Driven by the high level of North American vehicle launches predicted between 2018 and 2020, spending on automotive vendor tooling will reach a record high of US$11 billion next year, a new report from Harbour Results Inc. said.
November 7, 2017 by Canadian Plastics
Driven by the high level of North American vehicle launches predicted between 2018 and 2020, spending on automotive vendor tooling will reach a record high of US$11 billion next year, a new report from manufacturing industry analyst Harbour Results Inc. (HRI) said.
But the news isn’t all good: Southfield, Mich.-based HRI also projects a drop of 40 per cent in tooling spending from the high of US$11 billion in 2018 to approximately $6.7 billion in 2020.
HRI estimates that 177 new vehicles will be introduced between 2018 and 2020, with 66 per cent of these launches being sport utility vehicles and truck platforms, which require more tooling to manufacturer than a car platform.
“In 2017, we are estimating tooling spend to be approximately $9 billion, which has resulted in high capacity utilization among tool shops – 88 percent for die shops and 81 percent for mold shops,” said Laurie Harbour, HRI president and CEO. “This created a new tooling model of outsourcing. In fact, between $1 billion and $1.5 billion of tooling was outsourced this year to help manage the growing demand, and we can only expect this trend to grow in 2018.”
However, HRI projects the 40 per cent drop to begin shortly after. “Our team looked at a number of factors and issues impacting the automotive industry in addition to vehicle launches – including the elimination of vehicle models, new foreign owned plants and products, OEM profitability, political and economic climate, and the changing consumer landscape – and we developed an automotive vendor tooling spend forecast of US$50 billion from 2016 to 2021, with 2020 being the lowest spend year during that time. Although the predicted dip in 2020 is not nearly as significant as we experienced in the recession, it is important that tool shops continue to focus on improving operations and investing in technology during the good times to remain competitive during the dip.”