Survey: Utilization down, work on hold increasing for automotive toolmakers

The automotive tooling sector continued its slowdown in the second quarter, according to a report from Harbour Results Inc. and the Original Equipment Suppliers Association.

The Q2 2019 Automotive Tooling Barometer Survey also showed that capacity for automotive toolmakers hit its lowest level since 2016, when the survey first started to collect that metric.

Mold shop capacity utilization fell 4 percent to 74 percent in the second quarter from the first quarter, which itself represented a soft start to 2019, the report said. Die shop utilization also fell the same amount, from 74 percent to 70 percent in the same time frame.

And the report said that automotive program delays drove work on hold to a record high of more than 20 percent.

Based on those factors, the sentiment of tool shop owners dropped to 61 percent.

"During the first two quarters of 2019, the industry saw a decrease in utilization and a significant increase in work on hold," said Laurie Harbour, president and CEO of Harbour Results in Southfield, Mich. "With this challenging environment, we can expect shops to continue to struggle as the year progresses. This, coupled with the fact that Chinese tool shops continue to significantly underprice North American shops, [signals] we will likely see more layoffs and bankruptcies in the balance of the year."

As 2018 drew to a close, President Donald Trump's administration removed 25 percent tariffs on injection molds imported from China, exempting them from the U.S.-China trade wars for at least one year. The unexpected move came as more than 200 requests from plastics injection molding companies — many of them in the automotive supply chain — filed requests with the U.S. Trade Representative to exempt their specific mold imports.

U.S. mold makers had strongly supported the tariffs.

The Tooling Barometer survey population was composed of mold shops (63 percent) and die shops (22 percent) located in the United States (56 percent) and Canada (34 percent), plus international sites (10 percent).

Shops surveyed have sales ranging from less than $5 million to more than $40 million. The largest percentage of shops are in the $10 million to $20 million range.

"The lower sentiments the survey results are showing are no surprise," said Julie Fream, president and CEO of the Original Equipment Suppliers Association, also in Southfield. "Our OESA Automotive Supplier Barometer Survey results indicate that sentiment of automotive supplier executives is at the lowest level since 2009."

The Automotive Tooling Barometer also looked at the business readiness of mold and die shops. The majority of both types of companies (79 percent for molds and 86 percent for dies) responding to the survey indicated they have a three- to five-year strategic plan. But when they were pressed for more details, these companies did not have the same level of plans in place for the adoption of technology, the sales process or labor and hiring.

"It is discouraging that so many shops are not including these specifics as they plan for the future," Harbour said. "With the automotive industry changing so rapidly, it is imperative for the tool and die industry to start preparing for the future today."

Labor and hiring are a big challenge, and a majority of the shops surveyed are experiencing a shortage of qualified talent. Many shops say they have problems filling open positions. And 81 percent of the mold shops and 67 percent of die shops indicated they are not prepared, or somewhat prepared, for the next-generation workforce, according to the report.

Harbour said that needs to change.

"By 2020, millennials will make up 50 percent of the U.S. workforce, and shops need to adjust the way they are recruiting talent as well as their internal culture to attract and retain an efficient workforce," she said.