Toolmakers have reason to rejoice, but …

By Rhoda Miel
News Editor

Published: May 2, 2013 2:13 pm ET
Updated: May 2, 2013 2:24 pm ET

Related to this story

Topics Molds/Tooling

SCHAUMBURG, ILL. — Business is starting to look good again for North American mold makers.

In a post-recession economy — even one in a slow recovery — customers are ordering more tools, and asking for more complex tools. In the American Mold Builders Association's spring 2013 survey, 65 percent of toolmakers said their business was "good," and another 17 percent said business was "excellent." Only 1 percent reported their business as poor.

Businesses that were struggling for years are now back in the black. But consultant Laurie Harbour warns that the increased revenue for toolmakers is masking some long-term problems that are lurking in the background, ready to hit again the next time things slow down.

Harbour is interviewed in this video from the AMBA conference.

"If we get cocky about revenue growth and don't take the opportunity to restructure problems in operations, then the window to see real improvement is going to close," Harbour warned toolmakers at the AMBA's annual conference, held April 24-26 in Schaumburg. "Everybody's all excited again, but everybody's forgetting we could have some losses just as we did in the recent past."

Harbour, the president and CEO of Harbour Results Inc., specializes in benchmarking both financial and production performance of mold makers. Her company was hired by a North American automaker to visit and analyze 120 of its molding suppliers worldwide to help it understand its supply base.

The North American auto industry, in particular, has seen resurgence in the five years since General Motors Co. and Chrysler Group LLC went into bankruptcy for restructuring. North American auto production is predicted to hit more than 15 million vehicles in 2013 after dipping below 9 million in 2009.

Automakers have been busy refreshing existing models and bringing new vehicles on the market to stoke consumer interest, which means more business for North American shops, Harbour said, however, the complexity of those cars — and the molds for them — is also increasing.

A door panel that was a one-part piece, using one mold, in a 2006 model now uses six different tools for a 2013 model, she said. Rising labor costs in China and improved production in North America has meant that U.S. and Canadian companies have a better chance to compete for business.

"What we're seeing now is that every automaker is pushing a huge elephant [to ramp up production] through a snake and trying to update everything," she said.

That massive effort will end at some point, however, and that same increased demand, is leading to potential problems on the production floor. Harbour said she and her team have seen too many shops relying almost solely on overtime to keep up with the new demand. There are bottlenecks in production that are not solved because no one has time to schedule machine time.

"Operational excellence is the one area that you as shop owners can control, the one area where you can make the biggest difference," she said.

Well over half of the shops that Harbour has assessed continue to practice the "old school" style of mold making, in which one person is responsible for a tool throughout its time in house. Her company's studies show that only 50 percent of the production requirements for a mold requires a highly skilled journeyman toolmaker. Other work can be handled by workers with fewer years of experience.

Using just one person to take an entire tool through production means that the tool itself sits idle at times while the journeyman waits for parts or time on a specific machine.

Re-thinking production so that the tool passes through multiple hands — with journeymen toolmakers overseeing the most complex tasks — helps to speed production, decrease the number of hours a tool sits in the shop and also gives more experience to upcoming younger workers.

"This gives you more flexibility in labor, which is the biggest cost," Harbour pointed out.

The auto industry is cyclical, she noted, so mold makers who are rejoicing their increased revenue now from automakers and suppliers will be in trouble if they don't fix problems with their throughput on the shop floor.

And while rising costs in China — and Chinese interests in serving their own domestic production — have reduced some of the pressure on North American toolmakers, Harbour said automakers are looking at the next geographic regions for tooling.

Harbour Results has already assessed mold makers in South Korea for its automaker customer, she said, and is about to start a round of visits to shops in India, Malaysia, Vietnam and elsewhere in Southeast Asia.


Comments

Toolmakers have reason to rejoice, but …

By Rhoda Miel
News Editor

Published: May 2, 2013 2:13 pm ET
Updated: May 2, 2013 2:24 pm ET

Post Your Comments


Back to story


More stories

Image

Polyair rebuilds from Sandy with help from Process Control

April 16, 2014 4:11 pm ET

Hurricane Sandy gutted Polyair Inter Pack Inc.'s Carlstadt, N.J., plant more than a year ago, and Brian Clawson won't soon forget the devastation.    More

Image

Despite struggles, Europe still key market in global resin picture

April 15, 2014 2:06 pm ET

Challenges and opportunities facing international plastics and chemicals markets were tackled by a trio of top executives at the IHS World...    More

Image

Material Insights: Price changes for PVC and PET

April 14, 2014 4:08 pm ET

Let's hope that North American PVC resin buyers have their seatbelts fastened. Prices for that material shot up 3 cents per pound for the third...    More

Image

IHS predicts growth in the developed countries

April 11, 2014 1:56 pm ET

The economic seers at consulting giant IHS Chemical lit some candles, burned some incense, polished a crystal ball and gazed into the future of the...    More

Image

Vietnam economy shows signs of bouncing back from slowdown

April 10, 2014 2:38 pm ET

Some signs of recovery in Vietnam were visible on a recent trip to the Plastics and Rubber Vietnam 2014 trade show, where multinational companies are ...    More

Market Reports

Thermoformed Packaging 2014 Market Review & Outlook North America

This in-depth report provides analysis and discussions of economic and political conditions, market trends, legislative/regulatory activity impacting supply and demand, business opportunities and threats, materials pricing, manufacturing technology, as well as strategies being implemented by thermoformed packaging companies. In addition, there are reviews of 25 leading thermoformers in the packaging segment, assessing their growth initiatives and performance metrics over 10 years.

Learn more

Automotive Market Review and Outlook 2014 The Americas

This 75-page report features in-depth analysis of the automotive industry for the Americas. It includes discussions of market trends, legislative/regulatory activity impacting production and threats as well as design strategies being implemented by the major automakers. Detailed charts and data tables outline North American automotive production over the last five years.

Learn more

Plastics Building & Construction Market Review and Outlook 2014 with MS Excel chart data

This report provides in-depth analysis of the plastic building and construction market for North America, including discussions of trends, opportunities, threats and the latest developments in construction trends that impact plastics processors.

Learn more

Upcoming Plastics News Events

May 6, 2014 - May 8, 2014Plastics in Medical Devices 2014

May 12, 2014 - May 12, 2014Plastics News Brazil Pharma Summit

September 10, 2014 - September 12, 2014Plastics Caps & Closures 2014

February 3, 2015 - February 7, 2015Plastics News Executive Forum 2015

More Events