In early 2007, one of North America's prominent mold-making shops went bankrupt. Hallmark Technologies Inc. of Windsor, Ontario, closed its doors amid a soft automotive market, tough payment schedules and offshore competition.
Such scenarios have occurred many times in the past few years, as market conditions cut down mold builders that couldn't meet today's challenges. These challenges are far stricter than they were 20 years ago.
“People used to be happy with just a good tool,” industry veteran Jim Meinert said in a recent telephone interview.
Now, many mold makers are expected to do more than build a tool. From design and prototyping to trial molding, mold makers are providing more services to capture business. Cradle-to-grave responsibility is becoming normal practice, said Meinert, who runs a consulting business, Meinert Market Services LLC in Saukville, Wis.
The need for speed is a relatively new demand. Customers now might expect a complete turnaround for a mold in a few weeks vs. a few months, as was common 20 years ago. “Now we live and die with just-in-time,” Meinert said.
Export opportunities exist and companies should chase them, he said, but it's expensive and time-consuming. “For a company that is just keeping its head above water,” the process is tough, he said.
Global competition existed 20 years ago, with the main Asian competition coming from Japan. Since the 1980s, costs have risen in Japan; now, much of the competition is from China, which two decades ago was just showing up on the industry's radar. “We were focused on [the U.S.], and now we need to follow customers like the multinationals,” Meinert said.
Exports can present surprises. For example, it's easier to work with Detroit-based General Motors Corp. on overseas projects than domestic ones, and South Africa is turning out to be a growing manufacturing hub that needs imported molds, since few are made there, Meinert said.
Mexico lacks mold-repair service because so much molding work has moved there, outstripping local capacity, according to Dan Moynahan, president of the Canadian Association of Mold Makers in Windsor. A new Volkswagen plant in Mexico, combined with one in Chattanooga, Tenn., will need 800 molds over the next two years, he estimates. “You must go where the business is,” said Moynahan, who also is president of Platinum Tool Technologies Inc. in Windsor. “You've got to chase the work. But it's hard to market yourself if you're small to medium in size.”
During the past 20 years, machine tool and design technologies have evolved tremendously, Meinert said. Five-axis, high-speed machining is common and computer-aided design/manufacturing is far more advanced than 20 years ago. “CAD was just coming in,” Meinert recalled. “It was very expensive, but not anymore. It's at one-tenth of the price and its capacity is tremendous.”
Companies being left by the wayside typically haven't invested in new technology; they've tried to make do with old equipment and cheap labor, according to Moynahan.
Getting paid is now a challenge for mold makers, especially in automotive jobs. Delays in paying for molds lead to cash-flow problems at tool builders, which are usually too small to absorb the shortfall. Banks have imposed onerous financial terms, hurting mold makers' abilities to modernize and fund day-to-day operations.
With so many mold shops hurt by the automotive downturn, market diversification is crucial: “You have to have a mixture of business,” Moynahan said. “For the past eight years, the Big Three have held the hammer,” he said. But a CAMM study predicts that mold makers with more than 35 percent of their business tied to the Big Three won't be in business in two years.
Finding good people is as much a challenge now as it was 20 years ago. Then, mold makers tried to interest high school students in mold building. Many students were paid to attend technical schools, some of which have closed.
But despite mold-shop closures, there's still no excess of good toolmakers on the market, Meinert said. When some mold makers lost their jobs, they left the field and went into other sectors or retrained for new careers. “Getting good people is still a tremendous need,” he emphasized.
Moynahan predicts mold makers will face a difficult market for the next six months or so, but demand will begin rebounding in the second half of 2009.
“We're the first step for the Big Three,” Moynahan said. “For recovery, you need the tool first.”
He expects a few more mold shops to close in the near term, but feels the rate of attrition has slowed. The successful companies will embrace change, and the pace of that change is accelerating, Meinert said.
Mold maker and injection molder Minco Group of Dayton, Ohio, is one firm doing relatively well. The firm attacks tough market challenges on several fronts, cutting costs wherever it can.
“We're scrambling like everyone else,” said Gary Deaton, marketing and manufacturing manager. “We try to keep people and equipment busy, but we're not working the hours we would like to see. We explain to employees where we are and what we're doing.”
Automotive accounts for half of Minco's business. Deaton said he has seen projects postponed or canceled in the industry. But because Minco builds molds mainly for transplant carmakers, the firm is better-positioned than some players tied to the Big Three.
Minco is open to diversification, but selects its work carefully and offers a range of services, he said. “We sell the value that we bring to a project,” Deaton said. “It's not just price.”
Minco's injection molding division can validate a tool before it is shipped, giving the firm an edge over straight mold builders, he said. Minco started in-house molding in 1985, some 31 years after it entered mold building. The shop runs 24 hours a day.
“Speed brings us business,” Deaton said. “When people need something, they want it now.”
Minco emphasizes engineering. It got involved in CAD/CAM early, in 1986. Although it is difficult and expensive to keep up with engineering software, Deaton said, it pays off.
Minco spends about $1 million to upgrade its equipment continually, improving efficiency and cutting costs, Deaton said.
“Our price approaches what is quoted for offshore [mold making]. We ask the customer, 'Why would you go offshore?' The landed cost [of offshore molds] is the realistic cost.”
Still, Minco has explored the export market, just in case. “We know of many successes — and also many failures,” Deaton said.