The U.S. precision parts market size was valued at USD 36 billion in 2020 and estimated to reach USD 71 billion by 2026, growing at a CAGR of 12% during the forecast period. The precision parts market in the U.S. is likely to grow due to the increasing prominence of electric vehicles. Significant updates in regulations by the United States Environment Protection Agency and the availability of attractive tax and credit incentives by federal governments have driven the demand and sales volume of electric vehicles rapidly in the country. Hence, the increasing importance of electric cars in the US markets has led several key vendors in precision components to increase production potential in manufacturing engines, transmission, and drivetrain components in hybrid and traditional EVs. However, electric vehicles' productivity and sales volumes witnessed a sharp decline during Q1-Q3 2020 due to the seven-week shutdown by major manufacturers to reduce the impact of the COVID-19 virus. Moreover, the prevalence of major EV manufacturers such as Tesla, General Motors, Chevrolet, BMW, and Nissan in the US is expected to act as a major contributing factor for precision part manufacturing in the US.
- The healthcare precision parts market is expected to reach a revenue of approx. USD 9 billion by 2026 due to the increasing application of precision parts in diagnostic equipment.
- The electronic precision parts market is likely to grow at a CAGR of approximately 5% during 2020–2026 due to the increased sales of electronic goods, especially via online stores.
- The aerospace precision parts market is expected to account for over $6 billion by 2026 due to increased safety stringency in defense aircraft by federal governments in the US.
- The revenue share of North East US is projected to reach over USD 24 billion by 2026 due to the increasing demand for electric vehicles.
U.S. PRECISION PARTS MARKET SEGMENTATION
This research report includes a detailed segmentation by
INSIGHTS BY END-USER
Automotive, healthcare, electronic and semiconductors, aerospace, watching making, defense, marine & offshoring are the major end-users for precision components. U.S. auto manufacturers are increasing the focus on the development of electric and hybrid variants. The implementation of heavy-duty engine emission standards, MARPOL Annex VI regulations, the Clean Air Act to curb carbon emission is expected to influence the application of precision parts in the US. However, the demand has been adversely impacted since the outbreak of the COVID-19 pandemic.
US precision part manufacturers are continuously looking to mitigate the pricing pressure. To reduce the production cost, manufacturers apply several techniques, such as purchasing raw materials and components at a low price and improving cost-effectiveness in the supply chain. Moreover, most automakers prefer the demand for high resistant and rigid manufactured precision components.
The repercussions of the COVID-19 pandemic on the US automobile industry have been severe, moderate, and mild. At the breakout of the infectious disease, the locking down of manufacturing units and supply disruptions was significant. The demand for new vehicles slowed down, which severely affected the U.S. precision parts market share. However, manufacturing units were allowed to operate under safety regulations. In 2021, the impact is expected to low, with most manufacturing and assembly plants resuming operations.
The US healthcare industry took new strides in 2020. Several technical advances such as telehealth, online consulting, AI-based surgical planning are key driving factors expecting to propel the demand for precision components during the forecast period. The growing concern over quality in medical treatments and government initiatives in offering public health insurance significantly increases the spending toward the healthcare segment. Moreover, the US's prosthetic surgical components are witnessing demand from several APAC and European countries for knee and joint replacements.
The COVID-19 virus has severely hit the US. The supply chain and demand for drugs and ventilator equipment increased significantly during Q1 and Q2 2020 with the virus's spread. Several equipment such as mechanical ventilation components, CT scan instruments, pulse oximeter, infrared thermometer observed heavy demand in the US healthcare industry in 2020. The supply chain disruptions and shortage of raw materials had significantly reduced operations and revenue margins for precision component manufacturers in the US.
Electronic and Semiconductors
The demand for US manufactured electronics and semiconductors has increased at a steady pace in recent years. Advances in digital technology, artificial intelligence (AI), and the expected adoption of the 5G network communication across the US are expected to influence electronics and semiconductors' growth. The rapid increase in several trending applications such as virtual reality, IoT devices, home automation systems, Industry 4.0 systems, and self-driving vehicles are expected to propel the demand for precision components. The US semiconductor market holds a share of between 45% and 55% of the global market in terms of volume.
The majority of established electronics and semi-conductors companies in the US are expected to turn up with a wide range of new opportunities. This is because suppliers of raw materials and precision components in the electronics and semiconductors industry adopt high-volume shipment to minimize human contact. Moreover, the US's lockdown has pushed several companies to significantly reduce their manufacturing units' employees in their manufacturing units. The work from home facility among major IT companies double the demand for laptops and network equipment in Q1 and Q2 2020.
The U.S. precision parts manufacturing market is gaining traction. Several aerospace manufacturers are increasing investments in offering Unmanned Ariel Vehicles (UAV). Thus, precision components observe innovations in the aerospace industry, thereby expecting to bolster the global precision parts market during the forecast period. Retrofitting of lighter materials with high resistance from temperature and pressure and upgrading critical aircraft components are expected to propel the demand for precision parts among aircraft manufacturers.
The outbreak of the COVID-19 pandemic has adversely affected airline operations across the US. The percentage of passengers reduced by 52% in Q1 and Q2 2020 due to the coronavirus's spread, thereby halting thousands of flights. US aerospace manufacturing suppliers have substantially reduced their production rate due to the decreasing passenger and cargo demand globally. Since the US is one of the worst COVID-19 affected countries, over two-third of airline operators had completely shut down their services due to the lockdown imposed across the world. Therefore, the decrease in air flight operations declined the demand and supply of airframe components and precision-made hardware required for MRO activities.
INSIGHTS BY GEOGRAPHY
The automotive industry's development and investment is expected to drive the demand for precision parts in North East. The region is highly developed and economically sustainable. New York is one of the largest states in the region, and the development has been increased as it is one of the prominent tourist places. However, the development has been disrupted due to the breakout of the COVID-19 pandemic. While Boston and Massachusetts remain the most lucrative markets with strong economies, New Hampshire has been hit by the pandemic. Maryland has one of the strongest economies nationwide. Pennsylvania has emerged as a major manufacturing hub for packaged food processing, chemical, fabricated metal products, industrial machinery, electronics, and computer peripherals. Thus, the demand for industrial machinery is likely to grow at a modest rate during the forecast period.
INSIGHTS BY VENDORS
In the post-COVID-19 scenario, the U.S. precision parts market is observing financial turmoil. The need for precision parts has been limited to specific applications, while others have witnessed a significant decline. Vendors catering to a single application or product are prone to face challenges with respect to maintaining a steady stream of orders. The competitive landscape is fragmented in terms of geography and products. The precision parts manufacturing industry is not highly prone to mergers and acquisitions and is limited to only certain regions. The impact of such mergers and acquisitions is also limited. With 45% of the revenue going into raw materials procurement, the manufacturing capability is primarily defined by the vendors’ accessibility to raw materials.
The U.S. precision parts market research report includes in-depth coverage of the industry analysis with revenue and forecast insights for the following segments:
- Light, Medium, & Heavy Commercial Vehicles
- Light Vehicles
- Two and Three Wheelers
- Medical Imaging
- Patient Monitoring
- Electronic and Semiconductors
- Industrial Equipment
- Heavy Equipment
- Marine and Offshoring
- Power Tools
- North East