News Digest Publishing forecasts 2024 Japanese machine tool orders at 1.3 trillion JPY

News Digest Publishing (ND), the organization behind SEISANZAI Japan, held the “2024 FA Industry New Year’s Reception” on January 11. SEISANZAI Japan Editor-in-Chief Shu Yasumi revealed a forecast of 1.3 trillion yen in orders for the Japanese machine tool industry this year. 

Related article: https://seisanzai-japan.com/article/p4659/ 

2024: A year of change

Shu Yasumi, Editor-in-Chief of SEISANZAI Japan

In 2023, total orders for machine tools in Japan were 1.48 trillion yen, down 15.9% from the previous year. Yasumi, who presented the “Industry Outlook,” noted the continuous softening trend since the peak in March 2022. Despite this, the total amount of orders remained remarkably high. He pointed out that the average unit price is increasing due to the integration of machine tools with software and automation equipment. 

Looking ahead to 2024, Yasumi forecast a 12.2% year-on-year (YoY) decline in total orders to 1.3 trillion yen. The breakdown includes a 6.3% YoY decline in domestic demand (450 billion yen) and a 15.0% YoY decline in overseas demand (850 billion yen).  

He pointed to China’s prolonged economic slump and structural reforms as crucial to recovery. The European and North American markets, on the other hand, are expected to remain stable this year without a major slump. He stressed that this year will be a year of change, with many risk factors such as geopolitical risks and a drastically deteriorating climate. 

Prepare for an economic turnaround 

Yasmi described the 2020s as a “political era” marked by the emergence of the U.S.-China conflict, with political risks having a significant impact on the economy, contrasting it with the “economic era” of 2010, centered on China’s dramatic growth. Domestically, he sees Japan’s “lost 30 years” coming to an end and inflation rising. 

From conflicts to climate-related logistics crises, he highlighted various global risk factors. Rising energy costs and cybersecurity issues are also becoming more serious, and there are many other factors to keep an eye on. Despite these concerns, he was optimistic about the Japanese machine tool industry, predicting a turnaround in the second half of the year as capital investment resumes. Drawing on past market cycles, Yasumi explained his forecast, stating, “Based on an analysis of past peaks and troughs, the market is expected to bottom out around March this year, and the economy will begin to feel the upturn in the fall and beyond.” 

In conclusion, Yasumi emphasized the need to “reset the successful experience of the past 30 years” for corporate survival. This includes rethinking financial approaches, adjusting management to domestic inflation, maintaining strong negotiating skills, and reducing dependence on specific companies or industries. He concluded, “Even in difficult times, prepared companies can navigate through the troughs and capitalize on the upturns at the right time.”