Costs, complications on the rise for mold makers

Novi, Mich. — Mold makers faced disruption during the pandemic followed by supply chain problems, material cost increases, labor shortages and competition from China. Demand lightened, too, forcing some companies to either fold or change direction.

In March, HS Inc. of Grand Rapids, Mich., laid off 58 people — nearly a quarter of its workforce — in a shift from tool and die operations, which dated back to the company's founding in 1969, to only automation solutions.

Superior Die Set Corp. in Oak Creek, Wis., is at a crossroad currently. The family of founder Kasimir Janiszewski will either sell the facility or close it Nov. 20 after 100 years of operations. The decision is based on many factors, "including our current outlook of the domestic market and Superior's fit therein," Frank Janiszewski, co-chair of the board of directors, said in a Sept. 21 news release.

More than ever before, the tooling and mold making industry is under attack, according to Lisa Lehman, business development manager of Harbour Results Inc., a manufacturing consulting firm based in Southfield, Mich.

"The cost of doing business is much higher than it's ever been," Lehman said while moderating a panel discussion about the future of mold making at the Injection Molding and Design Expo, held Sept. 20-21 in Novi.

"And while our wages used to be the best in manufacturing — more than any other trade — even production wages are now higher. It's making it more difficult for toolmakers to find labor," Lehman continued. "China continues to put pressure on us. Supply chain and material cost challenges are all over the place. These pressures have forced several mold makers out of business in the last two years."

Panelist Tom Barr, president and owner of TK Mold & Engineering in Romeo, Mich., said his company recently started taking on injection molding work for the three presses it has for mold trials.

"We're looking at some low-volume work, things that will help us improve cash flow," Barr said, adding that molding jobs have come in from the automotive, consumer goods, medical and defense markets.

Barr has been in the business since 1985, "loving every day what I do," he said, but the challenges are mounting.

"Years ago, there was a cycle that every six years would dip and be somewhat of a recession. This time it seems we're getting attacked by several different things, whether its interest rates, retaining employees, cost of living upgrades. There are four or five things attacking the business right now. If it's not that, it's offshore competition, so we really have hunkered down," he said.

For mold work that does materialize, the payment terms have been harder with some tool shops taking on financial risk for customers even though it interferes with their own cash flow and new projects.

"More responsibility is being put on the tool shops financially and from a technical standpoint," said Bill Frye, another panelist and North America business manager of Simoldes Tools, a Portugal-based mold maker.

Frye described Simoldes as a privately held, family-owned company with annual sales of about $100 million generated from facilities in 11 countries that employ about 1,000 people.

Simoldes officials are watching cash flow, keeping an eye on receivables and staying in close contact with customers.

"We can only control what's in our reach," Frye said. "Internally, we're looking at processes for streamlining and being in tune to our customers, making sure we hang onto the ones we have. ... It's tough in these times. Everyone is doing the same thing, just trying to hang on."

Recession worries continue to loom, and the United Auto Workers strike brings more unknowns, Lehman noted. "A lot of things we haven't seen yet could come to fruition," she said.

Still, new opportunities are on the horizon for companies that hang on and adapt.

"What we are optimistic about is that we'll see more demand over the next three years than we've seen [in a while]," Lehman said. "And this is largely driven by new ICE [internal combustion engine] products, and of course we're all talking about BEV [battery electric vehicles]. So, there's about 140 new BEV parts that will come to life."

Even so, the panelists were cautiously optimistic. Adam Idlewine, technical sales manager at Decatur Mold Tool & Engineering, pointed to a five-tool package awarded to the North Vernon, Ind., company in December.

"We're finally seeing final data today," Idlewine said. "We're trying to manage our workflow and capacity. The challenge is when will the job actually start."

Decatur's five-tool package deal brought nine iterations of data and requests for an analysis and a presentation.

"I know there's a cost to do business, but those really chew away at our margin," Idlewine said.

Tool shops need to be resources for their customers, particularly the sales staff, added panelist Tim Galbraith, general manager of Windsor, Ontario-based Cavalier Tool and Manufacturing.

"The OEMs and Tier 1s are expecting that level of engagement, and if you're not doing that kind of work, you're just a me-too guy quoting," Galbraith said.

Cavalier employs about 200 people at three facilities, generating about $55 million in annual sales.

At TK Mold, a much smaller shop with 25 employees and three apprentices in Romeo, Mich., customers are treated to a high level of engagement — even prospective ones for putting quotes together, which Barr said is something else to monitor. TK Mold staff recently identified a customer that "doesn't align with our core values."

"So, we had a separation from them. We're not just a quote source," Barr said. "We'd like to get some deals and work once in a while."

Because customers have been asking for so much more information and an increasing number of design and engineering revisions, Idlewine said, "our quotes are only good for so long now."

"It used to be 90 days but now we're down to 15 days because of the simple fact things change so quick," he said.

Founded in 1966, Decatur serves a variety of markets, including automotive, appliances, medical, consumer, industrial, packaging, electronics and the military.

"We're in almost every market now. We're trying to figure out what's a good fit for us and keeps cash flow moving," Idlewine said.

Decatur does about $40 million in sales annually with 135 employees and a recent expansion to house lights-out manufacturing for 24/7 operations.

After a first quarter that was "pretty good" and a second quarter that "wasn't great at all," business is steady right now through December, Idlewine said.

If Decatur was overloaded, then the company could turn to the online capacity tool of the American Mold Builders Association and coordinate to complete the job with another company.

"We can all collaborate and share the [computer numerically controlled] machining or anything," Barr said.

Decatur has taken on machining for another business. "We hit a dry spell at the time they got a big package. We helped them out," Idlewine said.

Lehman encourages companies to support one another and the industry: "Any time we can work together to make tooling stronger, we should go headfirst into that."

Barr said he's facing a new labor challenge with another larger company enticing away TK apprentices with higher pay.

"A Detroit OEM took three of our guys within the last year. They're paying wages I can't touch," Barr said. "That's a new one for me. That's one of the biggest challenges I'm facing right now: retaining employees, and with the cost of living, keeping them happy with their wages while also trying to meet the demands of pricing we're up against."

TK Mold also is involved with the local high school — the company hosts the robotics team at its facility — and the community college.

"Our main focus when we do need talent is to go to the community college," Barr said. "The high school activities are a give-back to the community and awareness to the trade. Macomb Community College is where the apprentices are. Finding them isn't our toughest part; it's retaining them."

Decatur Mold sponsors a high school electric go-kart team that races at universities.

"They work with our designers. It gets them in the door to see what we do," Idlewine said. "Several in the last three to four years have taken an interest, and a couple returned and have become good toolmakers."

Many labor woes also are being addressed by automation, like at Decatur, and that's bringing about the need to fill news kinds of positions.

"We used to need apprentice toolmakers, apprentice machinists and apprentice designers — and we still do. We also need robotic technicians and software technicians," Galbraith said. "We're going to be looking for skilled trades that we haven't invented yet in manufacturing. Artificial intelligence is the wave of the future for our industry, and we need to be addressing that now."

In 2008, many companies learned the lesson to find distinct markets and diversify. For example, about 75 percent of Decatur Mold business used to come from the automotive market, but now that's down to 40 percent and other markets are higher.

"We've changed more in the last two years than we have the last 20 years with how we know what's coming in, how our sales team is going out and to what markets," Idlewine said.

Diversification is the way to sustain the business, Galbraith said.

"We don't use the R word," Galbraith said of recession concerns. "Any time there's an economic shift, whether it's good or bad, is an opportunity for us to sharpen our swords. Take the opportunity right now with the slowdown in business to learn lessons, drill down in your process and look at cost of goods sold. ... That's the strategy you need. Opportunity is coming. We just need to be prepared for it."