Population Growth, Globalization and Your Precision Machine Shop

Population Growth and Globalization are two very important determinants or drivers of your precision machine shop business.
Are you paying attention?

We think that the population growth is one of the most important determinants of demand for our products- after all, our products are bought and used by people.

Population growth = more customers

Population growth = more customers

But it goes further than that.

More people means more energy is needed. that means equipment to harvest, recover, refine and transport.

More people means that we need to use smaller amounts of materials to do an equivalent amount of work. This is called ephemeralization, and it is why we seldom see the 4″ Acme running round the clock, while all of our smaller diameter swiss machines are booked solid across multiple shifts.

Ephemeralization is why I can now watch TV on my hand held device, in contrast to the 75 pound “portable ” TV I had back in the 1970’s with a steel chassis and case.

Portable! Not quite...

Portable! Not quite…

Maybe the population isn’t growing where you live- but globally, globally we are adding 82,000,000 more people each year.

If they are to have the same standard of living, that means more energy, more appliances and plumbing, more transportation, more healthcare.

Global Population growth is the “Driver of Drivers.” it is what drives the change in the other market areas that affect our shops: Mobility, Communication, Health, etc.

So how can a shop owner look at these two megatrends of population growth and increasing globalization for planning purposes?

Population growth means

  • Increasing demand-Automatic machines to economically handle production volumes
  • Market demand following demographics
  • Low mass devices- Stronger more difficult to machine materials
  • Low mass devices- Smaller parts requiring greater precision
  • Smaller rather than larger size machines

Globalization means

  • Worldwide markets but needing localized products
  • Small batches for local markets
  • Greater competition moderated mostly by freight costs
  • Skills gaps can be solved “over there” if we don’t solve it here
  • Costs of raw materials reflect worldwide rather than local economic conditions.

One of the failings of Soviet style central planning was well, central planning.

One of the weaknesses that we have as small entrepreneurial shops is failure to see the big picture.

Population growth means more, smaller, and more difficult to machine and produce materials and products.

Globalization means larger markets but must be localized products, more expense for raw materials and energy, and greater competition.

What is it that your shop does better than anyone else in the world?

If it is making big parts in large volumes, from easy to machine materials, we would not be terribly optimistic.

If you say it is making batches of complex things with high value from difficult to machine materials in small to tiny sizes. if it is for critical parts used to collect or use energy, we think that you might be playing these megatrends just right.

Post inspired by presentation by Horn: Tools for Today and Tomorrow

Population Photo

Portable TV

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