Honda of America Manufacturing Inc. wants to help toolmakers - and itself - by creating new ties to select companies.
The North American carmaking unit of Japan's Honda Motor Co. has created a ``co-management'' system for tool and die shops in the region that will establish long-term relationships providing a stable business level for those companies.
Mold makers will have the sales base needed to help finance capital improvements, while Honda has long-term suppliers that can build on the expertise learned from one vehicle launch to smooth the launch of the next vehicle, said Timothy Myers, senior manager for the North American purchasing technical center at Honda of America.
Honda has four tool shops already in the co-management programs, two die makers for steel stampings and two injection mold makers - Rapid Die & Engineering Inc. of Grand Rapids, Mich., and Unique Tool & Gauge Inc. of Windsor, Ontario.
And it is looking for more, Myers said during an Aug. 7 interview at the auto industry's Management Briefing Seminars in Traverse City. Honda hopes to have as many as eight North American tooling businesses signed on as long-term partners.
The co-management prospect grew as Honda expanded its manufacturing in North America and also altered its view on tooling, Myers said.
``We saw, historically, tooling as a commodity,'' Myers said. ``In today's environment, we're starting to see tooling as moving from a commodity to value added.''
During one recent vehicle launch, Honda bought 41 percent of its dies and tools from North America, 41 percent from Japanese tooling companies and the rest from low-cost countries.
Some of the molds go directly to Honda, some go through suppliers that are backing the automaker's move.
``For the most part the Tier 1 [suppliers] understand the value of this,'' Myers said.
Honda's concern for healthy toolmakers focused on the cyclical nature of the industry, in which sales climb and fall widely from year to year.
``They want you to survive, and they want you to be there down the road,'' said Rapid Die President Chris Jones.
Rapid Die has worked with Honda on past contracts for more than 10 years, but the new program takes the relationship even further. Honda provides the same lean manufacturing and production expertise to tool shops that it has provided for key molders in the past.
Honda has helped Rapid Die track equipment use to ensure it is using machines to their full capacity, he said.
The automaker also has helped Unique Tool improve its processing throughout its facility - not just on Honda programs, said Vice President Darcy King.
``It really sparks invention,'' King said.
Competition from low-cost manufacturing sources has been even more intense for injection mold makers, which have seen business migrate to Asia for small automotive parts as well as parts for a range of electronic and consumer products, Myers said.
Through co-management, Honda wants each selected tool shop able to rely on a third of its business coming from the carmaker and its suppliers. That should stabilize income levels and help those shops finance the purchase of new equipment that will help them build molds better and faster.
``A competitive domestic tooling industry must be available,'' Myers said.
The effort benefits more than the tool shops, he said. If Honda has good mold makers on call from one program to the next, they also are able to retain the intellectual property within those companies.
The companies that build the tools used to make interior trim for one pillar already have done the troubleshooting on problems such as sink marks or flash, he said. They don't need to reinvent the wheel when work begins on the trim for the next car.
``Co-managed tools shops retain the information from the old parts when we move into the next model,'' he said.
The long-term relationship should pay off for Honda in the long run because the shops retain that knowledge, he said.
The company will be reviewing tooling shops in search of good partners for the co-management program, looking at its own existing supply base as well as companies recommended by suppliers, Myers said.
``[The program] isn't exactly where we'd like it to be at this time, but it takes a long time to change,'' he said.
* * *
* Gains long-term suppliers that can build on the expertise learned from one vehicle launch to the next
* Hopes the program helps level off the up-and-down nature of the toolmaking industry
* Plans to have as many as eight North American tooling businesses signed as long-term partners
* Gain sales base to help finance capital improvements
* Receive lean manufacturing and production expertise from Honda