Results from the Q2 2019 Automotive Tooling Barometer Survey show that the tooling/mold industry continues to slow, with North American capacity utilization at its lowest mark since 2016 when the metric first started being collected. The quarterly Automotive Tooling Barometer Survey is conducted by the Original Equipment Suppliers Association (OESA; Troy, MI) and Harbour Results Inc. (HRI; Southfield, MI).
In Q2 2019, mold shop utilization saw a 5% decrease to 74% as compared to 79% in Q1 2019. 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%, down from Q1’s 62%, which had previously been the lowest point recorded since measurement started in Q1 2016.
Julie Fream, President and CEO of the OESA, noted that the lower sentiments in the survey results are no surprise to that organization. “Our OESA Automotive Supplier Barometer results indicate that sentiment of automotive supplier executives is at the lowest level since 2009,” Fream stated. “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.”
“During the first two quarters of 2019, the industry saw a decrease in utilization and a significant increase in work on hold,” stated Laurie Harbour, President and CEO, HRI. “This coupled with the fact that Chinese tool shops continue to significantly under-price North American shops, we will likely see more layoffs and bankruptcies in the balance of the year.”
The OESA/HRI Automotive Tooling Barometer also looked at the business readiness of shops. A majority of both mold and die shops (79% and 86%, respectively) that 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,” said Harbour. “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 labor 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, 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 added.
The survey population comprised mold shops (63%) and die shops (22%) in the United States (56%), Canada (34%) and internationally (10%). Shops with revenue of less than $5 million to greater than $40 million were represented, with the largest percentage of shops (29%) coming from the $10 million to $20 million range.