When one of Accu-Mold Inc.'s major customers began using larger-tonnage molds, Accu-Mold was faced with a dilemma. To keep the business, the Portage, Mich., firm either had to spend a lot in new mold-building machinery or it needed to find a partner that could build the big molds.
Like a growing number of mold makers, Accu-Mold decided to team up with another mold builder. For the past three months, Accu-Mold has been allied with Commercial Tool & Die Inc. — a marriage that Accu-Mold President and owner David Martin said has been "working picture-perfect."
Martin said his firm avoided a major machinery expense and long learning curve by allying with Commercial Tool. More mold builders are following that route to meet customer demands for faster delivery, comprehensive service and broader geographic presence.
"Capital equipment costs to be competitive are escalating," said Glenn Starkey, president of Progressive Components Inc. of Wauconda, Ill. He predicts a trend to mold-maker alliances and mergers as firms strive to afford new equipment and technology.
In the past, mold makers commonly had informal relations with other tool firms to handle overflow work, but the process is getting more formal and structured, Starkey said in a telephone interview.
He compared small shops competing separately as "strolling minstrels" vs. a "symphony when firms work together."
Mold shops are traditionally family-owned, and it is easier to expand capabilities through an alliance than an outright merger or acquisition, according to Starkey. Eventually an alliance might advance to another stage, such as a merger, when the partners have gotten to know each other well.
Dennis Melinn, president of Commercial Tool, said the relation with Accu-Mold combines the strengths of the firms, both for existing business and potential new markets. Accu-Mold specializes in tools for presses up to 500 tons, while Commercial Tool mainly builds molds for presses up to and surpassing 2,000 tons of clamp force.
An added benefit is that each partner is close to some customers of the other partner, making it easier to provide mold servicing to the clients, Melinn said.
"There will be a lot more [alliances]," predicted Melinn, whose company also allies with other shops.
Accu-Mold has been so impressed with its results that it plans other alliances, including one with a mold flow analysis firm, Martin said.
An alliance allows companies to cut lead times on large projects and on rush jobs, like launches of large-volume products, according to Eddie Stoncius, general manager of Glendan Mould Inc. of Toronto.
"When one company gets an overload, they can share the work," said Stoncius, who characterized Glendan's alliance with Dollins Tool Inc. as "going extremely well overall."
Both firms specialize in thin-wall container molds. On a big job Glendan can do all the rough machining and then send out components for heat treating. Dollins then can do final finishing work.
Stoncius said his firm had done subcontract work informally with Dollins in the past and was acquainted with Dollins' skills.
"An alliance can rely on each other's quality, vs. farming work out to just anybody," Stoncius explained.
When allies mesh well they can drive down mold delivery times, a big attraction to customers. An alliance between M2M International Ltd. and Windsor Mold Inc. offers delivery of a complete set of auto interior tools in 20 weeks or less, according to M2M President Richard Myers.
Myers concedes it is taking some time for Tier 1 auto suppliers to recognize the partners' abilities but the alliance is still a new one, dating only to late last year. When business grows, M2M and Windsor Mold will be ready for the surge.
M2M alone is completing a major expansion including two large computer numerically controlled machining centers, and this fall will build a new tryout facility, One Source Plastics, at its Wallaceburg, Ontario, operation.
Alliances are a way of pooling hard-to-find talent, according to Stoncius. They also are especially valuable in developing talent, Mengel added. A group of companies spreads costs and builds critical mass needed to develop a curriculum. Southwest Michigan mold builders are known for their success in this area.
A company needs to choose its partner carefully, stressed Jeff Mengel, who heads the plastics industry team at consulting firm Plante & Moran LLP of Southfield, Mich. An alliance makes sense for "companies with complementary skill sets."
Mengel said an alliance can work when it is convenient to both parties. It can be inconvenient if there is conflict about where a mold stands in either partner's list of priorities.
Another risk is that a company actually might "be training its competition," he said. For this reason, Mengel said it might make more sense to partner with an offshore mold builder. A firm can improve its technology without the partner encroaching on its natural market geography. Alliances with Asian companies can mean cheaper components, while European partners can offer advanced technology and design.
"The trust issue has to be paramount," said Accu-Mold's Martin. An alliance is typically a handshake agreement that relies on integrity and ethics.
One partner has to take the lead and responsibility for each project, according to Mengel. Mold customers only want to work with one company and, to them, the alliance should be invisible.
Customers can benefit from an alliance's broader capabilities while cutting down on the number of individual mold makers it works with, Starkey said.
"Customers don't want 10 candidates for a mold job, they want a limited number of strategic partners," Starkey explained.
One partner will sign on a project and be legally responsible. Partners need constant communication to avoid overlap and efficiency.
Accu-Mold and Commercial Tool use a Nextel cellular phone system for rapid response, Martin said. Advances in Internet and other communications allow rapid delivery of computer-aided design and other data.
International connections can be especially useful in alliances. M2M's Myers said Windsor Mold brings connections to Mexico and Brazil, while M2M has relations in Japan, Taiwan and Germany. A global network makes it easier to farm out a small part of a multimold job, such as for interior switches, to an offshore company.
Multinational alliances can have surprising benefits, Glendan's Stoncius said. Glendan and Dollins were exhibiting at a trade show in China last year, soon after a NATO bombing of the Chinese embassy in Belgrade, Yugoslavia, during the Kosovo conflict. Anti-American sentiment in China was rife following the incident so Glendan, a Canadian company, took the lead at the firms' trade show exhibit, while U.S.-based Dollins stayed in the background.
"If someone prefers one country over another, it gives [the alliance] a stronger force in the world market," Stoncius said.