The purpose of this paper is to identify critical factors forcing manufacturing companies to improve the development of production technology in a machining environment. The focus in the paper is on industrial challenges within product design and production system development when introducing new products in a machining environment. Particular attention is given to the product development process and the production equipment acquisition process. A single case study is presented, consisting of interviews, observations, document studies and an analysis of a large Swedish manufacturing company. The case study company is characterized by advanced production technology, high mechanization and high automation level. In parallel with the case study a literature review was conducted in order to identify state-of-the-art methods/models for efficient design and product introduction within a production system. The paper identifies a gap in the current way of working within the case company as well as challenges regarding the development of production technology. Based on the study, the need for future research has been identified including the need of developing an improved working support for efficient production technology development when industrializing new products.