Workforce, new business, trade top concerns for toolmakers

U.S. mold makers face challenges, but for the first time in several years, the need for a younger workforce showed a very slight decline, failing to hit 100 percent.

The most recent survey by the American Mold Builders Association shows new business development, profitability and foreign competition also are top concerns.

The association released its AMBA Business Forecast Report on Feb. 2. In a webinar five days later, AMBA Executive Director Troy Nix and Omar Nashashibi, a Washington lobbyist AMBA hired last year to help reinstate tariffs on injection molds from China, addressed the issues facing mold makers in 2020.

The survey, conducted Dec. 13 to Jan. 5, got responses from 113 executives at mold builders — 87 percent of them were smaller shops with less than $15 million in sales. Nix said 80 percent of respondents make injection molds. Most are in the Midwest.

Attracting younger toolmakers does remain a priority, as the mold making workforce ages. But the priorities are changing, according to the survey. AMBA said 93 percent of respondents reported that building an industry workforce is a primary challenge. But for the first time in three years, that number did not hit 100 percent. And 15 percent said employment levels declined in first quarter of 2020 vs. the fourth quarter of 2019, which Nix said was the highest proportion since AMBA began doing the survey in 2011.

At the same time, 46 percent of mold makers said generating new business is a challenge, 13 percent higher than in last year's AMBA Business Forecast Report. And maintaining profitability grew to 20 percent of respondents, after just 7 percent last year.

Also getting 20 percent: Continuous improvement to become more efficient.

AMBA reported that one in four respondents listed foreign competition as an industry challenge.

During the webinar, Nashashibi, founding partner of The Franklin Partnership, outlined the mold making industry's successful effort to get the U.S. government's 25 percent tariff on injection molds made in China. The tariff returned in late December, following an AMBA-backed lobbying campaign. The tariffs originally were put in place in mid-2018 in the first round of President Donald Trump's tariffs against China. But after injection molders and other manufacturers complained the tariffs would raise costs for U.S. molders, the government dropped them for a 12-month period.

AMBA hired Franklin in October to focus on lobbying.

"[The tariffs] were scheduled to kick back in on the 28th of December. However, 30 mold importers filed requests to continue to keep those tariffs off," Nashashibi said.

Indianapolis-based AMBA and mold builders countered, submitting comments from 152 molders that support reinstating the China mold tariffs, he said.

Franklin lobbied members of Congress, explaining there are 1,400 mold builders in the United States and they have plenty of capacity, one of the arguments made by the molders seeking an exemption from the tariffs. The AMBA survey said the average capacity utilization of U.S. mold builders is 67 percent, and companies think capacity will rise five points, to 72 percent, in 2020.

Nashashibi said it was all about cheaper Chinese molds.

"The way [government trade officials] look at whether or not they are going to grant an exclusion, price is not a consideration. They said only quality and availability," he said. "So in our case, we clearly know that many of these [molders], they're aware that you all exist. Clearly also, the U.S. government now does. But they ... were just going through the process and trying to get a cheaper product from China. We all know that's what it is. However, they would mask it and say we don't have the technical capabilities, and so on and so forth here in the States, in order to do that."

Nashashibi said the lobbying campaign worked: "We were able to have a strong victory for this industry."

But he said mold makers still need to explain the issue to their customers, since there is some confusion on the issue. And he said mold industry leaders must be on the lookout for cheating by Chinese mold suppliers, amid reports some are saying they can evade the tariffs by shipping them to another nontariff country, then on to the United States, he said.

He added that President Trump was right to take action against China, which subsidizes many of its industrial companies or owns them, as part of the country's industrial strategy. China has engaged in unfair practices such as forced technology transfer for two decades, he said.

"Some of your counterpart companies [in China], they don't even get an electric bill. It goes straight to the government and that's who pays it, or that's who subsidizes it," Nashashibi said.

When asked about current business conditions, AMBA reported some significant shifts. Although nearly 90 percent of mold builders report that current conditions are positive, 13 percent fewer of them said business is in "good" condition compared with 2019 responses, while those reporting "poor" business conditions has risen by 7 percent.

First-quarter backlog also has declined vs. the fourth quarter of 2019. Nix said 40 percent reported that backlog is down, 25 percent said it's up and 35 percent said it's the same. That's almost the reverse of survey results last year, when they reported better backlogs overall, he said.

When it comes work in the pipeline, 47 percent said they are not full enough. Four percent are totally empty of new business and are desperate for work, Nix said. Fifteen percent of respondents said they are full, and 6 percent are oversold.

Smaller mold ships appear to be struggling a bit more than larger ones, Nix said. But executives at the small firms say they are optimistic about 2020.

The full 2020 Business Forecast Report is available for purchase at AMBA.org.