Canadian Plastics

Sector must diversify to survive: study

Canadian Plastics   

H ardly a day goes by in Windsor Essex County without news of a newly bankrupt mold, tool and die manufacturer (MTDM). Relentless offshoring, a strong currency and continued instability among the Detr...

Hardly a day goes by in Windsor Essex County without news of a newly bankrupt mold, tool and die manufacturer (MTDM). Relentless offshoring, a strong currency and continued instability among the Detroit OEMs have hit MTDM firms hard.

And according to a new study based on data from 140 companies in the Windsor Essex region, if the industry in Windsor doesn’t diversify, an additional 18 to 25 shops will close in the region over the next three to five years. The report, which was developed by the Windsor Essex Development Commission (WEDC) and Lean Design Canada Inc., describes the current state of the industry and the changes that need to be made to help local shops survive.

“It would mean loss of jobs, loss of economic activity because the MTDM industry has a large economic spin-off,” noted Tracey Pringle of the WEDC. “Seeing as there would be some severe challenges brought forward if nothing was done for this industry, we needed to have a clear understanding of where we sit now.”

Luckily, for MTDM shops that are struggling to make ends meet, the news isn’t all bad. According to Pringle, local tool shops are skilled enough to solicit work in industries that require high tolerances and extremely high surface finishes, such as medical and aviation.


“Most of our shops are very highly skilled and able to move into other industries without a whole lot of retooling and retraining,” she explained. “There is no better place [than Windsor] in the world to do quality mass production of any sorts.”

The WEDC is also encouraging industry members to look outside the U. S. Nearly 90 per cent of the industry’s output has traditionally gone to the American market, and profit margins have shrunk as the Canadian dollar moved towards parity with the greenback. Pringle notes that Canadian shops should look at supplying European companies with tooling, engineering and on-the-ground support for their Canadian ops instead.

“If you look at the two currencies on a graph, how the Euro has floated and the Canadian dollar has floated, they have essentially remained on the same path,” she said. “It’s a much more stable currency market to be dealing in.”

Dan Moynahan, president of the Canadian Association of Mold Makers (CAMM) and Platinum Tool Technologies Inc., recently travelled to Mexico to perform some due diligence. Moynahan is looking at setting up a satellite operation in Mexico, noting an increasing number of auto assembly contracts, a strong demand for molds, and a number of opportunities in aerospace and medical.

Platinum, which has traditionally specialized in automotive lighting design, has targeted the aerospace industry as a potential growth market. But Moynahan notes that aerospace is a long-term goal, and setting up an operation in Mexico is a short-term solution that will allow him to diversify his customer base without a significant capital investment.

“There are lapdogs and there are hunting dogs,” he argued. “It’s a scary time for everybody, but having done it 36 years, if you’re not in a position where you don’t know if you are going to make it, you shouldn’t be looking at today — you should be looking at five years from today.”

The largest obstacle for shops looking to diversify is the need for market intelligence. Although non-automotive markets represent significant opportunities for mold shops and businesses in Windsor Essex are highly skilled, they still need to do a lot of groundwork.

“The biggest barriers they have are perhaps the lack of market research and understanding of the industries, and the ability to make connections and networks in those industries,” noted WEDC’s Pringle. “It’s access to those markets and having the financial wherewithal to attack those markets.”

The WEDC has undertaken a number of initiatives to help companies identify opportunities and forge gateways into new sectors. For instance, the commission is planning a seminar this month on Industrial Regional Benefits (IRBs) in the aviation, defence and aerospace industries, which can be of significant benefit to mold shops. The commission also recently conducted a study that took stock of the technical capabilities of local shops, which the WEDC can now use to match shops with foreign opportunities.

“Having that survey at our fingerprints allows us to very quickly get the information into the hands of international trade commissioners,” said Pringle.



Stories continue below

Print this page

Related Stories