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Harbour study shows large tooling shortage ahead

By: Bill Bregar

March 12, 2014

WESLEY CHAPEL, FLA. — Reshoring of manufacturing, and the robust North American automotive sector, have exposed a coming tooling shortage — at a time when new cars require more molds and dies, and more complex ones, than ever before.

“We really think there’s a pending tooling capacity constraint,” Laurie Harbour said at the Plastics News Executive Forum in Wesley Chapel. Her firm, Harbour Results Inc., released its vendor tooling study last fall.

The results are sobering. By 2018, she said, the North American automotive sector will need $15.2 billion worth of tooling. In 2012, tool shops built about $9.25 billion worth of molds and dies.

Harbour looked at 10 automakers. Half of that $9.25 billion in 2012 was consumed by the Detroit 3 of General Motors Co., Ford Motor Co. and Chrysler Group LLC.

New vehicle launches drive demand for tooling. Harbour said the 46 product launches this year are a record. To make the average vehicle, automakers and parts suppliers use more than 3,000 dies and plastic molding tools. That’s 20 percent more than 10-15 years ago, she said. And they are more complicated. She said the tooling for a complete front fascia assembly, not including lighting, can cost $500,000 to $1 million, requiring more than 35 tools.

The current capacity to make tooling for the North American auto industry is $11.25 billion. Only about $1 billion of that comes from China, Harbour said. That’s enough to meet current demand, but by 2018, it will have to grow by 64 percent.

The Harbour Results survey focused on companies that make complete tools. The 2018 projection looks at future vehicle launches. Several other factors are driving demand even more, including the growing number of European and Asian auto production in the United States and Mexico, and reshoring of tools from low-cost countries.

Automotive suppliers and automakers say they will keep sourcing about 20 percent of the volume of their tools from China, but most of these are simple tools, and often miss shipment deadlines, she said. And China won’t be able to fill the capacity gap, she said, because labor costs are going up there, and more of their work will go to a booming Chinese auto industry.

The transplant factories want to source molds from North America, not just their home country.

“Lead time constraints are significant, which I think is driving more reshoring. The challenge here is there is still tremendous pressure on tooling costs,” Harbour said.

North America has not rebuilt its tooling supply base, which was hit by the recession. She said that puts even more pressure on the capacity gap.

America’s aging workforce, and how to attract and train young skilled workers, was a major topic at the Executive Forum, which was held Feb. 23-26. Harbour said the average tooling maker is 56 years old.

How to close the coming $6 billion gap? Harbour said that tooling suppliers are working to boost capacity, but these are the big ones, with sales over $30 million. Smaller shops are less competitive, but they have new opportunities to do non-automotive molds, as vehicles soak up more tooling work.

And Harbour thinks European tooling companies will invest in North American production.