I've never used a machine to stitch sheaths, but having seen a number of sheaths that were machine stitched,.I have to wonder if with a machine, it's possible to have the stitching lay in a groove, so that the stitching stays below the surface of the leather? I have to admit that building sheaths is the one part of knifemaking that I simply detest. I've tried a number of times to farm out sheaths, and for various reasons have always been dissatisfied with the results, so I have resolved to just make them myself. Over the years it's become less tedious for me. In many cases the sheaths that I provide for my knives has been the "deal clincher" in a knife sale.
I've always believed that a sheath should be as nice and well done as the knife that goes into it, and just have not found that when someone else builds a sheath for one of my knives. Maybe it's me being too anal about the sole authorship thing, but in my mind it somehow cheapens the overall package when a knifemaker offers either a knife without a sheath, or the quality of the sheath made by someone else does not "match" the knife...not sure how to describe it, but it's always very obvious to me when I see a higher end knife, paired with a sheath that was not made by the maker.....although the sheath might be well made and beautiful, all too often it simply does not look like it belongs with that particular knife....does that make any sense?
I got off topic a bit there, so back on point, I think that IF a machine can produce the same level of quality in stitching as can be achieved by hand, AND the capability exists to ensure the stitching lays below the surface of the leather, then I say it's a viable method. I suppose one reason I still hand stitch is that the value to cost ratio of acquiring/using a machine isn't there for me....at least NOT YET!