); Steve Rotman, president of the American Mold Builders Assn. (AMBA; ); D. Craig Wiggins, independent member; and Les Payne, executive director, Canadian Tooling & Machining Assn. (CTMA).
The group met with the U.S. Automotive Task Force, represented by David Markowitz, Haley Stevens, and Karen Mills, plus Bo I. Andersson, global purchasing–General Motors, Larry O. Walker, director global purchasing–Chrysler, and a few other government representatives.
The groups discussed issues critical to the survival of the mold, tool, and die industries, including the impact of implementation of “reasonable commercial payment terms” on tooling orders; implementation of a “safe passage” mechanism to ensure OEM tool proceeds navigate financially challenged Tier Ones through to the Tier Two tool manufacturers; the impact of OEM or major Tier One Chapter 11 filings on tooling purchasing commitments, both existing and future; and strategies and working groups directed to reduce OEM tooling acquisition costs and to develop manufacturing innovation.
David Markowitz made it clear in the meeting that the Automotive Task Force does not want to get into the administration of the relationship between Tier One and Two suppliers, and has given the “tooling reins” to the OEMs. He also noted that as far as the business relationship between Tier Ones and their Tier Two suppliers, that is a relationship each tool manufacturer must work on individually.
The NAATC’s focus in the meeting was on payment terms to the mold, tool, and die makers. According to the coalition’s standpoint, if the Federal government became the lender of last resort, it should have the ability to influence the terms of any public funding being provided to the OEMs; and the terms suggested by the coalition would ensure that payments flow down to smaller tool shops in a “normal, commercially acceptable time frame” for work completed and shipped. However, the meeting failed to reach this objective and, according to the NAATC, the Task Force had no interest in becoming involved in these types of transactions.
The issue of funding from OEMs to Tier One suppliers flowing to Tier Two suppliers was a sticking point. At one point, an OEM representative in attendance asked, “Why would your members work for a Tier One company that does not pay for the tooling in a reasonable time frame?”
Wiggins, who is president of Tooling & Equipment Capital Solutions Inc. (Tecumseh, ON) and representing the independent shops that do not belong to any North American trade organization, says that question shows a lack of understanding on the part of the OEMs as to when and how payments to mold, tool, and die companies are made. “The OEMs understand this to be purely a Tier One problem,” Wiggins said in a telephone interview. “Yet it’s the rules established by the OEMs that have created the problem.”
Wiggins cites the whole production part approval process (PPAP) and the lack of transparency of the process that keeps Tier Two suppliers in the dark about when PPAP happens and when payments are made to the Tier One suppliers. “Improved transparency as to when PPAP occurs and when payments are made [to the Tier One suppliers] would go a long way to improving the current, absolutely unsustainable system,” Wiggins commented. “Something has to change. Adam Smith’s invisible hand is moving. At the end of the day, we don’t know where this will lead, but that meeting had to happen for us to move forward, and we’ll continue to work in a collaborative way with the Task Force to find solutions to commercially reasonable terms and safe passage of payment through the Tier Ones to the Tier Twos.” —[email protected]