Mold maker Industrial Molds Inc. thinks it has found an answer to the problem of low-cost foreign competition: Strike up a partnership with some of the would-be competitors.
Rockford, Ill.-based Industrial Molds, through its sister company Fusion International Inc., has formed a partnership with four injection and compression mold-making shops in China. Fusion will act as project manager for the Asian firms, which collectively employ 50 engineers and 300 mold makers, said Fusion sales manager Doug Myers.
``It's unfortunately the reality that our business has been going offshore for the last five or six years,'' Myers said. ``People are going to go overseas one way or the other. We wanted to find a way to keep mold makers employed here and get that business.''
For IM sales manager Tim Peterson the venture is a response to a tough tooling market. IM's mold-making business has dropped 30 percent since 1997, to $10 million in annual sales, he said.
``There are jobs we routinely lose on price going over to Asia,'' Peterson said.
``I am fully convinced that at Industrial Molds we will figure out how to be as competitive as anybody,'' he said, as he praised the firm's work force. ``We are not there yet.''
Fusion and IM share common ownership. Fusion is a five-person operation that started as a rapid-prototyping firm, while IM is an 80-person tool shop.
Fusion declined to release the names of the Asian partners, but Myers said all four are ISO 9001 certified and use the same equipment as mold-making shops in the United States. One shop is in Shanghai, and three are in Dongguan, near Hong Kong.
``It's all state-of-the-art,'' he said.
Fusion is not investing in any of the firms, and none of them has invested in Fusion, he said.
``The service we provide allows our customers not to have to go to China and check on their tools,'' Myers said.
He estimates a typical tool would be 25 percent cheaper than one built in the United States, factoring in costs such as transportation and tariffs.
The arrangement gives Fusion and the Chinese firms the flexibility to do design work in the United States or China, split mold orders between them, or have IM finish work started in Asia, he said.
Fusion hopes to have one of its employees in China or Hong Kong later this year, he said.
The company spent about two years in China searching for partners, and it started marketing the venture to customers this year, he said. It has found particular interest from the automotive supply chain, and packaging, consumer products and medical firms also have expressed interest, he said.
``The economy hasn't picked up, but there is still a lot of interest in having tools built in Asia and in our concept of project managing,'' Myers said.
He said the company could expand on the idea - it has been approached by toolmakers in India and Pakistan, for example. But for now, it wants to focus on China, he said.