As demand rises and sales gain momentum, suppliers are forecast to increase prices in the three years to 2017
Los Angeles, CA (PRWEB) November 29, 2014
The machining services market has a buyer power score of 2.8 out of 5, indicating few negotiating powers for buyers. IBISWorld market research analyst, Scott Winters, says, "The lack of buyer power can be tied back to excess demand for machining services, which allows suppliers to raise prices while stripping away negotiating opportunities." As the domestic economy improves, key buying markets such as mining, government, auto manufacturing and power generation are purchasing more machinery and equipment, boosting sales for machine shops. Nevertheless, there are still a few encouraging market factors that will preserve buyer power in the coming years and allow buyers to gain a good price on machining services.
The most important factor preserving buyer power is the slow rate of price growth during the past three years. "Despite demand markets picking up, prices for machining services have been increasing slowly and steadily, allowing buyers to compare multiple quotes accurately and negotiate for the best price," says Winters. In addition, rising demand has triggered more suppliers to enter the market in recent years. Low market share concentration has enhanced competition among buyers, especially at the local level, thereby keeping prices in check. Moreover, the availability of both general and niche suppliers allows buyers to select a supplier based on their ability to cater specifically to the buyer's application. Major vendors in the market include Rockwell Automation Inc., Major Tool and Machine Inc. and CNC Industries Inc.
Unfortunately for buyers, high demand is projected to push prices upward in the coming years. This price increase will accelerate as input costs rise and increase operating costs for suppliers. In fact, a key risk factor for buyers is the threat of rising steel and aluminum prices. With few substitute goods or related services to provide additional negotiating leverage, buyers are left to absorb the majority of the price increase when input costs spike. To combat rising prices, buyers are encouraged to lock in the current price by entering into a long-term fixed-price contract with their supplier. For more information, visit IBISWorld’s Machining Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to help buyers of machining services. Machining services include turning services; electrochemical machining services: punching services; stamping services; and grinding, bending, drilling and polishing services, among others. Suppliers in this market are typically small and localized, although there are some large national players as well. Machining companies may provide design and fabrication services in addition to machining services. This report excludes other types of services, such as metal welding and painting.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.