General Motors Corp., which has been anxious to reshape its image among its suppliers, has led a charge among North American automakers to take advantage of engineering capabilities available in mold shops.
The trend is opening new opportunities for toolmakers that can deliver a complete package of services. And it marks a major shift from the previous strategy of only seeking the cheapest supplier.
``That flies in the face of pretty much the purchasing policies that are used in today's world, but our argument has been that if you bring us in earlier, you will actually save money and time,'' said Dennis Bronkema, business unit manager for Paragon Die & Engineering Co.
``Some of them are finding that they have gone to the low bidder on programs, and found that [the selected company] couldn't even perform,'' added J. Daniel Hess, president and chief operating officer for Grand Rapids, Mich.-based Paragon. ``Look at what that does for your quality, for your [product] launches. Consider the damage to your reputation, your quality, your customer base.''
Now Paragon is getting in on the ground floor for future programs at GM. The automaker has designated which Tier 1 companies will oversee interior programs, and is calling on those firms to have a team in place well before production.
For one project, Paragon is among a handful of toolmakers participating in the design stage for vehicles that will not hit the roads for another two years.
``GM is taking an active role is getting these new programs launched,'' agreed Jeff Mengel, a partner with consulting group Plante & Moran LLP in Auburn Hills, Mich.
Mengel called it an enhancement of GM's quality and product planning requirements. Those programs had included demands for delivery and quality. But now that GM is outsourcing larger and more-complex modules, it also has created new requirements for upfront preparations. The Detroit carmaker wants to know that a complete team is in place, and that the Tier 1 integrators will hit critical milestones.
``The idea is to make a commitment early on and bring people in as a group, rather than saying that we'll send it out for competitive bidding each step down the line,'' Bronkema said. ``If you wait, then as it gets down the line you'll find out all the errors that were there, and you've got increased cost, more time, more money.''
Bronkema and Hess point to two recent projects where Paragon's expertise saved money for customers. One company was seeking a mold for a low-volume project, and planned to order a standard steel mold. Instead, Bronkema steered the buyer to a cheaper aluminum tool that could meet his needs.
Paragon's proprietary rapid prototyping - which can deliver an exact replica of a tool at a fraction of the cost for tryouts - pointed out a flaw in another customer's design. Without the prototype, the customer would have wasted hundreds of millions of dollars on a mold it never could use.
``If you isolate the purchase price, you lose the ability to go upstream and downstream and look at the total program costs and see where you can really save money,'' Hess said.
GM is not alone in taking a new look at toolmakers. Executives scattered throughout the industry realize the value that mold makers with engineering expertise can bring if they are consulted early on, said Nesim Benrobi, president of DBM Reflex Enterprises Inc., a toolmaker in Laval, Quebec, specializing in molds for rear lighting.
``They are using it much more,'' he said. ``Before, they would say: `This is what we designed. Just do it.'''
Mold shops' capabilities are not as widely known as they could be, though.
Japanese automakers with assembly plants in North America also are champions of the savings possible through a long-term relationship, making them popular customers for any supplier. Now GM, with new products and increasing support on Wall Street compared with its U.S.-based rivals, is able to push for relationship changes that it believes will help in the long run.
``GM is taking a very intelligent move in saying that, `We're one of the few out here creating action,''' Mengel said. ``They're putting a spin on it that says, `This is not the old GM. This is the new GM and this is how we do business now.'''
That is not to say that toolmakers can slide on price once they're in the front door on the design side of the business, Hess said. Engineering skills can get companies in the door, but they will not stay if they cannot compete on cost.
Now that the auto industry is taking note of the potential savings of working with toolmakers, those mold shops likewise must have strong engineering capabilities that set them apart from competitors, and they must deliver on promises, he said.
``The bigger guys that have the skill set would love to be able to assist in making sure the molds function as a program,'' Mengel said.
``That brings them that much closer to the customer.''
