D-M-E Study Outlines Difficulties, Opportunities

North American moldmakers faced with the growing threat of offshore competition need to develop innovative ways of manufacturing and forge closer relationships with customers in order to survive, according to an independent research study recently commissioned by Madison Heights, Mich.-based D-M-E Company.

Working with Milwaukee, Wis.-based marketing communications firm Scheibel Halaska, D-M-E spent several months surveying approximately 470 molders, moldmakers and industry decision makers throughout North America, Europe and Asia. According to D-M-E president and CEO Dave Lawrence, the goal was to gain a greater understanding of new and emerging trends in the moldmaking industry, and also of the ways in which the top companies were responding, particularly in North America. “Essentially, we wanted to identify the challenges facing domestic moldmakers and understand the strategies of the winners,” Lawrence told Canadian Plastics.

COMPETITION GROWS, LEAD TIME SHRINKS

Not surprisingly, the biggest single challenge identified by survey respondents was overseas competition. “The biggest, most obvious trend that we identified was the large exodus of moldmaking to overseas, which is seen as a challenge primarily in North America but also to a lesser extent in Europe,” Lawrence said.

A second, and related, pressure facing moldmakers of all nationalities is that of reducing lead times. “We discovered that no matter where a moldmaker operates — whether in North America, China or Germany — the reduction in lead times throughout the supply chain is perceived to be a real challenge,” Lawrence said.

According to the survey, other key concerns relate to money and labour. “In both North America and Europe, there is concern about an inability to make the necessary capital investments that are required to compete,” Lawrence said. “There is also concern in these regions about a labour shortage, as first and second generation moldmakers leave the industry without a large pool of people available to replace them.”

Asian moldmakers who responded to the survey, meanwhile, reported an abundance of available general labour but a lack of skilled workers, Lawrence continued.

THE OUTSOURCING OPTION

Partly because of this labour shortage, the survey uncovered an increased focus among North American moldmakers on outsourcing as a means of improving cost and quality of products. “The most successful respondents were those that leveraged costs and capabilities in lower cost countries,” Lawrence explained. “To become more effective, these companies are building the core and cavities themselves, and outsourcing the manufacture of the mold to strategic partners in countries such as China and India.”

This points to the related trend among the more successful North American survey respondents of becoming mold manufacturers, as opposed to moldmakers in the traditional style. “Without taking away from their pride of workmanship, the concern among the top moldmakers nowadays is to get a project completed as quickly as possible,” he said. “The survey showed that successful mold shops are spreading around the labour and the expertise to achieve this.”

As they delegate more of the actual mold construction to outside sources, the top moldmakers are also becoming increasingly involved with their customers, from the earliest stages of a project onwards. “From the outset, the leading moldmakers are now using their expertise to influence such things as part design,” Lawrence said. “Their ability to work with a customer through every step of the process is a real opportunity for them to stand out from foreign competition, and they’re seizing it.”

GEOGRAPHY MATTERS

The survey also outlines emerging opportunities in North American markets. “The packaging, medical and new domestic automotive industries are areas where top moldmakers are beginning to focus more,” Lawrence said. “By comparison, the traditional automotive markets are seen as declining in North America, as is commodity molding in electronics and telecommunications.”

These disparities in the market are partly geographic, Lawrence continued. “The market in California, for example, is strong and driven primarily by the medical industry,” he said. “The weakest area is the upper Midwest, in particular the 300-mile radius around Detroit that has been hit hard by the troubles of the Big Three automakers.”

Given this decline in what was once the very heartland of the moldmaking industry, one of the more surprising results of D-M-E’s survey is that almost 50 per cent of North American respondents described themselves as optimistic about the future. “Although they are certainly concerned about offshore competition, many of the North American shops know that they have skills that haven’t been overtaken yet,” Lawrence said. “In combination with the innovative ways of doing business uncovered by our survey, this gives a different picture from the doom and gloom that we hear about so often.”