Moldmakers speak at House of Commons committee
The House of Commons Industry Committee recently set up a sub committee to analyze the automotive industry, and con...
March 16, 2009 by Canadian Plastics
The House of Commons Industry Committee recently set up a sub committee to analyze the automotive industry, and conducted hearings about the crisis that is affecting the sector.
Angelo Carnevale, vice president of the Canadian Association of Moldmakers, spoke at the March 9 session, voicing the concerns of mold, tool and diemakers serving the automotive market.
“To state the obvious, our toolmaking industry is in crisis,” Carnevale told the committee. “What may or may not be surprising is that we have been dealing with this situation for several years, not just due to the current financial crisis. In effect, the rest of Canada is just now feeling our pain.”
Carnevale said that the root of the industry’s problems is the inequitable payment terms from the the Detroit three, or PPAP payment terms. He noted that the delay in getting payment for tooling — a process that can take anywhere from 18 to 48 months — placed a financial burden on moldmakers.
Carnevale said that the payment model was “broken,” and called on the government to give a portion of any loans to tooling companies.
“This payment strategy must be stopped for the future health of the small to medium sized businesses which cannot afford to finance the Detroit 3,” he said. “We believe this is an opportune time for the endeavor, as there is currently a similar effort by the American tool shops which is being viewed seriously by their elected officials.
Carnevale also noted that the mold, tool and die industry should be viewed as an independent sector, and could be a robust business if companies were paid for their work and could reinvest in new technologies. He noted that many tool shops are owed money by the Detroit 3, and that banks lump tool shops in with automotive supplier.
He also noted that many banks don’t offer accounts receivables coverage on a customer without the customer being approved for EDC coverage, and EDC does not offer coverage for the Detroit 3 or most of its suppliers.
Carnevale asked the committee to earmark a portion of any funds to pay off “critical” suppliers, with toolmakers designated as critical suppliers. He also called for the discontinuation of the PPAP system, and an increase in credit coverage for the Detroit 3 from EDC.
“We are not before you requesting any loans, only timely payment for services already rendered to the OEMs, and a return to fair practice payment terms so that we can move forward to invest our money in our own futures,” he said.