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June 15, 2018 02:00 AM

Mold makers: 'We're in uncharted territory' on tariffs

Bill Bregar
Senior Staff Reporter
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    Bill Bregar
    Visitors at Amerimold in Novi, Mich.

    Novi, Mich. — Mold makers at the Amerimold trade show said tariffs on steel and aluminum are raising prices for their key raw materials, and they will fuel higher prices for molds. But by how much depends on the size and complexity of the tool.

    President Donald Trump imposed tariffs of 25 percent for steel and 10 percent for aluminum imported into the United States starting June 1, less than two weeks before Amerimold, which ran June 13-14 in Novi. Toolmakers said U.S.-made steel and aluminum prices will also go up.

    Some mold makers said steel suppliers immediately slapped them with 25 percent higher costs. Other Amerimold exhibitors said they had seen smaller increases, and a few said they still have not seen any price hikes.

    But they all agreed that the tariffs will increase prices for molds.

    "At the end of the day, those prices get passed on to the customer," said Mike Skukalek, chief financial officer for Krieger Craftsmen Inc. of Grand Rapids, Mich.

    Steel accounts for a significant percent of the cost of manufacturing an injection mold, from 20-30 percent for mid-sized molds, or as much at 50 percent for a very large mold, officials said. Steel can amount to only about 10 percent or less of the cost to make a small high-precision mold.

    "With all the steel coming into this country from Europe — the cost of steel just went up," said Dave LaGrow, president of Maximum Mold Group. The mold maker based in Benton Harbor, Mich., uses both steel and aluminum.

    Normally, the price of steel is fairly stable. But the tariffs are changing that.

    "We're in uncharted territory," said Paul Thal, general manager of Thal Precision Industries in Clark, N.J. The company has not raised mold prices because of the tariffs, and he said higher steel costs have a relatively small impact on Thal Precision's small specialty molds, including tools for insert, two-shot and reel-to-reel molding.

    Westminster Tool Inc. also makes small tight-tolerance molds for markets such as medical and aerospace. President Raymond Combs said Westminster is paying more for steel, "but it hasn't had as profound of an effect on our company as it has on our peers — our peers that are buying big pieces of steel." The toolmaker in Plainfield, Conn., has not had to raise prices, he said.

    Mold makers generally order steel and aluminum for each specific mold job, so they can't cushion material price hikes by stockpiling steel. But as job-shop operations, they can react quickly to list higher material costs on contracts. Several mold makers at Amerimold said they now are including a line item in job quotes saying that material prices are subject to change, based on higher costs from the tariffs.

    Aluminum billet prices historically have been more volatile than those of steel, industry officials said.

    American mold makers have been busy, thanks to the strong U.S. economy and solid sales of cars and trucks.

    LaGrow said the tariffs cover ​ raw steel, which makes U.S. mold makers less competitive. He encouraged the president to broaden the tariffs.

    "What Trump needs to do is, he needs to finish the job. He needs to tariff on finished steel goods," he said at his company's Amerimold booth.

    Officials of Krieger Craftsmen said U.S. mold makers need to work together on the issue. So far, Krieger has not seen any material price increases, but Skukalek knows they are coming.

    "We've been working with AMBA [the American Mold Builders Association] to try and figure out what the impact will be," Skukalek said.

    Owner Tim Krieger said mold makers "need to stay united and pass the costs on to the OEMs."

    Toolmakers said that they can't absorb major price increases for steel and aluminum.

    Dennis Hoover, president of Quest Industries Inc. in Lapeer, Mich., said his company's steel and aluminum prices have gone up only a minimal amount. Quest has not increased its mold prices yet, he said, but company officials are watching the situation.

    Macomb Township, Mich.-based Baker Industries Inc. also has seen small increases for its steel and aluminum, said Jerry Kablak, business development and program engineer.

    "We haven't seen big increases, just moderate increases," he said.

    But Kablak said the company expects to see more price hikes over the next six months. Baker Industries has made some moderate mold price increases, he said.

    Kablak thinks higher mold prices, coupled with manufacturers bringing work back to the United States, could be good for the U.S. mold making industry.

    "It's going to help the American worker," he said.

    The logo of Ameritech Die & Mold Inc. sports an Uncle Sam-type hat and a red, white and blue banner. "I'm pretty patriotic," said President Steve Rotman. He agrees with President Trump's moves to renegotiate trade agreements to make them more fair. "My goal is, whatever makes America great again is OK," he said.

    As to the tariffs, Rotman said Ameritech, which has been in business more than 30 years, is helped by its long-term, close working relationships with customers.

    Amerimold attendees toured Quest Industries the day before the trade show started, an event organized by AMBA.

    The week before Amerimold, the Society of Plastics Engineers held its Rotational Molding Conference in Cleveland. Attendees toured Diversified Mold & Castings in Warrensville Heights, Ohio, which makes aluminum molds for rotational molding and tooling for thermoforming.

    CEO Vince Costello said aluminum prices started going up a month or two ago, even before the 10 percent tariff. Have prices gone up after June 1? "I haven't seen a recent increase, but we probably will," he said.

    Diversified Mold & Casting's aluminum suppliers source the material from overseas, so they are now going to pass along the increase to the mold maker. The suppliers cut the billet to the size that Diversified needs to make an individual mold. Diversified also makes cast aluminum rotational molds.

    "Will we have to increase pricing? Absolutely. We will," Costello said. "If our pricing goes up from our material vendors, we are going to have to quote higher mold prices. For sure."

    Amerimold attendees, exhibitors discuss steel, aluminum tariffs

    Continued from Page

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