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March 20, 2000 01:00 AM

NTMA launching fight against rebates

Steve Toloken
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    WASHINGTON — The head of the National Tooling and Machining Association plans to lobby counterparts around the world to fight against what he sees as a growing problem — global companies demanding rebates and discounts, sometimes after a tool is built. NTMA President Matt Coffey is speaking to Asian tooling companies and mold makers at a Singapore trade group meeting, scheduled for March 21-24. And he said the issue will be on the agenda for the first time when a group of 18 tool-building trade groups from around the world meet in Naples, Italy, in July.

    "It's a pattern I find in business that is growing," Coffey said. "If global companies assume an exploitative posture, it forces those who are representatives of small businesses to seek remedies."

    Coffey has been very outspoken, and other trade groups like the American Mold Builders Association agree with him. But some mold builders questioned how much impact such an effort can have.

    A Midwestern tool builder, speaking anonymously, said: "You are biting the hand that feeds you. I'd say you have to be very diplomatic representing me."

    One automotive mold builder, also speaking anonymously, said other segments of the industry already have been through this, and rebates are part of the way business is conducted now.

    "It's something OEMs did to the Tier 1s," the mold builder said. "I'm sure molders had concerns when it first happened but everybody seems to still be alive."

    One of the companies identified by mold builders as seeking retroactive rebates, Lear Corp., said it has consolidated its supplier base and offered them long-term contracts to reduce costs.

    "The issue is all about remaining competitive and driving costs out of the system and assuring that we have a strong supplier base on which to go forward and support our customers," said Karen Stewart-Spica, spokeswoman for the Southfield, Mich.-based auto parts supplier.

    NTMA in Fort Washington, Md., recently surveyed all 2,500 of its members and found 257 who said their customers asked for rebates or discounts at the end of 1999, Coffey said. That's more than the association anticipated, he said.

    For now, he said the remedy is to meet with the companies that are asking for rebates and enlist allies to stop the trend.

    Coffey said globalization is giving large companies more leverage to move work around the world. He said NTMA could wind up pushing for unspecified government remedies if firms cannot be persuaded to change.

    "That puts me in a strange position," he said. "We have believed in free trade for 50 years. Now we are starting to see a whole new scenario played out — companies no longer see themselves as U.S. companies. Some companies are bigger than many governments."

    He wants NTMA's counterpart trade groups in other countries to start talking about the issue too.

    "This isn't U.S. mold and die builders vs. Asian mold and die builders vs. European mold and die builders. We now have global companies saying, `Which one of you is exploitable?'|"

    Coffey said he will raise the issue in Singapore at the meeting of the Federation of Asian Die and Mold Builders. And it is on the agenda for a July meeting of the International Special Tooling and Machining Association, the first time the group has put it at that high of a level, Coffey said.

    Coffey said about 70 percent of the NTMA firms surveyed said no to the rebate demand, which generally ranged from 3-15 percent. Most ended up keeping the business anyway, but he added that it's only been two months.

    In a Feb. 20 speech to NTMA members, Coffey singled out General Electric Co., Honeywell Inc., Visteon Automotive Systems, Lear and Lucent Technologies Inc. Lucent asked one NTMA member to rebate $1 million of a $6 million project, finally settling on $50,000, he said.

    And Boeing Co. threatened to cancel work unless it got a 30 percent reduction, Coffey said.

    The American Mold Builders Association, in Roselle, Ill., also opposes the rebate policy pushed by large manufacturers. AMBA wants to work with NTMA, but is not working actively on the issue now, said executive director Jeanette Bradley.

    Some 17 of 183 mold builders responding to a recent survey had been asked for rebates, she said. Eight paid the rebates.

    Ralph Swain, president of mold builder Paragon Die and Engineering in Grand Rapids, Mich., said the more trade group involvement on the issue, the better.

    "I think the only way you can fight that is en masse," he said.

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