CAMM President Works on Local Solutions
Bankruptcies, shop closures and asset auctions have become an almost weekly occurrence in the embattled Windsor-Essex County tool and mold sector, and industry watchers have cited a number of reasons ...
September 1, 2007 by Canadian Plastics
Bankruptcies, shop closures and asset auctions have become an almost weekly occurrence in the embattled Windsor-Essex County tool and mold sector, and industry watchers have cited a number of reasons for the shops’ struggles. The glut of inexpensive molds from low cost countries like China, for instance, is often blamed for the sector’s decline.
However, six months into his two-year tenure as the president of the Canadian Association of Moldmakers (CAMM), Dan Moynahan is more concerned about the troubles at home.
“Although it’s alarming how quickly Chinese mold imports have grown in the last four years, actually as far as imports of molds to Canada, China represented less than two per cent of the industry total in 2006,” argued Moynahan. “I believe we must remain mindful of their existence, but they have become the scapegoat and offered as the excuse for the recession we have experienced in our sector over the last two years.”
ON BETTER TERMS
According to Moynahan, the biggest issue facing Windsor-area moldmakers today are the languid payment terms set out by original equipment manufacturers (OEMs). Initially driven by automotive OEMs, many clients now take 18 months or longer to pay for their new molds and tools.
As an example, Moynahan noted that his company Platinum Tool Technologies Inc. has experienced instances where their customers have not paid them, even though the molded parts are being commercially produced. For small- and mid-sized moldmakers, this disparity can severely limit operations as the cash flow and operating lines are exhausted quickly.
Moynahan has also been working together with the other associations affected in taking action to extend existing lien laws in Ontario for mold and tool shop owners. In Ontario, the purchase-money security interest (PMSI) set out under section 33 of the Personal Property Security Act offers significant benefits for creditors. First, PMSI allows the creditor company to have priority over other registered secured creditors. PMSI arrangements also allow creditors to retain the title to the goods until the debtor has paid the full purchase price.
Although some industries have been able to take advantage of this clause, Moynahan said moldmakers have a harder time reaping the benefits.
“In our industry our customer would just laugh at us if we asked them to sign [a PMSI agreement],” he said. “They are not going to sign away the title to the tool.”
CAMM has discussed the extended payment terms and lien laws at several meetings with government officials and industry stakeholders. Moynahan and a group of stakeholders, along with the support of local Windsor lawyer John Leslie, even met with the Attorney General in July, and delivered a presentation on the specific needs of mold and tool shops when it comes to PMSI laws.
“We said that it isn’t working for us, in our sector it doesn’t work,” said Moynahan. “If our customer in Ontario goes bankrupt, the receiver takes control…even though we have not been paid, the title has been passed.”
Moynahan thinks shorter payment terms and better lien laws will allow shop owners to take on more contracts, and provide moldmakers with greater leverage when dealing with lenders.
Moynahan has committed himself to improving payment terms during his time as president, but he has also been focusing on the need for technological improvements, diversification, better research and development tax breaks and additional tax incentives for Ontario moldmakers.
Additionally, Windsor and Essex County received $200,000 from Minister of Economic Development and Trade and Windsor West MPP Sandra Pupatello to find ways to create opportunities in markets outside North America or in other industries. Moynahan said that CAMM is scooping out markets such as India, and the association has boosted its presence at trade shows to promote the skills that exist in Ontario.
CAMM also participated in an economic summit in August, and met with local stakeholders such as nurses and teachers to map out a sustainable future for the Windsor-Essex County.
“For every moldmaking job, there are seven spinoff jobs that are being lost [in Windsor],” said Moynahan. “It affects everyone, right down to the guy who works at the corner store.”