The AMBA, the only industry trade association dedicated solely to the mold-manufacturing industry in the U.S., is linking arms with other associations in an effort to prove that there is “strength in numbers.” Recently, the group has joined with two organizations fighting for fair trade and U.S. manufacturing: the Coalition to Fix America’s Economy, and the U.S. Business & Industry Council (USBIC).
One of the issues the AMBA will be bringing to Congress on their Washington, D.C. fly-in is that of bailout money to the automotive industry being used to pay for molds already built, shipped, and many cases running parts at Tier 1 molded parts suppliers. The AMBA has endorsed a U.S. Tooling Proposal developed by Tooling & Equipment (T&E) Capital Solutions, which is being submitted to Congress, asking that tool, die, and mold companies be “paid in a commercially reasonable manner and not five-18 months after delivery.”
The proposal asks for the following considerations:
• At a minimum, 90% payment within 45 days of delivery of goods.
• 10% will be held back, as per construction industry standards, until the OEM confirms the tools meet OEM Production Parts Approval Process (PPAP) standards.
• The OEMs are to take all due care and caution to ensure the Tooling Proceeds make their way through the Tier 1 parts company, without the proceeds being diverted or hijacked, to the tool source, the true equitable owner of the goods.
• The proposal suggests a ‘Trust Account’ mechanism to achieve this.”
The AMBA has sent a letter to each of its 300-plus members nationwide outlining the problems mold, tool, and die manufacturers have had in the past getting payment from the OEMs and Tier One suppliers, now exacerbated by the economic situation, which has accelerated bankruptcies and plant closings. The letter encourages each AMBA member to contact his or her congresspersons to make them aware of the current crisis among automotive suppliers.
As these OEMs and Tier One suppliers have made their “case for the provision of billions of dollars in government loans, and the Tier One suppliers lobby government to accelerate payments to the Tier One companies from 45 days to 20 days for parts previously delivered, thus reducing their risk,” the mold, tool and die makers have an urgent need to ensure prompt payment. “We believe our industry has an even more gravely urgent case related to the acceleration of payments,” said Melissa Millhuff, AMBA executive director, in the AMBA’s proposal letter.
“We want to be certain that any bailout money the government gives to General Motors and Chrysler gets passed through the Tier 1 suppliers to our member mold manufacturing companies that supplied these molds, and which are, in many cases, still owed money,” Millhuff added.
The Proposal will push for OEMs to pay for tooling when “substantially complete” and “de-link payment from PPAP (Pre-Production Approval Process),” which is often ambiguous and delays payment for months, even a year or more. The Proposal also outlines a mechanism to ensure that OEM tooling payments navigate “unencumbered” through cash-strapped Tier 1s to the mold manufacturer.—[email protected]