Machine Shops
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 17,300 machine shops in the US process various materials, such as metal, plastic, or composites, to produce custom parts. Companies may specialize in a particular process (such as lathing) or an industry (such as automotive). Most projects are low-volume and require high precision. The industry consists of small- to medium-sized businesses – no large companies dominate.
Dependence on Manufacturing Sector
Demand for goods produced by machine shops is cyclical and highly dependent on the state of the manufacturing industry.
Dependence on Skilled Labor
Operating machine shop equipment requires a blend of technical knowledge and experience.
Industry size & Structure
A typical machine shop operates out of a single location, employs about 15 workers, and generates about $2.3 million annually.
- The machine shop industry comprises about 17,300 companies that employ 267,000 workers and generate $39.6 billion annually.
- Customer industries include aerospace, automotive, transportation, consumer electronics, and various equipment manufacturers (farm, medical, recreational).
- The industry consists of small- to medium-sized businesses - no large companies dominate.
- Nearly a third (32.2%) of US machine shops are in California, Texas, Ohio, and Michigan.
Industry Forecast
Machine Shops Industry Growth
Recent Developments
Jan 18, 2025 - Growing Optimism Among Metalworking Manufacturers
- December marked the third consecutive month of metalworking improvement as measured by the Gardner Business Index’s (GBI) for Metalworking, which tracks the current state of metalworking and machining activity. The metalworking industry registered a GBI reading of 46.9 in December. While still indicating contraction, the recent upward trend points to a possible bottoming out of the current contractionary cycle that began in early 2023, Modern Machine Shop reports. Supplier deliveries was December’s strongest index component, showing gains month-over-month and versus the previous year, while other components including employment and exports contracted versus the previous month, per MMS. The GBI Future Business Index – a look at the future state of the metalworking market – surged to 68.1 in December, its highest level in recent years. The dramatic improvement in sentiment suggests growing optimism among metalworking manufacturers regarding business conditions over the next 12 months.
- US manufacturers have much to lose if a trade war erupts between the US and its largest trading partner Mexico, The New York Times reports. During his campaign, President-elect Donald Trump vowed to slap 25% tariffs (or higher) on all goods from Mexico unless it stopped the flow of migrants and drugs to the US. While Mexico depends heavily on trade with the US – exporting some 80% of its goods to America – it accounted for nearly 16% of overall US exports in 2022, according to the Office of the US Trade Representative. Tariffs on Mexico and China, another Trump target, would have widespread ramifications for manufacturers, making it more expensive to produce goods that use foreign materials and components. And if other countries respond with retaliatory tariffs, it could also make it more expensive for manufacturers to export goods to foreign markets, according to Manufacturing Dive.
- Grant funding for workforce training or the purchasing of new equipment is a valuable resource that many machine shops overlook due either to a lack of awareness or the complexity of the application process, according to Modern Machine Shop (MMS). Grants are available from states and the federal government, with larger shops having more success obtaining federal money due to the greater impact those grants can achieve, including significant job creation potential and large-scale investment (common goals for federal grants), according to MMS. Small and mid-sized shops are more likely to access state grants, which vary by state but often include programs like Manufacturing Readiness Grants that support advanced manufacturing technologies. Indiana, for example, offers grants up to $200,000 for manufacturers investing in new equipment, while other states, including Michigan, have provided Industry 4.0 grants to help shops adopt cutting-edge technologies, MMS reports.
- Producer prices for machine shops rose 1.2% in November compared to a year ago after rising 1.2% in the previous November-versus-November annual comparison, according to the latest US Bureau of Labor Statistics data. Employment by the industry fell by 3.1% year over year in October, extending a mostly downward trend from its post-pandemic high in June 2023, BLS data shows. While machine shops are trimming headcounts amid cooling demand from manufacturing customers, average industry wages rose 3.9% YoY in October to a new high of $27.49 per hour, BLS data show.
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