Machine Shops NAICS 332710

May 18, 2025 - AI Drives Improvement

• Artificial Intelligence offers numerous ways for machine shops to optimize equipment performance and longevity, and set maintenance schedules, American Machinist reports. Shops can apply machine learning (ML) algorithms to production processes to spot and overcome bottlenecks and increase output. AI-based tools can also identify which jobs customers request most, giving managers insight into the shops’ top revenue generators. AI’s ability to digest and analyze massive amounts of data from machine condition reports reveals patterns humans might miss, empowering managers to address problems before equipment malfunctions become more expensive or time-consuming, per AM. For example, a ML algorithm may detect that the cutting tools on a machine are wearing down faster than usual. Insights provided by AI can reveal whether the problem is due to the equipment or its operator. While hard data on adoption of AI by US machine shops is limited, the benefits are not.
• A bipartisan group in Congress introduced legislation in May that would boost manufacturing by small US firms, Barron’s reports. As part of the Trump administration’s efforts to revive US manufacturing and create jobs, the Made in America Manufacturing Finance Act would raise the $5 million cap on Small Business Administration 7(a) and 504 loans to $10 million, but only for manufacturers. (The current $5 million limit hasn’t changed since 2010.) The 7(a) program offers flexible financing for working capital, equipment, and real estate, while the 504 program is typically used for fixed assets like land and large machinery. The 7(a) loan program, which guarantees loans issued by banks and nonbank lenders, has long been a cornerstone of small business financing. Lenders broadly support the bill, but would like to see it applied to all small business loans, according to Forbes.

• New tariffs on steel and aluminum imports to the US have a direct impact on small fabricators’ cost structures, bidding strategies, and overall competitiveness, according to Exiil, a provider of software to metal manufacturers. In March, President Trump raised steel and aluminum import tariffs to the US by 25%, ending all country exemptions, in addition to hiking tariffs on China, according to Reuters. Russian aluminum imports carry a tariff of 200%. Beyond raw metal, the US has increasingly added “downstream” or “derivative” products – such as stamped parts, fasteners, tubing, wire, or other items with high steel/aluminum content – to existing Section 232 tariffs. As a result, machine shops face higher materials costs. Even shops that source metals domestically are likely to pay more for metal as US mills often raise their prices when foreign competitors’ costs go up – because the “floor” of the market shifts.
• Gardner’s Metalworking Index, a measure of the current state of the metalworking and machining activity, topped 50 in March for the first time in two years, Modern Machine Shop (MMS) reported in April. March’s reading of 50.7 marked the sixth consecutive month of improving conditions for the metalworking sector. (A reading above 50 indicates the market is expanding.) The March increase was driven largely by significant gains in new orders and production. Other components of the index – backlog, employment, exports and supplier deliveries – saw modest improvements or remained flat. The above-50 reading – the first since February 2023 – signals cautious optimism for the metalworking sector, according to MMS.