphasizing innovation, the focus of innovation is more concentrated on a single technical link but lack of comprehensive innovation, namely, a bit by bit continuous improved innovation in various aspects. For example, we can also manufacture some high-end products with certain indicator achievable even feeling like more or less similar to the advanced level, but after a period of use it will be found far from the advanced one. In fact, when the basic work is still not strong and learning ability is not enough, over emphasizing self innovation and subversive innovation are really an impetuous attitude as well.

If the development stage of high-end machine tool can be summarized into three levels: “can do”, “do well” and “have market competitiveness”, then we may still only stay in the "can do" stage. Ten years of rapid growth, one of the major achievements in the machine tool industry is we transit from "cannot do" to "can do" for high-end products, which is not easy, but we cannot just stay at this stage for it is only a transitional stage. The real "do well" is referred to application, which is still seldom on our market.

Chen Huiren thinks, at present our high-end products need to cross several hurdles, the biggest problem is the misunderstanding. Now a lot of R & D personnel, business managers, and even the industry's expert leadership, often think that there is only “the last mile” from "can do" to "do well", which is actually wrong. If it’s 100 kilometers, this is at least 55 kilometers. Getting over “the last mile” does not require a big investment, but if it is 55 kilometers, it certainly needs to invest large. Removing impetuous mind state, calming down and crossing the more difficult second hurdle are the needed good basic work for China's machine tool & tool industry to practice.