Learning from the German model

We’ve all heard jokes about German efficiency. According to one industry insider, however, it’s time for Canadian moldmakers to stop laughing and apply some valuable lessons to benefit their own businesses.

“German mold, tool and die shops are cost-competitive within the global market, and use their engineering skills as leverage to enter markets in which they’re not cost-competitive,” said Horst Schmidt, president of the Cambridge, Ont.-based Canadian Tooling & Machining Association (CTMA). “The result is that virtually every moldmaker in Germany is fully booked well into 2008, and many are even delivering tools into China. How many Canadian shops can say that?”

At a time when input costs are increasing, and customers are in decline and/or sourcing more work to lower cost countries, Canadian moldmakers might find that emulating their German counterparts is smart business.

SURVIVING AGAINST THE ODDS

Ironically, the secret to German success lies in the government’s slightly antagonistic approach to manufacturing. “Germany is a very socialistic country, and the manufacturing system is built on the needs of the workers, as opposed to those of industry,” Schmidt said. The German worker has the highest labour rates for the least hours worked by any worker in the industrialized world, Schmidt noted, and the country enforces a 35 hour work week with no overtime permitted. Additionally, the tax structure is very high, and there is little to no government assistance offered for business development.

To survive in such an atmosphere, a mold, tool and die shop must trim every ounce of excess and squeeze as much productivity as possible from its resources.

This is apparent from simply walking into the average German shop, Schmidt said; the layout has been painstakingly designed to maximize every inch of floor space. “Each piece of moldmaking machinery has been deliberately positioned to streamline operations and maximize efficiency.” By contrast, he continued, too many Canadian shops have set up their equipment in a seemingly random fashion. “Very few moldmakers in Canada approach their floor layout with a business plan in mind,” he said. “It’s not uncommon, for example, to have the carbon room in one corner of the shop and the EDM machines in another, when they should actually be closely aligned.”

The German attention to detail carriers over into customer relations, as well. “German moldmakers tend to form very close relationships with the end-users of their tools, and are involved in helping customers develop the product,” Schmidt said.

TAKING CARE OF BUSINESS

Not surprisingly, most German shops leave little to chance in their daily operations, either. For example, almost all are meticulous when crafting a quote for new business. “German shops know the true detailed costs of a particular job when they quote,” Schmidt said. Once given a new project, he explained, a typical shop then completes all of the engineering and part analysis before it begins work, thereby minimizing the risk of costly and disruptive changes that might occur. “In Canada, we don’t realize how much money we’re losing every time we undertake an engineering change during a mold-build,” Schmidt said.

German shops also focus almost obsessively on each project, beginning with a work schedule. “The German system of scheduling is very compact, and based on delivery,” said Schmidt. “They take a hard look at the delivery date and work backwards from that to determine the work schedule.” The result is that little to nothing about any job is left to chance. “Before beginning work, they have done the requisite computer simulation and analysis, calculated all the parameters, and even factored the employee’s hours into machine manufacturing hours.”

Additionally, German moldmakers tend not to begin a project until they are ready to work continuously until completion. “Once they take a piece of steel off the truck, it goes right onto a machine; when it comes off that machine, it goes immediately onto the next, and so on,” Schmidt said. “By contrast, a Canadian moldmaker often starts work on a piece of mold steel as soon as possible, but then only works on it periodically.” The unfortunate result is that a block of steel often spends as little as 20 per cent of the time in a shop actually being worked on. “The rest of the time it just sits on the floor, taking up space,” said Schmidt. “If a Canadian shop has a twenty-week delivery time, this can mean it’s literally only working that steel for four weeks.”

BREAKING WITH TRADITION

While Schmidt noted that some Canadian moldmakers have done an excellent job of adapting to a German-style system, the majority continues to resist — partly from a sense of loyalty to tradition, even as those traditions become obsolete. “Too many shops are wedded to the old ways of doing things,” he explained.

Today’s machines, for example, can cut to plus or minus 1/10,000 of an inch and better, he continued, yet many shops don’t machine-cut to fit 100 per cent, preferring to leave some of the most detailed tooling to be done by hand.

Time management also remains an issue for many Canadian shops. “German moldmakers don’t sit and watch machines,” Schmidt said. “In Canada, meanwhile, the ratio is still generally one employee for every machine. Most of the high-end tooling machines nowadays have tool management systems in the control, but few shops are bothering to use them.”

Struggling Canadian moldmakers have the materials, components, and know-how to compete, and win, against moldmakers from any corner of the globe, Schmidt said; applying the strategy perfected in Germany may be the final piece of the puzzle.

CPL