U.S. tool builders now target India: growth in manufacturing sector predicted.

Author:Modic, Stan
Position:Straight talk

After years as the United States' preferred corporate dumping ground for outsourcing financial, engineering, and customer service operations, India is on a fast track to build its manufacturing sector. And the machine tool industry appears poised to cash in on the emerging foreign market goldmine as never before.


Justin Quan, Haas Automation business manager for Southeastern Asia, says: "India is really coming of age on a global scale as a manufacturing economy; I would expect to see very rapid growth in the machine tool markets." With its success in the information and technology sectors, India is now getting serious about improving its infrastructure--a necessity if it wants to launch a serious industrial revolution.

Ford is investing $500 million to build a small car there. India's largest automaker is launching a new car it'll sell for $2,500. Ford says it'll have a new engine plant there by 2010. A population of more than a billion people and an increasingly well-off middle class will be demanding more and better goods. As the manufacturing sector grows, so will the need for more and more sophisticated machine tools.

"There is a lot or optimism in India now," says Knox Johnstone, business development director of the AMT-Association for Manufacturing Technology, who recently led a trade mission to India. The Indian economy grew 8 percent last year and that is expected to continue. The key for the U.S. machine tool industry is the explosive growth in the manufacturing sector with increased investment in automotive, defense, space, atomic energy, railways, and other areas of the infrastructure.

India needs help

All these efforts will require machine tools, tooling, and tools; and the Indian machine tool industry won't be able to keep up. As a U.S. Commerce Department advisory points out, the Indian machine tool makers have had a heavy dependence on imports over the years. According to the U.S. Commercial Service, the total Indian machine tool market in 2007 was about $1.5 billion, with about $1 billion being filled by imports and $575 million by domestic makers. Imports from U.S. builders totaled $237 million, or some 22 percent. That's up from $204 million in 2005.

AMY member's numbers are smaller but also trend up. They show $10 million U.S. machine tool exports going to India in 2000. That ballooned to $60 million by 2006.

Observers believe imports will continue to grow as there will be increased demand--spurred...

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