Machine tool finance is where the equipment finance industry keeps its oldest instincts. The collateral — CNC mills, lathes, machining centers, grinders — is the asset class the business practically grew up on: durable, movable, serialized, supported by a deep and genuinely liquid secondary market with dealer and auction channels refined over generations. The credit tradition around it is equally seasoned. And the sector’s obligor base — the American job shop, the contract machining operation of five to fifty employees serving regional manufacturers — has been the durable heart of middle-market equipment lending for seventy years.

Which is precisely the problem, because the durable heart is aging out, and the sector’s loss data has quietly changed its subject. The dominant default driver in job-shop paper is no longer demand — the reshoring wave has, if anything, strengthened the order books — and it is not the collateral, which remarkets as reliably as ever. It is succession: the owner-operator in his late sixties with no successor, whose business does not fail so much as expire — wound down, absorbed, or simply closed when health, energy, or a spouse’s patience gives out, with financed equipment mid-term and a customer list that walks to the shop across town. The sector’s post-mortems increasingly read less like credit files and like estate matters, and the underwriting has not followed the losses to where they moved.