Maybe it boils down to overcapacity. And if that's the case, God help the toolmaking industry.
Toolmakers in North America are in a difficult position. Many prominent companies have coped during the past year as best they could with a market that keeps knocking them to the mat.
Whenever brighter business prospects seem to be just around the corner — when quoting activity is up, when customer visits encourage them — something has gone awry. Many toolmakers have been in what seems to be an eternal waiting mode for the past 18 months.
The common line of thought: The dam is going to break any time now and business will come flooding through.
But now, some wonder how strong the economic rebound will be for toolmakers.
“We're at a loss to describe how the marketplace is behaving,” said Horst Schmidt, general manager of automotive toolmaker Build-A-Mold Ltd. of Windsor, Ontario. “We have a pent-up readiness to pounce. But there's nothing to pounce on at the moment.”
The thing is, nobody knows for certain what will work. Many toolmakers have gone the automation route to get more efficient and keep costs down. Many of them practically have beaten down customer doors on sales calls looking for business.
And many of them have started bidding for lower-price jobs that once, when they were busier, they would have avoided like the bubonic plague.
That has become a dangerous habit.
One toolmaker, speaking on condition of anonymity, said another local mold maker visited the shop recently. He wanted help with his finances, to see whether he could continue taking bargain-basement jobs.
The toolmaker opened his books and said confidently that he had enough profit left over to pay his workers and his bills. But the other toolmaker looked closer. What about insurance premiums? What about utility costs?
He told the man that if he continued to work with that margin of profit, he soon would be out of work.
The most sobering thought in all this mess is the overcapacity issue. It's a Darwinistic view that says too many toolmakers continue to make molds in North America. Until more of them fall away, prices will stay low and work will continue to suffer.
But how many is too many? Already, since January 2001, we've seen hundreds of tool shops go under. Many of them have been small family businesses, but some were larger shops. Many livelihoods have been destroyed. How many more does it take?
Overseas competition has become a fact of life. Unfortunately, it also has led to the new glut of toolmakers competing for jobs.
Maybe an answer is in equipment. One toolmaker, making a recent investment in automated machinery, said you don't have to pay insurance or worry as much about safety regulations when a machine replaces a worker.
But if enough workers leave toolmaking, eventually you won't have to worry about an industry here at all. Those issues put many toolmakers between a rock and a hard place.
Pryweller is an Akron, Ohio-based senior reporter for Plastics News. His beats include tooling, packaging and e-business.