The past year wrecked havoc on South China's export-oriented injection molding and mold-making sectors. But the industry may have seen the bottom and is eyeing signs of a slight upturn.
Hong Kong-based Ultratech Mold Design & Mfg. Co. Ltd., for example, saw its business plunge 50 percent in the financial crisis that began last year, as its overseas multinational customers saw demand plunge.
But Ultratech has since partially recovered, and sales now hang at about 25 percent of pre-crisis levels, with orders in the last month becoming hot, said Simon Cheung, assistant general manager of sales and marketing.
Still, he said, it's not clear if the recent activity is a sign of renewed growth, or more driven by rebuilding low inventory levels, he said in an interview at the Asiamold 2009 trade show, held Sept. 16-18 in Guangzhou.
Asiamold is sponsored by Messe Frankfurt and DeMat GmbH, organizers of the Euromold show in Frankfurt, Germany, and the Hong Kong Mould & Die Council.
Many companies interviewed at the event also reported sales drops in the same range as Ultratech, and also cautiously reported conditions were improving, even if they could not tell if the improvements are sustainable.
We wonder, did we really hit the bottom and are we rebounding, or do people need to restock? Cheung said, noting that the company had dropped employment from more than 1,000 a year ago to about 800 now at its factories in China.
Ace Mold Co. Ltd. of Hong Kong CEO Jack Yeung said sales appear to have leveled off, and markets seem more rational than in the immediate aftermath of the crisis period, when no one seemed to understand what was happening.
Yeung said his firm is making serious plans for the mainland Chinese market.
The market for the higher-quality, higher-cost goods it makes for North America and Europe is not big in China at the moment, but there are opportunities if the company can revamp its production to lower costs and produce reasonably quality goods for the large numbers of rising Chinese middle class consumers, he said.
It is a good opportunity but you have to rethink the business model, he said.
Singapore mold-maker Amura Precision Tooling Ltd. Pte. said business in its Xiamen, China, facility has switched from focusing on export sales to seeing more than 60 percent of sales target the local Chinese market.
The company is also 80 percent sure it will build a $2 million toolmaking plant in Ho Chi Minh City, Vietnam, in 2010 that will becapable of making about 20 molds a month, to meet demand for higher-quality molds there from automotive and other customers, said A.T. Tan, marketing director.
Some firms said they are cautiously starting to hire again.
Hoyu Digital Tooling (HK) Ltd. executive Colman Wong, however, said he expects shortages of skilled mold makers in South China to increase in coming years, and once the current economic troubles pass, the 10 percent annual salary increases of recent years to return.
One mold industry consultant who buys tooling in China and Portugal for the American market said he thinks China's tooling industry will remain strong. However, he said, Chinese firms will have to focus on product development skills, working in collaborative partnerships and adding value, rather than competing on price.
That change is happening, said Manuel Pilar, a director of Auburn, Maine-based Cridex Tooling.
The Chinese suppliers are not always price driven sometimes they are quality driven and value driven, he said. There is less talk only about price.
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