Recently, according to the work plan of cmtba Media Department, the author interviewed the secretariat of the Tool Branch and several tool enterprises (mainly tool enterprises) through interviews and correspondence. He had a preliminary understanding of the operation of small tool industries and the current situation of enterprises in China and formed some superficial understanding, which is summarized as follows.  I. Overview of Industries and Enterprises It is understood that 2017 is a rare good year in the history of the tool industry. For four consecutive quarters, it has maintained the development momentum of two flourishing production and sales, with sales revenue increasing by more than 20% year on year and exports reaching a new high in recent years.  Entering 2018, the tool industry continued its high-speed growth in 2017 and continued to maintain rapid growth.  However, with the gradual decline of 3c and automobile industry, the growth rate of tool industry (mainly small tool industry) slowed down from the second half of 2018.  By the first half of 2019, the tool industry will show a high level of consolidation and a steady decline.  According to the relevant data of 40 member enterprises participating in the monthly report of the Tools Branch, the year-on-year growth rate of sales revenue in the four, five, six, seven and eight months is -3.3%, -3.4%, -4.4% and -6.7%, -8.1%, the month-on-month growth rate of sales revenue is -5.2%, -10.4%, -4.6%, -19.3% and 2.7%, and the year-on-year growth rate of profits is -9.9%, -14.4%, -6.5%, -8.8% and -10%, respectively  At the same time, in the first quarter of 2019, the export of cutter products also dropped sharply, with a year-on-year increase of -15.2%.  According to the overall situation of the machine tool industry, the decline of the tool industry, especially the small tool industry, has a strong correlation with the general environment and lags behind slightly. It is more affected by the obvious decline in the user fields such as automobiles and 3c.  Specific to the enterprise level, the situation is different.  Statistics from cmtba show that in recent years the overall operation of Shanghai Tool Factory Co., Ltd. (hereinafter referred to as Shanggong) has been in good condition, with its annual sales and profits at relatively good levels.  According to the data from January to May 2019, the sales volume of high-speed steel twist drills, high-speed steel taps and overall hard alloy tools on the job dropped to a certain extent. However, due to its persistence in technological innovation and structural adjustment, and its outstanding performance in the fields of construction machinery and aerospace, the total profit of its products increased by 10.5% year on year.  In the first half of 2019, the internal and external sales of Zhuzhou Diamond Cutting Tools Co., Ltd. (hereinafter referred to as Zhuzhou Diamond or Zhuzhou Diamond) declined slightly year-on-year, but through active adjustment of market strategy, the sales rose month-on-month in May, the year-on-year decline narrowed, and the marketing decline momentum was effectively curbed.  Guilin Guanglu Digital Measurement and Control Co., Ltd. (hereinafter referred to as Guilin Guanglu or Guanglu) saw its output drop slightly by about 1% and its sales increase by 15% (including 30% in the first quarter). From the second quarter onwards, it was obvious that the order decline was serious, and the sales in the second quarter were the same as last year, which was also rare in Guanglu in the past three or four years.  Sendai Yingge (Chengdu) CNC Cutting Tools Co., Ltd. (hereinafter referred to as Sendai Yingge) is in good condition in the first half of 2019, with a GDP of about 120 million yuan, up 21% year on year.  The newly signed contract was about 83 million yuan, up 16% year on year.  Hangzhou Hangzhou Hangren Tools Co., Ltd. (including Hangzhou Hangren Tools Co., Ltd. (hereinafter referred to as Hangzhou Hangren)) saw a steady growth in production in the first half of 2019, with production and sales basically balanced. The output of tap, die and assembled cutting tools increased rapidly year on year.  Xiamen Golden Heron Special Alloy Co., Ltd. (hereinafter referred to as Golden Heron or Xiamen Golden Heron) reflects that the growth rate of order demand has slowed down compared with 2018, but it is still in normal operation.  In the first half of the year, sales of Zhejiang xinxing tools co., ltd. increased by 35.1%, while exports increased by 41.1%, resulting in rapid growth in production and sales.  In the first half of 2019, tool enterprises will be more or less affected by Sino-US trade friction.  It is Zhuzhou Diamond that is directly affected.  First of all, a 25% tariff increase has increased the export and promotion costs of its cutting tools, weakening its competitiveness in the US market.  Secondly, the current tax list includes a large number of cutting tool application industries such as engines and motors, which will indirectly cause the export of related products to drop considerably.  In addition, some user enterprises may consider transferring production lines from home to Vietnam, ASEAN and other countries, resulting in a shrinking demand for cutting tools.  If the United States further implements a 25% tariff increase on 3c industries such as mobile phones and tablet computers, the demand for cutting tools in related industries will be further reduced.  Sino-US trade frictions have had a greater indirect impact on Guanglu Company, and the overall decline in cutter orders has resulted from the impact on its service areas.  Hangzhou blade tools also said that the trade friction between China and the United States caused its orders in foreign markets, especially in the United States, to become unstable in the first half of 2019. it is expected that in the second half of the year, U.S. customers will drastically reduce their orders and demand a reduction in prices, which will have an impact on their export markets.  Judging from the feedback from enterprises, the demand for cutting tools in different fields and the market performance of different kinds of cutting tools vary greatly, which fully reflects the specific and subdivision characteristics of the cutting tool industry.  At present, the fields with good demand for cutter products mainly include aerospace, military industry, energy, construction machinery, rail transportation, heavy machinery industry, etc.  Shanggong said that with the country's emphasis on national defense and the aerospace industry, the aerospace industry will become another vigorously developed field after the automobile industry.  Especially in the field of aviation parts processing, it has almost become the starting point for various domestic and foreign tool manufacturers, and has successively launched a series of special aviation tools.  Although the overall scale effect of aviation is not enough at present, the market still needs a cultivation process because various tool manufacturers have not entered the standardized application system, but the development potential is huge.  At the same time, the general machinery fields such as construction machinery and rail transit have developed relatively well in the past two years. The heavy machinery industry has ushered in a new round of economic growth cycle, and the transformation of new kinetic energy on the demand side has continued to accelerate.  Among them, the metallurgical industry and mine exploitation will continue to grow in the first half of 2019 after the temperature continues to rise in 2018.  As for the types of tools, generally speaking, the market demand for high-end series products with high technical content that can replace imports is relatively strong and the orders are relatively good.  Different enterprises have different types of cutting tools. The new products, such as economical hydraulic tool shanks, quick-change adhesive chucks and high-efficiency reaming systems, introduced by Sendai Engel in 2019, have won high praise in the market and have driven the sales growth.  Tap, die and set of cutting tools for Hangzhou-edged tools grew rapidly year on year.  The orders of micrometer varieties and vernier calipers of Guanglu Company are saturated and in short supply.  Second, the main problems and difficulties are small in size and lack of attention.  Due to the small size of the cutting tool industry, the market size is only tens of billions, even less than the annual marketing income of a single enterprise in some fields. For a long time, the cutting tool industry has been regarded as a subsidiary of machine tools and has not received enough attention. The state's support for the industry needs to be strengthened.  Investment in basic research and product research and development in the industry is insufficient. The medium and high-end markets have long been occupied by brands in Europe, America, Japan and South Korea. It is difficult for Chinese products to make major breakthroughs.  In fact, as an important part of cutting, cutting tools directly affect the level of cutting and are one of the important factors to measure the level of a country's manufacturing industry.  The problem of talents is prominent.  The talent problem is a very prominent common problem in China's machine tool industry and even the entire machinery manufacturing industry, which has seriously restricted the overall progress and development of the industry.  Zhuzhou Diamond believes that the domestic cutting tool industry started late and has a weak foundation.  The development process of just a few decades is far from enough in terms of technology deposition and talent reserve.  Sendai Inge said that the most important problem facing enterprises at present is the shortage and loss of high-end technical talents.  Xiamen Golden Heron believes that the tool industry has a great demand for professional and technical personnel and management personnel, but it is difficult to recruit them at present.  Guanglu reflects that enterprises are located in underdeveloped areas such as Guangxi, and the overall wage level is not high, which makes it difficult to recruit high-end R&D talents, and at present this problem is difficult to alleviate.  Some enterprises reflect limited capital investment.  Working on the job reflects that the rising prices of raw materials for upstream products have continuously increased the production cost of products and affected the export of products.  At the same time, the overall market situation is not optimistic due to the slowdown in capital turnover, resulting in a decline in market demand and rising customer inventories.  Guanglu also encountered capital problems, mainly due to fierce competition among peers, low product profits, and the lack of policies and capital support due to the small size of the measuring tool market, slow growth rate, and limited investment from enterprises' own capital, which could not speed up the pace of technological innovation and product innovation.  Xiamen Golden Heron and other enterprises also reflect the rising operating costs and greater cash flow pressure.  In addition, some enterprises also reflect the increasing pressure on environmental protection.  For example, Shanggong is located in Shanghai, an international metropolis, but it is dominated by traditional manufacturing industry. How to ensure that the production process meets the requirements of environmental protection and the production capacity is not affected or less affected has become a thorny problem for enterprises at present.  Three, efforts to transform, to meet the needs of the high-end market and the whole machine tool industry similar situation is that China's high-end market in the field of cutting tools are mostly occupied by imported brands.  According to the report of the secretariat of the Tool Branch of the Machine Tool Association, of China's total cutting tool consumption of 42.1 billion in 2018, imported cutting tools (including overseas brands produced and sold in China) amounted to 14.8 billion, accounting for 35%.  Facing the increasing pressure of operation in 2019 and beyond, cutter enterprises are trying to explore the road of transformation and upgrading.  Breakthrough in key areas: regarding the current economic situation, zhuzhou diamond believes that the macro-economy may still be under downward pressure.  Under the influence of many factors such as Sino-US trade friction, the cutting tool industry may continue to decline in the second half of the year.  Zhuzhou Diamond will continue to take active measures to cope with the changes in the market situation. On the one hand, it will continue to strengthen its market promotion efforts in the second half of the year, deepen its application of key markets and increase its market share.  On the other hand, it will continue to carry out special research and development on high-end and medium-end cutting tools in key industries such as aerospace, military industry, automobile and energy, further expand the market, strive to break through more foreign technical barriers and occupy a larger share in the high-end and medium-end cutting tool market.  Shanggong has conducted a lot of research on China's aviation manufacturing industry, which is in a period of rapid development. It is pointed out that the development of new aircraft and large aircraft poses challenges to aviation manufacturing and processing, and puts forward higher requirements for the overall application of cutting tools.  From the point of view of the processed parts of the aircraft, the required cutting tools can be subdivided into cutting tools for processing engines, wings, airframes, landing gears, etc. The processing of engines can also include engine brakes, blades, blades, diffusers, bearing housings, etc.  From the point of view of different processed materials, it can be subdivided into special tools for processing hrsa high temperature heat resistant alloy, aluminum alloy, titanium alloy, carbon fiber reinforced plastic, high alloy steel and other different materials.  In terms of cutter types, it can be subdivided into integral high-speed steel cutters, integral hard alloy cutters, rotary cutter and pcd welding cutters.  According to statistics, in the field of aircraft manufacturing, high-speed steel cutting tools account for about 60% of the total cutting tools for various cutting processes, hard alloy cutting tools account for about 35% of the total cutting tools, and superhard cutting tools (cubic boron nitride and diamond) account for less than 5% of the total cutting tools.  This has great room for development for those workers who have relatively obvious advantages in the design, manufacture and application of high-speed steel tools, but the overall matching ability of the tools needs to be further improved.  Aim at the medium and high-end market: Guanglu will increase the research and development of high-end products on the basis of the original product series, aim at the international high-end similar product technologies, and compete with the international high-end technologies. The target market is to import and replace them first, and then develop the international high-end market.  Guanglu said that it will unswervingly take the middle and high-end route, take technological research and development as the vanguard, consolidate the company's basic strength and create higher value for customers.  Hangzhou Blade Tool said that it would pay more attention to the export market, pay attention to the impact of Sino-US trade friction, adjust the product layout in time, and further explore markets in Europe and Southeast Asia.  At the same time, improve product quality, increase investment in technological transformation and production scale, and promote and perfect digitalization and 8s management.  Broaden the field of users.  Regarding the development strategy and prospect forecast for the second half of 2019, Sentaiyinger said that the decline in the automobile manufacturing industry in the first half of the year has affected the growth expectation to a certain extent. In the second half of the year, efforts will be made to broaden the user base and focus on key industries such as energy and power industry, construction machinery, electronics and aerospace.  At the same time, to meet the requirements of more automobile manufacturing enterprises to reduce costs and increase efficiency, improve product quality and stability;  In the next few years, we will strive to enhance our own strength, consolidate our foundation, seize opportunities and stand out in the wave of transformation and upgrading.  Shanggong believes that in the field of construction machinery and rail transit, the demand for traditional tools, especially large-size tools, has increased. For products such as large-size high-speed steel drill bits, large-size spiral fluted taps above m36 and integral hard alloy internally cooled deep-hole twist drills, the market demand has increased to a certain extent.  As for the future development prospects of the industry, the interviewed enterprises can view the current situation and future trends rationally, and are full of confidence and expectation in the policies adopted by the state such as supporting entities, tax reduction and fee reduction.  At the same time, he said that according to his own characteristics and industry situation, he would actively take practical and important measures to improve product technology and quality, strengthen management, promote the integration of the two, participate in information construction, and change the passive into the active in view of the impact of Sino-US trade friction, better develop domestic cutting tools, strive to achieve import substitution, and make greater contributions to the revitalization of the machine tool industry.