By Mike Boyer
Enquirer staff writer

An expiring federal tax incentive is heating up the market for machines that cut and form metal.

That's good news for Cincinnati-area machine tool builders participating in the industry's largest show kicking off today in Chicago's McCormick Place.

IMTS 2004, the biennial International Manufacturing Technology Show, is one of the largest machine tool shows in the world, encompassing 1,300 exhibits over 1.15 million square feet. The biennial event is a major focus for the latest manufacturing systems and machinery.

After five years of depressed sales, machine tool makers have high expectations for this year's exhibition, which runs through Sept. 15.

"This year's show is not only about looking at technology but also buying," said Chip Storie, vice president of marketing for Hebron's Cincinnati Lamb, which will spend more than $2 million on its exhibit. The company is a machine tool unit of Unova Inc.

Mason-based Makino Inc. is spending more than $3 million, more than it ever has, on two separate exhibits.

"It just dominates our marketing activity for the year," said Don Lane, president of Makino, an aerospace and automotive parts machinery business.

Brian Papke, president of Mazak Corp. in Florence and a board member for the show's sponsor, the Association for Manufacturing Technology, said attendance is expected to be 95,000, up 10,000 from two years ago.

"All of us are looking for this show to carry on with the recovery we're seeing. All of us are planning big shows," said Lane.

Total machine tool orders through the first half of this year totaled $1.25 billion, up 32 percent from a year ago, according to a recently survey by the Association for Manufacturing Technology and the American Machine Tool Distributors' Association.

Lane said Makino's sales are running about 60 percent ahead of last year.

"You're actually going to get a pull-ahead,'' said Lane. "Anybody who really needs equipment, even through the first quarter, would be foolish not to try and get it at this show.''

"We'll easily see $60 million to $70 million in orders in the 90 days after the show,'' he said.

Mazak's Papke said, "I've never seen a time leading up to the show where orders were as strong.''

Mazak, which is seeing orders 50 percent ahead of last year, took 22 machines to this year's show, compared with 17 two years ago.

A big element in the buying surge is the 50 percent expensing allowance for machine tool purchases, part of President Bush's tax cut package. To qualify for the allowance, equipment has to be installed by year-end.

"People need to buy at this show to take delivery by the end of the year to take advantage of the expensing allowance,'' said Lane.

The impact of the expensing allowance on a metalworking shop's bottom line can be dramatic, says Jim Mack, a lobbyist with the McLean, Va.-based AMT.

For example, on the purchase of a $100,000 machine, the normal $14,000 first-year depreciation allowance would increase to $57,000 (50 percent of the cost, plus 14 percent on the remaining $50,000, or $7,000).

That represents a savings of more than $15,000 for a business in the 35 percent tax bracket, he said. For a qualifying small business, the tax savings can be even more dramatic.

"Nobody buys an expensive machine for the tax break," he said. "You buy it because you need it, but the 50 percent expensing allowance is a significant permanent reduction in the cost of purchasing a machine."

The AMT and other manufacturing groups hope Congress, when it returns after the election, will extend the expensing allowance.

It's not just equipment-makers showing their wares at IMTS. Bond Hill-based TechSolve, the non-profit manufacturing assistance organization, is participating in the show for the first time.

As manufacturers are looking for ways to be cost-competitive, it only makes sense for TechSolve to market its training programs in lean machining and machining optimization to a broader audience, said Mark Sauter, executive vice president.

TechSolve is introducing a new tool tuning service at the show that measures vibration characteristics of a piece of equipment by tapping it with a computerized hammer.

The device determines the best speed and depth of cut to maximize metal-cutting performance based on the vibration analysis.

TechSolve is also participating in a new IMTS display on smart machine innovation, part of an industry effort to develop a U.S.-based machine control system.

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E-mail mboyer@enquirer.com