Several automotive suppliers have shifted responsibility for a bulk of their pre-production work to a small clique of toolmakers.
That work — long the domain of either carmakers or their large, Tier 1 parts suppliers — is significant for those toolmakers fortunate enough to land a long-term contact that can last several years.
It has caused several large tooling firms to hire a phalanx of global program managers and invest in expanded prototyping shops, design studios, auxiliary equipment and assembly operations. In turn, those shops have begun to contract for work with smaller mold makers, a function traditionally under the aegis of parts suppliers.
The approach shifts the ground for mold makers accustomed to frequent bidding wars for smaller jobs, said Thomas Ruczynski, marketing vice president of Proper Mold & Engineering Cos., a toolmaking services provider in Center Line, Mich.
``We're involved for a longer period from start to finish on one project,'' he said. ``It keeps us working, and we don't have to constantly look for new business.''
Many toolmakers have recrafted their physical operations to keep in tune with suppliers' needs. For in-stance, over the past decade, mold maker Reko International Group Inc. of Oldcastle, Ontario, has created an on-site umbrella of services: mold making, engineering, prototype parts, mold tryouts, custom and special machining, and the production of fixtures, gauges and assembly equipment.
The operation is parceled into separate buildings on a series of narrow streets throughout an Ontario industrial park. Trucks continually shuttle molds and equipment to different loading docks at the Reko complex.
The firm, which recorded C$68 million (US$44 million) in sales for fiscal year 1998, now more closely resembles a sprawling campus of tooling services than the hardscrabble mold shop of its origins.
Other firms will need to follow a similar path to compete, said Reko business development manager Ron Beneteau.
``I really think our model is the way the industry must go to succeed,'' he said. ``We're just a bit ahead of the curve.''
PME, a Reko competitor, has adopted a similar approach, offering an array of separate buildings for mold tryouts, prototyping and high-precision tooling.
Last fall, PME went one step further: It opened a 31,500-square-foot design and prototyping plant for its Pinnacle Technologies Inc. subsidiary in Center Line.
The facility includes three private design studios where carmakers, parts suppliers and tooling engineers work under a cloak of secrecy. Each studio offers a personal outside entrance and private elevator leading to the second-floor offices, where designers can gaze through windows at prototypes being made below.
``We want to give our customers a private place here to work,'' said Mark Montone, PME business development director. ``We want them to feel comfortable coming here.''
The new era of tooling also comes with a few potential hazards. The ranks of toolmakers are expected to be winnowed further over the next few years, said Jeffrey Mengel, a tooling-industry analyst with Plante & Moran LLP in Southfield, Mich.
Many old-school toolmakers will be forced to build a wider array of services or find a distinct niche to survive, Mengel said. That will be a difficult transition for some shops, he said.
``Some of them have a reluctance to venture into new design, processes and other value-added areas,'' he said. ``But there will be winners and losers here, and those that have an aggressive growth strategy should do quite well.''
The approach has other potential pitfalls. The process of passing product-development work to toolmakers can lead to a loss of production efficiency, said Tim Gale, operations director with T.A. Systems Inc., a secondary-equipment tooling supplier in Rochester Hills, Mich.
``Our customers are mainly toolmakers now,'' Gale said. ``We can become an afterthought for a tooling company wanting to offer tooling and assembly equipment at one bare-bones package price. We're one more step removed from decisions that can help [parts suppliers].''
Too many cooks can also spoil the stew, said David Cole, director of the Office for the Study of Automotive Transportation at the University of Michigan. Responsibility is seeping out of the hands of parts makers, he said.
``As you pass responsibility to lower tiers, you've got to be trusting that others will do the job competently,'' said Cole, based in Ann Arbor, Mich. ``If you do it yourself, you have the ability to control the work. You have less opportunity for a problem.''
Yet, the shift is also necessary, Cole said. Carmakers attempting to cut costs already have handed over most parts design and engineering functions to favored suppliers, he said.
But — in a potential Catch-22 — those automakers are not willing to raise a project's price tag even while giving suppliers the added load, Cole said. To reduce costs, suppliers in turn must pass some new-product functions downstream like a hot potato, he said.
``[Carmaking] customers today expect more but don't want to pay more,'' Cole said. ``That forces tooling companies to move to new levels of responsibility.''
It also has sparked a complicated pact between automaker, supplier and toolmaker. A case in point is Magna Interior Systems Inc., a division of auto supply giant Magna International Inc. of Aurora, Ontario.
Last year, Magna was awarded a major contract to make an array of interior parts for a new sport utility vehicle, dubbed the U204, a joint project due out in 2001 from Ford Motor Co. and Mazda Motor Corp, said Magna Interior Systems program manager Kevin Ritter.
To slash costs, Magna handed Reko control over many of the product-development functions for the project's inner door panels and trim, Ritter said.
The onus put on Reko is one of the heftiest in the mold-making industry. The firm will work side-by-side with Magna on part and tooling design, make models and sample parts on its tryout presses, produce gauges and fixtures that fasten prototype parts to equipment during testing and build prototype heat-staking equipment.
Of course, Reko also will make production molds for the project.
The effort is needed to see the project through on time, Ritter said. The automakers want to launch the vehicle six months earlier than Magna had anticipated, he said. Allowing Reko to do much of the work lets Magna conduct simultaneous part design.
``It's the proverbial one-stop shopping approach, working with one toolmaker'' he said. ``But there aren't as many checks and balances built into the system. That's the one downside.''
Reko has reconfigured its staff to better serve customers such as Magna. About 10 program managers oversee the array of services, acting as liaisons to the supplier and Reko's manufacturing plants. A separate group of process planners sets target delivery dates and tracks progress.
The approach should help the firm reach about C$100 million (US$65 million) by about the year 2000, Beneteau said.
The work can pay off. According to a survey completed in 1998 by Plante & Moran, those toolmakers that offered such services as prototype models and heat treating were 55 percent more profitable than those that did not.
``But suppliers tend to let those jobs out to a relatively small group of proven mold makers,'' Plante & Moran's Mengel said.
That is one of problems with this approach. Ritter at Magna said his firm has reduced its list of outside toolmakers by half over the past three years. United Technologies Automotive, a Dearborn, Mich.-based supplier, has narrowed its approved vendor list to about nine toolmakers, said Dave Walters, UTA interior systems core tool engineering manager.
UTA once worked with more than 100 toolmakers, Walters said. But it now negotiates a new bargain: the mold shops that support UTA's concurrent engineering approach are guaranteed a large cut of its tooling business, he said.
``They actually attend design reviews with us once a week or sometimes every day during a project,'' Walters said.
That collaboration may have European roots. Paris-based supplier Cie. Plastic Omnium SA has been working with a short roster of European toolmakers throughout an entire project for more than four years, said Pascal Bardet, engineering director for Plastic Omnium Industries Inc. in Rochester Hills.
In North America, the supplier works with a select few toolmakers at its two automotive plants.
But it means a take-no-prisoners approach for toolmakers willing to quickly adapt, Bardet said.
``We care that a toolmaker takes ownership [of tooling design and pre-production],'' he said. ``Ten or 15 years ago, we were a shoot-and-ship molding operation. We've taken on more responsibility, and toolmakers are now going to have to move up the same learning curve.''