Harvard Machine Ltd.

Harvard Machine Ltd.

Learning Goal 1

The Industrial Machinery Industry

The Industrial Machinery industry is in the mature stage of its life cycle. Over the 10 years to 2016, industry value added (IVA) is projected to grow at a rate fairly in line with GDP growth. Industry IVA will climb an estimated 1.5% annually on average compared with 1.8% for GDP. Between 2003 and 2007, the industry experienced a new growth phase as the debt-fueled housing construction boom stimulated sales of residential construction equipment. This trend changed following the financial crisis of late 2008, with sales stagnating since then. Revenue growth in 2010 and 2011 was driven largely by pent- up demand for residential and commercial construction as well as increased government expenditure. The industry will likely settle on a weaker long-term growth path after 2013 (Presswire, 2011).

World demand for infrastructure, particularly in densely populated countries, has created new geographic markets for this industry. As a result, the four largest players have increased revenue derived from sales outside of the Canada as a percentage of total revenue over the five years to 2011. Increased global demands for industrial machinery has caused industry firms to increase their level of capital expenditure, especially where research and development is concerned, in order to upgrade the quality and serviceability of existing products and create new ones.

Many Canadian manufacturers of industrial machines are owned by or are subsidiaries of foreign companies. Market concentration will continue to increase as global competitors acquire local production capacity and increase their market share.

The company overview

Harvard Machine Ltd is a Canada based diversified manufacturer of industrial machinery and equipment. The company's four business segments make aerial platforms, various construction equipment, cranes and materials-processing equipment for total company revenue of about $4.4 billion. Harvard Machine Ltd employs about 16,300 people (Harvard Machinery Ltd., 2012). The company's General & Custom Machining division makes Turning, Milling, Grinding, Drilling, Spiral threading and Gun drilling products; Automation division makes Material-handling equipment, Turn tables (welding, blanking), Overhead conveyors and W/P pick & place stations; Manufacturing/Fabrication division makes Die carriers/carts, Platforms (fixed, moving), Tool Stands, W/P fixtures, Custom gear boxes and scrap/chips conveyors; and Equipment Repair provide the services to repaire Presses, Cranes, Die carriers, Water pumps, Turbines and Gear boxes (Harvard Machinery Ltd., 2012).

Harvard Machine Ltd was severely affected by the recession in 2009, with demand for construction, mining and road building equipment falling sharply in emerging markets. The company responded by selling its former mining business, including related parts, aftermarket-service businesses and distribution location (Harvard Machinery Ltd., 2012).

External Analysis

The industrial machinery market will be analyzed taking manufacturers of industrial machinery and industrial components as players. The key buyers will be taken as commercial users and industrial companies (including construction, manufacturing, metalworking, agriculture, power producers etc.), and metal producers along with providers of raw materials and equipment for manufacturers and manufacturers of parts that not produced in-house as the key suppliers (Rainer and Turban, 2009). The improving market eases competition slightly which makes rivalry ...