Skip to main content
Sister Publication Links
  • Sustainable Plastics
  • Rubber News
Subscribe
  • Login
  • Register
  • Subscribe
  • News
    • Processor News
    • Suppliers
    • More News
    • Digital Edition
    • End Markets
    • Special Reports
    • Newsletters
    • Resin pricing news
    • Videos
    • Injection Molding
    • Blow Molding
    • Film & Sheet
    • Pipe/Profile/Tubing
    • Rotomolding
    • Thermoforming
    • Recycling
    • Machinery
    • Materials
    • Molds/Tooling
    • Product news
    • Design
    • Mergers & Acquisitions
    • Sustainability
    • Public Policy
    • Material Insights Videos
    • Numbers that Matter
    • Automotive
    • Packaging
    • Medical
    • Consumer Products
    • Construction
    • CEO Issue
    • Diversity
    • Best Places to Work
      • 2022 winners
    • Processor of the Year
    • Rising Stars
    • Women Breaking the Mold
  • Opinion
    • The Plastics Blog
    • Kickstart
    • One Good Resin
    • BRICS and Plastics
    • All Things Data
    • Viewpoint
    • From Pillar to Post
    • Perspective
    • Mailbag
    • Fake Plastic Trees
  • Shop Floor
    • Blending
    • Compounding
    • Drying
    • Injection Molding
    • Purging
    • Robotics
    • Size Reduction
    • Structural Foam
    • Tooling
    • Training
  • Events
    • Plastics News Events
    • Industry Events
    • Injection Molding & Design Expo
    • Livestreams/Webinars
    • Editorial Livestreams
    • Ask the Expert
    • Plastics News Events Library
    • Processor of the Year submissions
    • Plastics News Executive Forum
    • Injection Molding & Design Expo
    • Plastics News Caps & Closures
    • Women Breaking the Mold Networking Forum
    • Plastics in Automotive
    • Injection Molding & Design Expo
    • Reuters Responsible Business Europe 2022
    • Reifenhäuser Technologies Livestreams
    • Polymer Points Live
    • Numbers that Matter Live
    • Plastics in Politics Live
    • Sustainable Plastics Live
    • Plastics Caps & Closures Library
    • Plastics in Healthcare Library
    • Women Breaking the Mold Networking Forum Library
  • Resin Prices
    • All Resins
    • Commodity TPs
    • High Temp TPs
    • ETPs
    • Thermosets
    • Recycled Plastics
    • Historic Commodity Thermoplastics
    • Historic High Temp Thermoplastics
    • Historic Engineering Thermoplastics
    • Historic Thermosets
    • Historic Recycled Plastics
  • Rankings & Data
    • Injection Molders
    • Blow Molders
    • Film Sheet
    • Thermoformers
    • Pipe Profile Tubing
    • Rotomolders
    • Mold/Toolmakers
    • LSR Processors
    • Recyclers
    • Compounders - List
    • Association - List
    • Plastic Lumber - List
    • All
  • Directory
  • Custom
    • Sponsored Content
    • Conair Sponsored Content
    • KraussMaffei Sponsored Content
    • ENGEL Sponsored Content
    • White Papers
    • Classifieds
    • Place an Ad
    • Sign up for Early Classified
MENU
Breadcrumb
  1. Home
  2. News
April 20, 2009 02:00 AM

Mold makers can minimize auto damage

Rhoda Miel
Managing Editor
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print

    As executives, politicians and lawyers try to chart a course for North America's auto industry, some of the smallest companies at the bottom of the auto supply chain are busy trying to secure their own future.

    With General Motors Corp. and Chrysler LLC pondering bankruptcy within weeks, mold makers and their support groups are lobbying members of Congress, working with the White House's automotive task force, meeting with automakers and screening their customer base, diversifying into other industries and using mold lien laws when they're available.

    Toolmakers have taken losses in the past year as major molders filed for bankruptcy, with payments owed to them tied up in court or paid off at less than full value. No one knows how a bankruptcy by GM or Chrysler would affect them and other sub-suppliers — though there are estimates the impact could reach half of the companies, so the firms and their backers are doing their best to stabilize their futures.

    “There are a lot of short-term and long-term issues to address, but now our immediate concern is bankruptcy,” said Rob Akers, executive director of the National Tooling & Machining Association of Fort Washington, Md.

    NTMA has been part of a group of sub-suppliers reaching out to the White House Automotive Task Force created by President Obama, urging it to consider relief for mold makers and other small firms.

    The American Mold Builders Association in Rolling Meadows, Ill., is encouraging its members to write to members of Congress, even offering a sample letter suggesting what they might say: “Our industry is presently in the cross hairs of the financial troubles that are being experienced at General Motors and Chrysler.”

    It estimates that 35-50 percent of the tool and die industry could be forced into bankruptcy if either GM or Chrysler enter bankruptcy, with that number climbing if both do.

    The federal government has made $3.5 billion available to direct suppliers of GM and Chrysler — with another $1.5 billion available if Ford Motor Co. sought federal bailout money — but lower-tier suppliers like mold makers cannot access the cash or payment guarantees.

    NTMA and other associations had hoped to include sub-suppliers in the program, but were unable to include them in the immediate bailout package. However the groups are continuing to work closely with the auto task force to urge recognition for toolmakers and other small firms. NTMA has also opened direct discussions with GM to help resolve long-term problems like complications to the part-approval process — called PPAP — which also slows payment.

    The biggest worry, though, is that if GM or Chrysler enters bankruptcy protection, toolmakers with payments pending will not receive full payment or be paid quickly — even for work completed months ago. With that income either gone or tied up in legal battles, and credit hard to come by, mold shops may be unable to pay their bills and be forced out of business.

    Typically in the auto industry, toolmakers bid on projects two years or longer before production begins, but they do not receive payment until the direct suppliers begin making parts. Payment for those tools is also funneled through the molder, which can further slow the amount of time before mold-making firms receive any cash. That means it could take anywhere from five to 18 months for payment during good times and it increases the danger that payments could be further delayed, or halted altogether if any one of the companies enters bankruptcy.

    Those concerns have helped generate more interest in mold-lien laws — which allow toolmakers to place a legal claim on a mold until they receive full payment for it.

    “The lien law is one of the most significant pieces of legislation of the past 20 years for mold makers, but it isn't perfect,” said Jeff Mengel, a partner with consulting group Plante & Moran PLLC, based in Chicago. “But it's nice to have any kind of leverage.”

    The laws vary from state to state, and only a handful of states have laws targeted toward toolmakers. Michigan's law, for instance, includes a loophole that allows mold buyers to opt out of the lien programs, essentially telling toolmakers that they will not accept liens, Mengel said.

    Ohio toolmakers knew of that problem when they began creating their own law in 2004, and closed that clause in their state's legislation.

    “It makes us a secured creditor,” said Larry Durivage, owner of injection-mold toolmaker Durivage Pattern & Manufacturing Inc. of Williston, Ohio, who helped lead the creation of Ohio's law.

    Mold makers have to file the appropriate paperwork to put a lien on the tool, which can add to costs, but Durivage said it adds a layer of security that the company will get some payment. Whether he uses a lien on a tool depends on how financially stable he feels his customer is — and his likelihood of getting paid.

    With some customers, he said he uses the law on every tool, and the current economy also is playing a part in his decisions.

    “We're doing it a lot more diligently now,” he said.

    The laws are not perfect. If a customer goes into bankruptcy still owing money on a tool, it will be up to a judge to determine who gets paid and when, Mengel pointed out.

    “It isn't the final answer, but it's an arrow in the quiver that wasn't available before,” he said.

    And a lien does give toolmakers a legal claim on the tool, rather than tossing the claim in with other unsecured creditors in a bankruptcy.

    “If their bank is going to get a dollar for every dollar they're owed, then I get a dollar,” Durivage said. “If they get 50 cents on the dollar, I get 50 cents on the dollar.”

    Akers said the best thing toolmakers should be doing now to protect themselves is simply taking a look at the rest of the supply chain. If their immediate contracts are with direct suppliers that are fiscally stronger, their chances of getting full payments improve. Direct suppliers with shaky finances are riskier business decisions at this time.

    “Look at the position of their direct customer,” Akers said. “How is that going to affect you?”

    And toolmakers who haven't already tried to expand beyond the auto industry must begin now.

    “Diversify, as much as you can,” said Gary Kimmen, president of Top Craft Tool Inc. in the Detroit suburb of Clinton Township.

    His company, which does machining and tooling and makes automation equipment, actively began pursuing business with a variety of customers three years ago, and successfully moved the auto industry from its largest business base to its third-largest base, with military now at the top of its customer list.

    Top Craft is part of the Global Tooling Alliance — a collection of 19 independent tool and die shops that pool resources and work together to bid on large contracts. Topcraft and some other GTA members will take part in the Society of Automotive Engineers' 2009 World Congress, set for April 20-23 in Detroit, to introduce themselves to potential customers. Alliance members first took part in the event in 2008, and attracted enough business from new customers that they are returning this year.

    “We're trying all kinds of new things,” Kimmen said. “We've got to attack the economy and do what we have to do — hurry up and diversify and be prepared for when the jolt hits.”

    RECOMMENDED FOR YOU
    Half of Phillips 66 shareholders urge study on risk of investing in virgin plastic
    Letter
    to the
    Editor

    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Plastics News would love to hear from you. Email your letter to Editor at [email protected]

    Most Popular
    1
    Report says plastics have positive role in climate fight
    2
    Stellantis rescinds ‘burdensome' contract terms for suppliers
    3
    SK Capital buys additives maker Valtris Specialty
    4
    ExxonMobil set to bring on new olefinic elastomer capacity
    5
    Viking Plastics invests $3 million in eight new injection molding machines
    SIGN UP FOR TO RECEIVE THESE EMAILS AND ENEWSLETTERS
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    Get our newsletters

    Staying current is easy with Plastics News delivered straight to your inbox, free of charge.

    Subscribe today

    Subscribe to Plastics News

    Subscribe now
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter
    • Instagram

    Plastics News covers the business of the global plastics industry. We report news, gather data and deliver timely information that provides our readers with a competitive advantage.

    Contact Us

    1155 Gratiot Avenue
    Detroit MI 48207-2997

    Customer Service:
    877-320-1723

    Resources
    • About
    • Staff
    • Editorial Calendar
    • Media Kit
    • Data Store
    • Digital Edition
    • Custom Content
    • People
    • Contact
    • Careers
    • Sitemap
    Related Crain Publications
    • Sustainable Plastics
    • Rubber News
    • Urethanes Technology
    • European Rubber Journal
    • Tire Business
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • News
      • Processor News
        • Injection Molding
        • Blow Molding
        • Film & Sheet
        • Pipe/Profile/Tubing
        • Rotomolding
        • Thermoforming
        • Recycling
      • Suppliers
        • Machinery
        • Materials
        • Molds/Tooling
        • Product news
        • Design
      • More News
        • Mergers & Acquisitions
        • Sustainability
        • Public Policy
        • Material Insights Videos
        • Numbers that Matter
      • Digital Edition
      • End Markets
        • Automotive
        • Packaging
        • Medical
        • Consumer Products
        • Construction
      • Special Reports
        • CEO Issue
        • Diversity
        • Best Places to Work
          • 2022 winners
        • Processor of the Year
        • Rising Stars
        • Women Breaking the Mold
      • Newsletters
      • Resin pricing news
      • Videos
    • Opinion
      • The Plastics Blog
      • Kickstart
      • One Good Resin
      • BRICS and Plastics
      • All Things Data
      • Viewpoint
      • From Pillar to Post
      • Perspective
      • Mailbag
      • Fake Plastic Trees
    • Shop Floor
      • Blending
      • Compounding
      • Drying
      • Injection Molding
      • Purging
      • Robotics
      • Size Reduction
      • Structural Foam
      • Tooling
      • Training
    • Events
      • Plastics News Events
        • Plastics News Executive Forum
        • Injection Molding & Design Expo
        • Plastics News Caps & Closures
        • Women Breaking the Mold Networking Forum
        • Plastics in Automotive
      • Industry Events
        • Injection Molding & Design Expo
      • Injection Molding & Design Expo
      • Livestreams/Webinars
        • Reuters Responsible Business Europe 2022
        • Reifenhäuser Technologies Livestreams
      • Editorial Livestreams
        • Polymer Points Live
        • Numbers that Matter Live
        • Plastics in Politics Live
        • Sustainable Plastics Live
      • Ask the Expert
      • Plastics News Events Library
        • Plastics Caps & Closures Library
        • Plastics in Healthcare Library
        • Women Breaking the Mold Networking Forum Library
      • Processor of the Year submissions
    • Resin Prices
      • All Resins
      • Commodity TPs
        • Historic Commodity Thermoplastics
      • High Temp TPs
        • Historic High Temp Thermoplastics
      • ETPs
        • Historic Engineering Thermoplastics
      • Thermosets
        • Historic Thermosets
      • Recycled Plastics
        • Historic Recycled Plastics
    • Rankings & Data
      • Injection Molders
      • Blow Molders
      • Film Sheet
      • Thermoformers
      • Pipe Profile Tubing
      • Rotomolders
      • Mold/Toolmakers
      • LSR Processors
      • Recyclers
      • Compounders - List
      • Association - List
      • Plastic Lumber - List
      • All
    • Directory
    • Custom
      • Sponsored Content
      • Conair Sponsored Content
      • KraussMaffei Sponsored Content
      • ENGEL Sponsored Content
      • White Papers
      • Classifieds
        • Place an Ad
        • Sign up for Early Classified