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Equipment makers contend with weak capital spending: as service centers and other processors tighten their belts on capital expenditures, manufacturers of coil processing, cutting, sawing and material handling products are finding ways to work through the sluggish market and position themselves for the eventual recovery.

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MANUFACTURERS OF METAL processing equipment rely on capital expenditures by service centers and other customers to keep them busy. With companies in every industry ferociously protecting whatever capital they have, the market for machinery has taken a significant hit throughout North America.

While the steel industry experienced a massive slowdown early in fourth-quarter 2008, the downturn didn't hit the equipment manufacturers until late in the quarter. But the impact was equally dramatic.

"This is the worst I've seen it in my 40 years," says Dick Couch, founder and president of Hypertherm, Hanover, N.H.

Fortunately for Hypertherm and most others in the equipment industry, the soft market follows five years of solid performance. Record profits for many companies have given them a strong enough cash position to navigate their way through the doldrums. "The good years allowed us to fatten up and gave us the cash reserves to weather this storm," Couch says.

As the market weakened in December, equipment makers quickly turned their attention to making the most of the downtime.

"We're working very aggressively trying to upgrade our operation," says Ed Bosse, marketing manager for Cincinnati Inc., Cincinnati, Ohio. "We've been using our time wisely in our shop."

Equipment makers are tackling operations ranging from simple cleanup and routine maintenance to large expansion projects. All of these options become more...

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