Traditionally, purchasing molds means a large down payment followed by a series of several work-in-progress payments. In today's economic environment, however, companies have become more reluctant to fork out those large chunks of cash. To help their customers ease the burden of purchasing molds, two mold-making firms recently implemented mold leasing programs.
Pro-Mold of Schaumburg in Schaumburg, Ill., announced its Tool Amortization Lease Plan, or TALP, that permits 100 percent financing of molds with terms that can match the useful life of the tooling.
Walter Schaub, president of Pro-Mold, said he conceived the program for his customers in the Mexican market to make buying molds easier in a time of financial crisis.
However, over the past five years, Schaub has seen an increasing reluctance on the part of many companies to make that first big down payment on tooling, he said.
``Sometimes we would be halfway through the mold and still trying to collect the down payment,'' he said. So, Schaub decided to make TALP available to all his customers.
Even large companies would rather use the mold maker's money than their own.
The automotive industry, one of Pro-Mold's primary industries, does not want to pay until the car rolls off the assembly line.
Like most mold makers, Schaub said he cannot afford to be a bank, and sees the idea of leasing through a financial institution as the answer to both his and his customer's problems.
``We think some customers will pay extra to get a better mold built if they don't have that big one-third or one-half down payment,'' said Schaub.
Bill Francen, director of operations for Springfield Tool & Die in Springfield, N.J., said he lost several potential customers this year because they could not come up with the large down payment for a mold.
A mold leasing program set up through Quantum Financing Services based in Hackettstown, N.J., allows Springfield to get paid up front, while its customers lease their molds at competitive rates.
``It helps us control our cash flow and helps the customers make better use of their capital,'' Francen said.
Some of Francen's customers are inventors who come in looking to get a mold built with no idea of the cost.
``If they use all their capital building a mold, then there's nothing left for molding and marketing their product,'' said Francen, who also offers help in marketing new products.
Should a customer end up not being able to make the lease payments, Francen's plan allows him to purchase the manufacturing rights from the leasing company, mold and sell the product and pay a royalty to the customers.
Both Francen and Schaub said they already have gotten some good response from a few customers, and both said their programs offer a creative way to keep mold work in this country, ensure they will get paid for molds and maintain better cash flows through their own companies.