FREMONT, OHIO (March 17, 9:30 a.m. EST) — It has gotten so that Martin Cass doesn't even like to read about the industry.
When he does, he never hears any good news about manufacturing or about his business of mold making. You'd think toolmakers were getting creamed left and right, Cass said.
Cass' company, blow mold maker Fremont Plastic Molds, had one of its best years in 2002. He could not hire enough people to fill the new openings. He was relieved to have completed an expansion in 2000 that almost doubled the size of his Fremont plant.
His company even was handed a regional award by accounting firm Ernst & Young in 2002 as Entrepreneur of the Year. With annual sales of just over $10 million, his shop won over some larger, formidable companies.
“We were driving forward so hard last year that I didn't pay attention to the bad news,” Cass said. “If I didn't read the newspaper, I'd think the country was in a huge boom right now.”
Believe it or not, there is good news for toolmakers in North America. Despite the very real problems that have picked apart the carcasses of some mold shops, others are doing more than merely surviving the vultures. They are thriving, due in large part to major changes they have made in technology and processes.
“When you talk to companies, more often than not, you hear something positive,” said Bruce Braker, president of the Tooling & Manufacturing Association, a group of Chicago-area mold makers based in Park Ridge, Ill. “Maybe that's because those who were saying negative things are no longer around.”
Braker has felt that pain firsthand. In the past 26 months, his association has lost 330 member companies. About half of those went out of business, he said.
Some of the remaining mold shops — and those include more than 1,500 alone in Chicagoland — have taken steps to counter the lingering slump. A few of them have done more than patch holes; they actually are turning their businesses on a dime to find ways to make money.
That should not come as a surprise to anyone who knows U.S. history, said Len Graham, director of tooling engineering for Tech Group Inc. of Scottsdale, Ariz.
“As much as we'd like to say we can go to sleep and the world will be fine when we wake up, it won't,” he said. “But through all this, we're Americans. We figure out how to make it right, and we're not going to roll over and give in.”
Summoning patriotic spirit is not enough to ward off overseas competition or price pressures or careening sales.
But change seems to help. And believe it or not, some U.S. tooling companies still are making money.
Lean vs. lazy
Three years ago, cost containment and flexibility were idle words, said Fremont project manager Bill Raubenolt, a former computer salesman who now works with large Fremont accounts. Work was flowing into shops. Toolmakers could afford to be fat.
Now, the tooling industry has turned into a Frankenstein monster, he said. Tool shops have dropped prices 10-20 percent just to keep the business. To compete, shops have to build some tools in as little as four weeks' time and offer the same quality, he said.
“We were lazy before,” Rau-benolt said. “We never dreamed what we'd have to go through today, even two years ago. Now all that has changed.”
Fremont has built a computer-based business around the drive to change. Today, the company has few workers on the plant floor, and the ones there spend time at a bank of computers plugging in numbers and monitoring machines.
Work has shifted to product development. Where before five people worked in a cramped design room, now 20 people sit in cubicles.
The locus of change at Fremont has been its own brand of software, called e.trak. The system allows for end-to-end project scheduling, reports, design work, product photos, job tracking, quoting and the administration of details online, Cass said. The software has been in use for about a year and has become the link to productivity and cost cutting.
The system was developed over a two-year period, much of it by new graduates who wanted to enter tooling but did not want to spend their days pulling a crank on a Bridgeport mill, Cass said. The new generation of workers would rather program computers than cut metal chips, he said.
The system is not cheap to operate, said Fremont controller Bryan Barshel; each upgrade costs $50,000-$100,000. But the cost savings have more than made up for the new, personal-computer society at Fremont, he said.
“We own a lot of our own software,” Barshel said. “It's not a file, hacksaw and hammer that take our investment dollars.”
There are subtle changes at Fremont besides e.trak, which won a recent e-business award. The company has shifted to seven days a week of work, Cass said. Instead of paying double for workers to come in for a big project on a weekend, the company has devoted itself to shorter work hours and more days of operation, he said.
That switch has added profit to jobs at little added cost, he said. “You can't turn all the machines off and let the sparrows take over the building on Sunday,” Cass said.
Meanwhile, Fremont has put money back, spending about $8 million during the past two years on high-speed milling machines and other automated equipment. Fremont has become the flagship shop of parent Midwest Tooling Group, the Chagrin Falls, Ohio, holding firm that owns three mold shops.
In contrast, another Midwest Tooling shop, Crown Mold & Machine, has struggled after losing much of its appliance business when the work went offshore, said Midwest President and Chief Executive Officer Michael Adams. Crown was forced to move last year from its plant in Streetsboro, Ohio, to a facility used by another Midwest Tooling company in Auburn, Ohio.
Some of Fremont's blow mold competitors, including now-defunct Hobson Mould Works Inc. of Shell Rock, Iowa, are gone or struggling, Cass added. But Fremont has managed to change its workplace and move forward.
That mind-set is a prerequisite for doing battle with the rest of the world, said John Hilbert, president of tool shop Reddog Industries Inc. of Erie, Pa. That large shop, with 165 employees, has counteracted lower profit margins with a reduction in overtime. The company opened a second shop in Erie to focus strictly on tool building without the overhead costs of the headquarters plant, he said.
“When life was good, we didn't give a second thought to some of this,” he said. “Now, we need to invest in a better mousetrap, in more efficient ways of doing business.”
More than 200,000 lines of code have been written, and it has taken more than seven years of work, but at Tech Mold Inc. of Tempe, Ariz., computer protocol is just the start of its new direction.
“That's the future,” said Tech Mold President Bill Kushmaul. “We'll be faster to market because we spent a lot of money in the 1990s to get there. When the economy comes back in a month or a year, we'll be ready.”
Times have been a bit turbulent at Tech Mold. Kushmaul once had been a partner with Tech Group but split off in 2000 to head his own injection mold company. The shop, specializing in tools for medical equipment and other precise parts, has gone through the same downturn as many others.
But it also has a refreshed outlook, based on a technology developed in-house. Called Self-Correcting Manufacturing, or SCM, the system allows a machine tool to run a perfect mold each time, no matter the complexity of the finished product. “It's taking out variability,” said Kushmaul. “And variability is what hurts everybody.”
It works like this: A piece of propriety software communicates with different machines in a manufacturing cell, making decisions from a set of design criteria fed into the system, said Brett Black, a sales engineer for Tech Mold and SCM project leader.
That design intent is translated to such equipment as machining centers, electric discharge machines and coordinate-measuring equipment. Those parts talk to each other, sorting out any differences that can cause a mold to fail.
The system also is making a difference in how a toolmaker works, Black said. The operator of the future will design criteria for the protocols used by the software to make decisions. It is a radical departure from the black art of toolmaking, he said.
“The funny thing is, when an operator is running a machine today, they are really in fire-drill mode,” Black said. “They make decisions on the fly for the first part. Now, they can control all of this offline. It's a quintessential example of working smarter instead of harder.”
The company has started the system on its first manufacturing cell, a graphite mill. More cells are planned this year, with eventually the entire plant running on the system, Kushmaul said.
It is not cheap — each cell costs about $750,000 to set up — but it is necessary to reduce time and increase accuracy, he said.
The Phoenix area is becoming the cradle of automated toolmaking. Tech Group has launched its Super-Cell concept, another automated approach. That system uses robotics to pick tools and move them between its automated machines.
The concept currently is used by three of the company's manufacturing cells, and Tech Group just received board approval to add the concept at its entire Scottsdale plant, Graham said. That work will start as soon as possible and will include the addition of new laser-etching equipment operated by robots, he said.
Graham, a former Tech Mold official who helped develop SCM, said the use of automation could be the enabler for an industry listing from a loss of jobs to Asia. Low labor rates can be combated by the lack of a need for labor, he said.
“It takes a total leap of faith to totally automate a plant,” Graham said. “But customers say they want a part fast, they want innovation, they want reliability and they want us to drive costs down. Toolmakers used to say those needs didn't go together.
“The only way to make this change is with automation. We can't ignore it.”
Mold makers are notorious for wasting time while parts are moved from one station to the next, said J. Daniel Hess, president of Paragon Die & Engineering Co. in Grand Rapids, Mich.
His automotive mold company is fostering a lean manufacturing approach, where work is moved seamlessly in an orderly route, he said. He has seen lead times for his bumper-fascia molds pared from 30 weeks to 26 down to 18-20.
“Workers spent a significant amount of time waiting for the next operation,” Hess said. “We had to attack that problem.”
Here or there?
Judged by others, Advance Tool Inc. should be facing doom. The Blaine, Minn., maker of injection molds works in businesses that largely have moved offshore: electronics and telecommunications. The company, like others, knows all about China and its molds.
Yet, Advance Tool sees the situation from another perspective. The company ships its molds, made in Minnesota, into China. It recently dispatched 64 molds to the country to be used by computer makers there.
Dashing more gloomy forecasts, it has secured mold work for Microsoft Corp.'s popular Xbox video game console, beating out competitors in China, Hungary and other low-cost places, said Steve Johanns, ATI's director of business development. The company even makes molds for Nokia cellular phones.
What gives? For one thing, Advance has a 40-person tooling operation in Malaysia, opened in 2001. While most of its mold work still is done near Minneapolis, customers in Asia are given the comfort of knowing that molds can be made there, Johanns said.
For another, the company does not operate under the fallacy that it must be a low-cost producer. Of its 108 people in the Twin Cities, 18 are engineers. It specializes in complex, difficult tooling, including multishot molds and stack molds.
But a big reason for the success of the larger tool builder, with annual sales of $21 million last year, is its flexibility. It has a network of business partners in Taiwan, some on board for a dozen years after the company opened a sales office there, and its Malaysia plant. It can quote jobs that blend work both in the United States and Asia, or jobs strictly performed here.
Many times, for the price of two plane tickets to Asia, it is cheaper for customers to keep the job in the United States, Johanns said. They listen, sometimes after getting burned by going elsewhere, he said.
“There's always going to be a differential between the U.S. and Asia when it comes to creativity, complexity, engineering and design,” Johanns said. “But you can't make excuses, and you can't look for someone else to solve your problems. You have to adapt and evolve as things change.”
Too many toolmakers are willing to give up their business to China without a fight, said Adams at Midwest Tooling Group. While his company is considering opening a facility in Asia, he does not buy into the attitude that U.S. shops need to hand over their work.
“People that say the game is over and manufacturing is going to China turn that into a self-fulfilling prophecy,” Adams said. “Instead, we should ask ourselves what the costs are and how we can compete.”
Some companies see networking as a necessity. A smaller mold maker, Carson Tool & Mold of Kennesaw, Ga., has set up a partnership with three North Carolina tool shops to share work.
The alliance, called Southeast Mold Builders Network, helps all the companies grow business by shipping out pieces of a project that are better-suited to each other, said Carson Tool President David Myers. The shops also are able to bid on larger projects, he said.
Others in the network are Ameritech Die & Mold Inc. of Mooresville, N.C.; Skyland Tool & Mold Inc. of Arden, N.C.; and Superior Tooling Inc. of Raleigh, N.C.
“We have to learn to trust each other and work together,” said Myers of his 20-person shop. “We're all in agreement on this. If we don't do something, the larger shops will take the majority of the work.”
Shawn McGrew and Darrin Schmitt, both in their mid-30s, had started a tool shop in a one-car garage in 1997. Both had worked at another mold builder in Indiana. One day their boss heard them talking about their side business and fired them.
They decided to make the shop more than a part-time hobby. They were successful, riding the tooling boom of the late 1990s after moving to a 5,000-square-foot plant in Haubstadt, Ind., near Evansville. Then the crash hit in 2000, and the partners wondered about their future.
“I was only 36 and Darrin was 35,” McGrew said. “We were too young to retire. But we felt like we were at a crossroads where we could either invest in new technology or look at an exit strategy. We said we were just going to keep on fighting.”
Their company, Prodigy Mold & Tool Inc., began investing in equipment. They became one of the smallest tooling companies to buy high-speed presses and robotic equipment, McGrew said. They put in stand-alone robots, machines with tool changers and electrode milling machines. Interest rates for bank loans were at historically low rates, and the partners decided to take a chance by borrowing.
They bought more than $2 million in equipment, even though their annual sales last year were only $1.2 million.
Then, they caught a lucky break. A nearby shop went out of business when the owner retired. Prodigy worked out a deal to take some of its customer base.
Now, Prodigy has a different problem: training the four new employees it just hired and learning to use another high-speed milling machine it just purchased.
“People said we were crazy, nuts, for taking such chances,” he said. “But we're tired of hearing the same, old, depressing news about toolmaking. It's up to us, the next generation, to raise the bar a little bit.”