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North American tooling industry continues to slow: report

North American capacity utilization at its lowest mark since 2016, the Q2 2019 Automotive Tooling Barometer Survey says.


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August 1, 2019 by Canadian Plastics

The tooling industry continues to slow, with North American capacity utilization at its lowest mark since 2016, a new study says.

According to the Q2 2019 Automotive Tooling Barometer Survey, compiled by the Original Equipment Suppliers Association (OESA) and research firm Harbour Results Inc. (HRI), mold shop utilization saw a 4% decrease to 74% as compared to Q1 2019 and die shop utilization dropped from 74% to 70% in the same timeframe. Additionally, automotive program delays drove work on hold to a record high of more than 20%. Based on these factors, tool shop owner sentiment dropped to 61%.

“During the first two quarters of 2019 the industry saw a decrease in utilization and a significant increase in work on hold. With this challenging environment, we can expect shops to continue to struggle as the year progresses,” said Laurie Harbour, president and CEO of Southfield, Mich.-based HRI. “This coupled with the fact that Chinese tool shops continue to significantly underprice North American shops, we will likely see more layoffs and bankruptcies in the balance of the year.”

“The lower sentiments the survey results are showing are no surprise. Our OESA Automotive Supplier Barometer Survey results indicate that sentiment of automotive supplier executives is at the lowest level since 2009,” said Julie A. Fream, OESA’s president and CEO. “Multiple factors are contributing to this and we are working with our members to help them navigate some of the current market uncertainties and mitigate risk wherever possible.”

The study also looked at the business readiness of shops. A majority of both mold and die shops (79% and 86% respectively) who responded to the survey indicated they had a three- to five-year strategic plan. However, when pressed, these same companies did not have the same level of plans in place for the adoption of technology, sales process or labor and hiring.

“In my perspective, a robust strategic business plan would include a sales plan, technology plan and specific details for labor and hiring, so it is discouraging that so many shops are not including these specifics as they plan for the future,” Harbour said. “With the automotive industry changing so rapidly, it is imperative for the tool and die industry to start preparing for the future today.”

Specifically looking at labour and hiring readiness across the tool and die industry, a majority of those surveyed are experiencing a shortage of qualified talent, with many shops indicating they currently have difficulty filling open positions. Additionally, 67% of die shops and 81% of mold shops indicated they were not prepared, to somewhat prepared, for the next generation workforce.

“By 2020 millennials will make up 50% of the U.S. workforce and shops need to adjust the way they are recruiting talent as well as their internal culture to attract and retain an efficient workforce,” Harbour said.

The survey population was comprised of mold shops (63%) and die shops (22%) in the U.S. (56%), Canada (34%) and International (10%). Shops with revenue ranges less than US$5 million up to greater than US$40 million were represented, with the largest percentage of shops coming from the US$10-$20 million (29%) range.