N. American tooling industry experiences slight dip in Q2 2017

North America’s tooling industry is experiencing a slightly slower second quarter in 2017 compared to Q1, a new report said, but capacity utilization for both mold and die tool makers is still well above 80 per cent.

The report, called the Q2 2017 Automotive Tooling Barometer, has been issued by the Original Equipment Suppliers Association (OESA) and Southfield, Mich.-based market research firm Harbour Results Inc. (HRI).

Additionally, the report said, shops with revenue ranges of US$40 million and above are experiencing peak capacity utilization rates of 95 per cent.

“There is still a large discrepancy between tool shops who are very busy, and those who are not,” said Laurie Harbour, president and CEO of HRI. “In fact, we’re seeing the standard deviation in the market widening as the year progresses, and the smallest mold shops are struggling to even maintain 60 per cent utilization.”

The clearly cyclical nature of work-on-hold continues, as it rises back above 11 per cent. “The Detroit Three are driving significant delays for suppliers,” the report noted. “Despite increased program delays, overall sentiment (a tool shop’s general outlook for the next three months) is still at record highs at above 80 points.”

The study also addressed differences between supply chains in the industry. Primary tool shops are generally larger, with better relationships at the OEM and Tier 1 level, while secondary shops are more focused on developing niches to fill capacity. Primary shops have consistently had higher utilization (95 per cent) than secondary shops (78 per cent), yet are more exposed to work on hold, and receive fewer progressive payment terms.

“Each supplier has distinctly different approaches in the marketplace,” said Julie A. Fream, president and CEO, OESA.  “As a result, primary shops typically oversell to maintain revenue size and turn to outsourcing to help level loads during particularly busy periods.”

The survey population was comprised of mold shops (72 per cent) and die shops (28 per cent), both in the U.S. (68 per cent) and Canada (32 per cent). Shops with revenue ranges less than US$5 million up to greater than US$40 million were represented, with the largest percentage of shops coming from the US$10-US$20 million (26 per cent) range.