Owners of small mold-making shops, faced with growing price competition, are beginning to reach out to China.
The demand for mold builders to meet ``world pricing'' quotes, which compares North American prices with those in low-wage countries, is leaving them with few choices. But there also are toolmakers that see opportunities to expand, rather than just survive.
``We've added four people in the last year here, and those four people are here because of our business in Asia,'' said Greg West, president of WesTool Corp., a 17-employee mold-making company in Temperance.
``My small four jobs aren't a lot, but they are a fact.''
Some larger mold builders have spent the past five years seeking cooperative ties with toolmakers in China and other Asian nations, linking North American design, customers and skills with the cost savings available in low-wage countries.
Now, however, the pipeline is opening even for those that previously considered themselves too small to handle the international contacts.
``There's a big push from small toolmakers, manufacturers and customers from the U.S., Europe and Australia to gain a foothold in Asia,'' Patrick McGrath, WesTool's Asian chief, said in an e-mail from his base in Taipei, Taiwan.
``It seemed to have accelerated earlier this year after the economic doldrums passed and business started to pick up.
``It was as if everyone decided en masse that the only way to survive during the next phase of globalization was to have something going on in Asia.''
Many are making their moves cautiously, though, since they were hurt when attempts in the 1990s failed because they could not find a good partner, McGrath said.
``There are at least 5,000 tool shops in southern China alone,'' said Jim Meinert, a tooling consultant with Meinert Market Services LLC in Saukville, Wis., who specializes in international work. ``How do you go about finding the right one?
``The multinational companies - the General Motors, the GEs - they want their suppliers to follow them because they want their good, trusted sources. The only way to do that is to have some kind of a connection.''
That does not mean every small shop must do all of the legwork on its own. There are consultants and companies that specialize in matching mold makers in Asia with those in North America, Meinert said.
Most of those cross-border arrangements link North American companies with a network of mold makers in Asia that will launch work - under guidance to ensure it meets standards here - then ship the mold overseas for completion.
Precision Mold & Engineering Inc. teamed up with fellow Warren, Mich.-based mold maker Proper Mold & Engineering Inc. to create Global Tooling Solutions, a separate company that blends Western engineering and management with the low-cost opportunities in Asia.
In the past year and a half, GTS has coordinated 90 molds from China, according to David Loehr, president of Precision Mold.
Now GTS is expanding its offerings with a design shop in Shenzhen, China, that can design and make inserts for North American mold makers at a reduced price, potentially saving $12-$30 per hour.
Toolmakers can contract and deal solely with GTS in the United States. GTS will oversee the work in China to ensure it is done to North American specifications, Loehr said.
The design house now has five designers, but has room for 16 as business grows.
``This has all been customer-driven,'' Loehr said. ``When we started [GTS] a few years ago, we got a lot of raised eyebrows. At that point, it wasn't customer-driven, but now we've paid visits to customers who are saying that if you don't have a China price available, don't even bother to bid.''
West saw Asia as a natural outgrowth of his shop's philosophy of subcontracting with specialists. From its launch in 1999, WesTool has contracted out work, rather than attempting to bring everything in-house, he said.
``That develops a very high quality of work, so ... as the Asian competition situation began, I began considering doing work in Asia through subcontracting in some way,'' he said.
Even as West began to look for Asian toolmakers, he lucked out. A customer - he is not certain who - passed along his name to a former automotive engineer and toolmaker, McGrath, who had moved to Taiwan.
McGrath also was interested in hooking up Asian toolmakers with their North American counterparts. He and West e-mailed, chatted and finally met to make sure their manufacturing philosophies melded. McGrath now is Asian chief for WesTool, tying in West's firm to a network of four toolmakers in Taiwan and a small selection of shops on the Chinese mainland.
``One of the keys to this is to have somebody in Asia all the time,'' West said. ``You can't just throw money into Asia and wait for the tool to come back.''
West and his team also have made multiple trips to Asia to check on the progress of ongoing work regularly.
``Where our plan differs from most other U.S. tool shops doing business here in Asia is that [WesTool] is not just a U.S. tool shop acting as a glorified broker for an Asian shop, but is deeply integrated in the tool-manufacturing process,'' McGrath said.
West oversees the design, the tryouts and all the validation in his customers' global back yard, McGrath said, giving those buyers increased confidence in the final product.
WesTool now can offer bids with both an ``Asia'' tool price and a domestic price. Every mold will not necessarily translate across the Pacific.
The four-week travel time alone eliminates some Asian options, West noted.
``There are a lot of jobs that don't make sense to send to China,'' Loehr agreed. ``You've got more expensive steel, you've got shipping costs. If you have jobs that are one- or two-cavity jobs with 500-600 man-hours in it, there's not enough hours in the job to make it make sense to go to China.''
But West is taking advantage of the international network to expand beyond price-based offerings.
WesTool specializes in large systems used to mold parts such as injection molded bumpers or composite compression molded truck hoods.
The company now is bidding on smaller molds, subcontracting much of the work to Asia. The process allows the firm to offer its services across a wider range of molds.
For the first six months of 2004, West estimates, his company has seen 40 percent of its sales dollars tied to its Asian capabilities.
``Some people may think I'm a traitor to do this business with Asia, but I think I'm a realist. You can either dig in your heels, or do something,'' he said. ``Asia is a bitter pill, but it's not going to go away. You better learn how to deal with it, or you're just going to get mowed over by it.''