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Clare Goldsberry

March 16, 2016

2 Min Read
OESA/HRI Tooling Barometer: Tool shops report significant amount of work is on hold

The Original Equipment Suppliers Association (OESA) and Harbour Results Inc. (HRI), both located in Southfield, MI, recently completed the Automotive Tooling Barometer. The research shows a positive trend in the amount of work being awarded on progressive payment terms. However, overall tooling sentiment was down seven points from last August, in part, because of a significant amount of work on hold as a result of program delays. Almost 20% of business is on hold, corresponding to $2.3 billion in tooling revenue, or the equivalent of more than 100 tool shops sitting idle at any given time. This is a 5% increase from the previous Tooling Barometer conducted last summer.

Image courtesy Stuart Miles/freedigitalphotos.net.

Additionally, overall capacity utilization metrics were flat at around 80% based on work hours provided over the last four months by function. Using a typical 50-hour workweek, which is standard in most tool shops, most respondents were hovering near 40 hours. The situation may actually be more dismal than that, explained HRI, because shops are reluctant to go below 40 hours per week. While monitoring more than 30 shops over the last four months, HRI observed some shops finding “other” work for employees to perform. Labor cost containment can only go on for so long, as tool shops gear up for a busy second quarter of 2016.

According to OESA and HRI, more than 75% of tool shops said they were optimistic about the future. With 2016 being forecast as a heavy sourcing year for automakers, many tool shops are assuming this current downturn is temporary. The Automotive Tooling Barometer also solicited feedback from automakers, Tier 1s and tool shops to better understand cost drivers.

“According to an LMC Automotive forecast, the North American light vehicle demand is predicted to plateau at 20 million units through 2020,” said Laurie Harbour, HRI President and CEO. “It is critical that the automakers, Tier 1 suppliers and tool shops improve communication and collaboration to reduce cost and remain profitable during this period.”

There were several common themes that appeared when HRI began to analyze the data. Tool complexity, communication and engineering changes were the main cost drivers. The majority of respondents indicated tools could be simplified to focus on functionality rather than perfection, but that this would require significantly better communication throughout the supply chain.

“It is important that the automotive industry collectively address the tooling industry’s concerns and issues to ensure they are able to support the upcoming record number of vehicle launches,” said Julie A. Fream, President and CEO of OESA.

About the Author(s)

Clare Goldsberry

Until she retired in September 2021, Clare Goldsberry reported on the plastics industry for more than 30 years. In addition to the 10,000+ articles she has written, by her own estimation, she is the author of several books, including The Business of Injection Molding: How to succeed as a custom molder and Purchasing Injection Molds: A buyers guide. Goldsberry is a member of the Plastics Pioneers Association. She reflected on her long career in "Time to Say Good-Bye."

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