Tooling capacity inadequate to support projected auto launch demand: report

There will be a vendor tooling capacity constraint within the North American automotive industry by 2018, according to a new report by research firm Harbour Results Inc.

In approximately five years, the required capacity of the vendor tooling industry will reach US$15.2 billion, with available current supply of only US$9.25 billion, according to the study, which gathered information from 10 OEMs, nearly 50 major Tier 1 suppliers, and more than 50 global tooling suppliers.

Vendor tooling – tooling purchased by the OEM to be run in Tier 1 or Tier 2 facilities – is a crucial part of the automotive industry and the vehicle development process, accounting for an average of US$550 per vehicle in North America at 2012 vehicle volume, the report said, and this capacity issue will affect the entire value stream from vendor tooling suppliers to Tier 1 suppliers and OEMs.

“Capacity will become a serious challenge for the automotive industry in the near future. If the North American tooling industry doesn’t respond to the challenge someone, such as European and Asian tooling suppliers, will,” said Laurie Harbour, president and CEO of Harbour Results. “Our study, in partnership with the Original Equipment Suppliers Association, addresses potential issues that we’ll face and provides several strategies to counteract industry changes.”

The study identifies several factors that will contribute to the demand increase, including mass customization, increased complexity, Europe and Asian OEM tool localization to North America, increased vehicle content, a growing labor shortage, and increased price pressure.

“To solve the imminent capacity issue, OEMs, Tier 1 and tooling suppliers must revisit current strategies throughout the entire value stream,” the study said. “Key strategies for reducing the capacity discrepancy identified in the study are: early collaboration, focus on cost (as opposed to price) and management of the value stream.”

According to Harbour, the industry would see a 10 to 20 per cent reduction in absolute tool costs if there is more collaboration between OEMs, Tier 1 and tooling suppliers as early as 36 months before vehicle launch. Increased collaboration leads to improved manufacturing feasibility, increased input on part design, improved understanding of supplier capabilities and more. “Modifying processes throughout the vendor tooling value stream will not only improve tooling cost, but, more importantly, improve capacity needed to offset the impending constraint. OEMs, Tier 1 and tooling suppliers will need to work together to create more efficient practices and reduce wastes throughout the entire process, from planning through to development, kick-off, production and beyond to address the entire capacity gap,” said Harbour. “The solutions identified in our study will help reduce the risks that will come with the capacity challenges we’ll see in the near future.”

For the full study or more information, contact Harbour Results at info@harbourresults.com or 248-629-9331.