Auto tooling barometer: Industry enjoys strong third quarter, but skilled labor shortage continues to fuel concerns

barometerThe tooling industry experienced a strong third quarter, according to the latest survey from the Original Equipment Suppliers Association (OESA; Troy, MI) and Harbour Results Inc. (HRI; Southfield, MI), a business and operational consulting firm for the manufacturing industry. Die shops, in particular, saw a spike in capacity utilization (88%) and mold shops reached 81% capacity, according to the “Q3 2017 Automotive Tooling Barometer.” Shops with revenue ranges of $10 million to $20 million are experiencing peak capacity utilization rates of 87%.

“Even though mold shops are slightly less utilized than die shops, average profitability numbers across the industry are still very close,” said Laurie Harbour, President and CEO of HRI. “That being said, the top performing tool shops average eight points more profit compared to the averages.”

The cyclical nature of work-on-hold continues, as it falls to 8.6%, the lowest it has been since the study began in 2014, said HRI. Despite record low work-on-hold numbers, overall sentiment—a tool shop’s general outlook for the next three months—dropped two percentage points. It remains in the overwhelmingly positive range, however.

The slight decrease in sentiment is likely a result of the continued hurdles the tooling industry is facing. Overall, finding skilled labor (38%) stands out as the foremost issue in the industry, followed by on-time delivery (18%) and profitability (14%). These key issues vary considerably depending on factors such as a shop’s profitability, type and geography, noted the OESA/HRI report.

“The shortage of skilled labor is a major concern for both U.S. and Canadian shops in multiple processes—mold, die and plastic molding,” said Julie A. Fream, President and CEO, OESA, whose mission is to champion the business interests of automotive original equipment suppliers. “In order to combat this issue, it’s necessary that these companies implement a talent acquisition program to educate, attract and hire young people with the aptitude to work in the tool and die industry.”

The survey population was composed of mold shops (77%) and die shops (23%), both in the United States (70%) and Canada (30%). Shops with revenue ranges from less than $5 million to more than $40 million were represented; the largest percentage (30%) of shops came from the $10 million to $20 million range.

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