Imagine a situation where your company habitually gives away weeks of work free without blinking an eye.
Or one where you frequently cut your profit margins to the bone to meet a client's budget, even if you can't do the job for that price. Or allowing your customers more than 75 days to pay you after you make a part worth as much as $1 million.
If you're an MBA candidate, that sounds like an archetypal case study in poor management. It doesn't take a Bill Gates to see that you wouldn't be around too long by leaving a pile of cash on the table.
Yet, that's the real world for some mold makers. Many of those entrepreneurial, family-owned companies could use a good shot of business sense that complements their highly trained craftsmanship. Both are equally important. But, too often, the former is sacrificed at the altar of client satisfaction.
That fact troubles tooling industry consultant William Tobin, president of WJT Associates in Louisville, Colo. Tobin presented those startling facts from a recent research study to a group of more than 70 leading tool builders Oct. 10 at the American Mold Builders Association fall conference in Traverse City, Mich.
According to Tobin, the problem stems partly from a lack of backbone. Mold-making companies are not standing up to pressure from their large, multinational clients. Those clients increasingly want tools delivered in seven weeks instead of 10, for instance, and are known to change course at the last moment with sudden engineering changes.
All of which is well and good. Except for one niggling fact. Mold builders aren't adjusting their prices accordingly to account for the time spent making emergency tooling changes or getting the job done faster.
Instead of letting customers run all over them, Tobin suggested that they get tougher. After all, it's more difficult for a client to switch toolmakers than to work with a current one that specializes in a product area.
It's also common business practice to charge 10 percent interest on payments made after 30 days. The mold-making industry should be no exception to that rule. If mold shops begin to do that, they might be surprised how quickly their clients pay them.
Many toolmakers like to grouse about how difficult the business is becoming due to competitive pressures. They have a point. But getting their own business practices in fighting trim can make them hardier and more competitive.
It might even earn some well-deserved respect from their clients.
Pryweller is the Detroit-based staff reporter for Plastics News, whose beat includes the mold-making and automotive industries.