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Tooling industry business “slower than expected” so far in 2018: report

According to the Q2 2018 Automotive Tooling Barometer, both die and mold shops in North America experienced a decrease in utilization from Q1 2018 to Q2 2018, with a significant amount of business being pushed to the second half of the year.


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July 23, 2018 by Canadian Plastics

The North America tooling industry experienced a slower than predicted first half of 2018 with a significant amount of business being pushed to the second half of the year, a new study finds.

According to the Q2 2018 Automotive Tooling Barometer released by the Original Equipment Suppliers Association (OESA) and Harbour Results Inc. (HRI), both die and mold shops experienced a decrease in utilization (88 per cent and 77 per cent respectively) from Q1 2018 to Q2 2018. Additionally, work on hold continued to climb with an average of 13.5 per cent (compared to 11 per cent in Q1 2018), which is a result of several automotive program delays. Sentiment also dropped 4 points (76 per cent) from Q1 2018 results.

“Our original forecast called for 2018 North American vendor tooling spend to be $11 billion, however, due to a number of factors including shifted or cancelled product launches, we are now expecting it to be closer to $8.5 or 9 billion with the remaining $2 million shifting to 2019,” Laurie Harbour, president and CEO of Southfield, Mich.-based HRI, said in a statement. “We saw a record year in 2017 with tooling spend just over $10 billion and now automakers are focused on launching the vehicles they built tools for in 2016 and 2017.”

The study also looked at shops’ investment strategies. On average, mold builders are planning to contribute 4.8 per cent of revenue toward new capital expenditures, compared to 7.7 per cent in 2017; and the average die builder is expecting to invest 4.6 per cent of revenue, compared to 5.9 per cent in 2017. Additionally, the percentage of a shop’s total investment that’s earmarked for machine expenditures is expected to decrease this year: 84 per cent to 75 per cent for mold builders; 85 per cent to 72 per cent for die builders.

“Tool shops are shifting capital spend from big ticket equipment, to productivity improvements, particularly in the areas of automation and high-speed cutting equipment,” Harbour said. “Additionally, we are seeing shops looking to invest in software with 68 per cent of mold builders and 42 per cent of die shops indicating they have plans to invest in machine monitoring solutions.”

Finally, as shops continue to try and bridge the skilled trades gap, the Tooling Barometer looked at recruiting methods and apprentice programs. “Organizations are leveraging many options including school partnerships (68 per cent), apprenticeships (58 per cent) and job placement websites (57.5 per cent),” the report said. “For molders, 14 per cent of their total hourly employees are apprentices while die shops average 10 per cent. This number has remained consistent over the past several years.”

“Results of the Tooling Barometer reflect what we hear directly from toolmakers on our Tooling Council,” said Julie A. Fream, president and CEO, OESA. “Toolmakers expect a busy second half of the year as programs catch up with earlier forecasts.”

The survey population was comprised of mold shops (74 per cent) and die shops (26 per cent) in the U.S. (57 per cent), Canada (28 per cent), Europe (9 per cent) and Asia (5 per cent). Shops with revenue ranges less than $5 million up to greater than $40 million were represented, with the largest percentage of shops coming from the $5 million to $10 million (32 per cent) range.