Drastic times mean drastic measures. The tooling industry is no exception.
At Reko International Group Inc., 2001 was a year that some would like to forget. Sales plummeted, and the company reported a loss. Morale needed a lift.
The company found new life through a major makeover that Mary Kay would be proud of. A year later, the Oldcastle, Ontario, company is back in the black.
But doing that required Reko to leave nothing to chance on the shop floor. Program managers and engineers make all decisions before the heavy slabs of steel are sliced into molds.
``The tooling industry is quite different than it used to be,'' said Graham Shorter, president of Reko's tool and mold business, in a recent interview. ``You will barely recognize it in a few years. We, like other companies, cannot work the way we used to.''
So it goes for many North American mold makers. Many of the changes are out of necessity. A fact-finding study of the tool, die and mold industry from the U.S. International Trade Commission, released Oct. 28, paints a bleak picture of an industry on the brink of disaster.
The downturn in the U.S. economy, a shrinking domestic market, excess capacity and demands for lower prices have left many tool shops worried about the future. Some industry experts forecast that about half of all U.S. toolmakers will disappear in a few years.
Some business is leaving the United States for cheaper shops in Asia and Eastern Europe.
``We continue to build up the living standards of every other country in the world while ours continues to decline,'' said Matt Coffey, president of the National Tooling and Machining Association in Fort Washington, Md.
Yet, while mold makers' trade associations plan to lobby Congress for action to help domestic mold makers, some tooling companies have not stood still. They are not waiting for help from an outside source, a political incentive or the spigot to open with new customers.
``I don't think tooling will ever be like it used to be,'' said Carolyn Coe, president of mold maker Kellums & Coe Tool Corp. of Jeffersonville, Ind. ``A lot of companies can't do things the way they did before. We have to find ways to change.''
These are some of their stories.
East meets West
Injection mold maker M2M International Ltd. preserves a small-town ambience. Located in rural Wallaceburg, Ontario, it's close to the Walpole Island ferry that shuttles cars across Lake St. Clair to the northern Detroit suburbs.
Yet the company has strayed farther than merely across the lake to boost automotive business. It has gone to Asia, and its customers are starting to follow.
``We run a mirror operation with Ikegami in Japan,'' said M2M President Richard Myers, speaking of M2M's evolving partnership with Ikegami Mold Engineering Co. Ltd. of Saitama, Japan. ``We can communicate to our customers looking at toolmakers in Asia that everything can be on our shoulders.''
M2M's unusual relations in the Pacific Rim took a big step three years ago, when the company partnered with a minority supplier, East Indian native Bharath Reddy, to form Synergetic LLC. That company, based in Romeo, Mich., now handles program management for jobs moving between East and West.
Ikegami, a company Myers has known for more than a decade, has five tooling plants in Japan and facilities in Mexico, China and Malaysia. Another partner of M2M, Susung Precision Mold Corp. of Seoul, South Korea, also has a tooling plant in China, while partner Honyi Steel Mold is based in Taiwan.
Now M2M has shifted Synergetic into a lead role to manage mold programs that might be built in lower-cost shops but used in North America, Myers said. Synergetic is coordinating tool design and engineering, cost management, mold tryouts and pre-production set-up on injection presses.
Where the tool is built depends on where the job will go and how much the customer is willing to pay. That flexibility gives M2M the global presence that most tool shops do not possess, said Mark Nowakowski, Synergetic vice president of business development.
Nowakowski helped lead a recent group of Tier 1 automotive suppliers to Asia to tour some of Ikegami and Susung's facilities. Another M2M partner, Design Intent Engineering Inc. of Auburn Hills, Mich., went along for the trip and is helping to manage the design of those projects under M2M's ``art-to-part'' approach.
``This could open new markets for the U.S. without the risks of working with an overseas toolmaker,'' Nowakowski said Oct. 8 at M2M offices. ``We're taking a huge leap in what can be accomplished.''
While other manufacturers have used Asian tool shops for years, the trend is just getting started among automotive customers. One of M2M's customers, Lear Corp. of Southfield, Mich., attempts to find local tooling sources for its parts, said spokeswoman Andrea Pulchalsky. The supplier is turning to the Pacific Rim more frequently as it attempts to source parts there, she said.
Looking beyond the United States is becoming a necessity in the automotive world, said Jeff Mengel, who heads the plastics consulting group at Plante & Moran LLP. ``Not recognizing the world economies and the choices there is pretty silly,'' said Mengel, based in Auburn Hills, Mich. ``Large programs and larger companies are not afraid to source globally.''
It is a sea change for M2M, a company founded by Myers' father, and has meant some recent expansion. Its 1 Source Plastics subsidiary, located down the street from M2M in Wallaceburg, recently added 14,000 square feet of space to perform more mold tryouts. It brought in a 3,300-ton Van Dorn Demag injection press, replacing smaller 700- and 400-ton units, as it gears up to run parts from tools made in Asia and North America.
Officials expect company sales to reach about US$23.5 million in fiscal 2002, up about $2 million from 2001.
Several Detroit-area toolmakers also are starting to work with overseas shops on a more regular basis. And so are others.
Alpha Mold LLC of Huber Heights, Ohio, was hurt when its telecommunications business moved offshore to Asia. But the injection mold maker found some respite by starting work with a Malaysian tool shop for certain jobs, said Executive Vice President Larry Beres.
When a customer wants an inexpensive mold without jeopardizing tool quality, the company sends the manufacturing part of the work to Asia, he said. All design and supervision work stays in Ohio. Beres called that concept ``blended tooling.''
``We have to be competitive,'' Beres said. ``We build Cadillacs here. But we don't want to be cut out of the intermediate markets. Now, customers can have the Chevy that is [built in Malaysia] or the Cadillacs that we make here.''
Alpha and M2M sacrifice some profit by sending tools overseas. But splitting the profit of a larger customer pie is much better than facing a shrinking U.S. market, Beres said.
``Nobody likes change, but sometimes you have to be more creative,'' he said. ``And opportunities show up that you might not have thought about.''