Despite a positive trend in the amount of work being awarded to tool shops on progressive payment terms, overall tooling sentiment is down in the latest Automotive Tooling Barometer.
The seven-percentage-point decrease from August is due in part to a significant amount of work being placed on hold because of program delays, according to the Original Equipment Suppliers Association (OSEA) and Harbour Results Inc. (HRI), which conducted the research for the barometer and released the findings on March 15.
Almost 20 percent of business is on hold, representing about $2.3 billion in tooling revenue — the equivalent of more than 100 tool shops sitting idle, OESA and Harbour announced. That's a 5 percent increase from the tooling barometer results released last summer.
In addition to revenue constraints, the shops face tool complexity, communications and engineering changes as their main cost drivers while they gear up for a busy second quarter in 2016.
“It is important that the automotive industry collectively address the tooling industry's concerns and issues to ensure they are able to support the upcoming record number of vehicle launches,” OESA President and CEO Julie Fream said in a news release.
Even though capacity utilization metrics are flat, more than 75 percent of tool shops indicated they are optimistic about the future, pointing to forecasts that indicate 2016 will be heavy sourcing years for automakers and assumptions that the current downturn is temporary.
Looking further ahead, North American light vehicle demand is predicted to plateau at 20 million units through 2020, Laurie Harbour, HRI president and CEO, said in a news release.
“It is critical that the automakers, Tier 1 suppliers and tool shops improve communications and collaboration to reduce cost and remain profitable during this period,” she added.
HRI is a Southfield, Mich.-based firm that advises the tool and die, injection molding and manufacturing industries in North America.
OESA, also based in Southfield, represents North American automotive suppliers.
