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August 3, 1998

9 Min Read
Does offshore mean budget molds?  Not necessarily

Maybe just the idea of buying a mold offshore is enough to make one a bit nervous. There are control issues and travel expenses; changes could be difficult; there could be language problems, shipping costs, and customs duties. And after all that, will the quality really be there? Do I, one might reasonably ask, really need this? In the meantime, the international trade in injection molds is growing at a very healthy pace. If mold sourcing is not yet truly global, it is surely heading that way. Face it: you may be heading that way, too, by choice or by necessity, and for a variety of reasons.

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High-quality molds are available the world over. The Portuguese, however, teaming together, are making quite an effort to earn your business.

You might consider sourcing molds outside your own country simply for cost control. You could go for shorter lead times, or you may want alternate sources for the peak periods. You could go to Taiwan, to Singapore, to Italy, to China, to Ireland, or to India--or to a number of other countries. One source you almost certainly will encounter, however, is Portugal, and it's almost as certain that low prices will be the main draw.

Portugal does have a cost advantage in its relative (to Europe) low labor cost. But labor cost is a small and decreasing component of mold production (10 to 15 percent). In any case, can low cost alone account for the scope of Portugal's mold business? Portugal, with a population of less than 10 million and territory slightly larger than Maine, has about 7500 of its people employed in 250 moldmaking companies. In 1997, it exported injection molds worth $238.5 million, 90 percent of total production. If those were only simple, low-cost molds, there would have been an awful lot of them. Curious, IMM went to the recent Moldes Portugal Conference (attendance 250+) seeking to obtain a clearer picture.

Investments in Hardware, Software, Training

A high percentage of the molds coming out of Portugal are, in fact, sophisticated, close-tolerance molds: not simple, and definitely not low cost. Not that long ago, many and perhaps most of the tools were simple. Why the change? Knowing the labor cost advantage would diminish and that buyers were specifying ever more sophisticated molds, in the late '80s, Portuguese moldmakers began investing heavily in advanced moldmaking technology.

What's heavily? In 1990, while moldmakers around the world were reinvesting an average of about 13 percent of sales, the Portuguese were investing double that: nearly 27 percent. Since then Portugal's rate has slowly descended to only slightly above the industry average, but those earlier investments are producing molds today. Whether you talk of CAD/ CAM, prototyping, EDM, or high-speed machining, laser test and measuring systems, or beyond that to sophisticated project management systems and CAM, Portuguese moldmaking shops--particularly the larger ones--are quite up to date.

Portugal's labor cost is still among the lowest in Europe, but it's on a rising trend likely to continue with next year's advent of the Euro. In any event, skilled toolmakers, no matter where they live, are not low wage earners, and they are not easy to find. U.S. toolmaking companies acknowledge their biggest problem to be a lack of thousands of trained moldmakers. Portugal's moldmakers and national government have made multilevel training part of the investment strategy.

On a basic level, Cenfim Training Institute's three-year program turns select high school graduates into well-qualified, entry-level toolmakers at the rate of about 150 per year. Its two facilities in the principal moldmaking regions, Marinha Grande and Oliveira de Azeméis, feature current-generation machine tools and CAD/CAM. Programs are monitored by toolmakers to be sure they produce exactly what the moldmaking businesses need. Beyond the basics, Cenfim offers advanced refresher and upgrade courses to keep skills current with new technologies.

Centimfe Technology Center was opened in Marinha Grande in 1991 primarily as an R&D center for the moldmaking companies that sponsor it. Also in its charter was advanced training in the engineering and technical aspects of mold design and construction. Besides various 30- to 40-hour courses in very specific aspects of CAD and CAM, a variety of seminars are held at its facilities and in the moldmaking shops themselves. The $5.8 million invested in Centimfe includes 30 staff professionals, erosion and wire EDM, high-speed turning machines, machining centers, digitizers, measuring systems, and injection presses for mold testing. As part of its R&D function, Centimfe fur-nishes moldmakers an evaluation point for new technologies and a laboratory for solving specific problems. Centimfe's facility, where the Moldes Portugal Conference was held, is a mixture of modern manufacturing and university facilities.

Cooperation and Competition

The Portuguese "moldmaker community" cooperatively organizes and supports this training and research, often through Cefamol, its national association. It supports exhibits at trade fairs around the globe. It convinces the government to add its support. Yet, this community is made up of competitors. On one hand, you have independent moldmakers proud of their own technology and skills. On the other hand, they form a cooperative to support projects of common interest. This helps account for the specificity of training in Cenfim and Centimfe, not to mention that 90 percent export rate.

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Whether you are looking for large or small molds, Portugal's moldmakers are eager to prove that their work will match up with anyone's. Moldmakers at Simoldes (above) and SET (below) are among many that have received intensive moldmaking training.

If U.S. exports were in proportion to Portugal's by population, more than $6 billion in American molds would have shipped out last year. What Portugal has done and is doing could not have happened by accident. Maybe it's geography--the country literally faces out to sea--or history--the Portuguese took to sea as worldwide traders 700 years ago. Whatever the reason, they are clearly globally oriented now. The 1990 export rate was 91 percent. Then the value of mold exports doubled between 1990 and 1997. The export rate, however, was still 90 percent. This year it could climb to 92 percent. Efforts are underway to grow the domestic molding business, but for now the moldmakers continue to think globally. Trainees in the institutes are learning in English. Virtually all customer-contact people speak several additional languages, and fortunately for North Americans, English is often first among them. Sending files by Internet using ISDN lines has been normal for a time.

North America is Portugal's largest mold market, taking 19 percent of its exports. Close behind are Germany with 17 percent and France at 16 percent. Though Europe takes more than half the output, Portugal has a presence in 70 countries. By application, molds for appliances account for 32 percent of exports; automotive takes 20 percent; electrical components are 11 percent: packaging 10 percent; and the rest is toys, telecommunications, electronics, and others.

For those concerned about distance and logistics: at the conference, two companies who recently began purchasing molds in Portugal described their decision making process and the results, detailed below.

Top 10 Mold Exporters
of Injection and Compression Molds, 1996

US$-millions

Japan

1510.0

Canada

826.8

Italy

710.1

Germany

696.7

United States

385.6

Korea

353.7

Portugal

234.0

Switzerland

216.2

France

204.6

Belgium

171.5

Top 10 Mold Importers
of Injection and Compression Molds, 1996

US$-millions

United States

1084.1

Germany

503.7

Canada

208.8

France

201.5

Japan

196.1

Italy

196.0

Switzerland

124.5

Korea

112.7

Spain

99.5

Belgium

94.3

A shift in policy

Automotive heating and A/C systems supplier Denso Manufacturing U.K. is the European operation of Tier One Japanese auto supplier Nippon-Denso. Denso's decision, according to Martyn Burnell, production engineer on the project, reflects a major company policy shift. Parent company Nippon-Denso had been supplying all molds to the U.K., as well as the company's other divisions, from Japan. For tactical reasons including sourcing flexibility, Denso U.K. became the first to buy molds externally. Going to Portugal was based on research and spurred by a specific reference from one of Denso's automotive clients. Burnell and others visited a dozen moldmakers qualified by technology, delivery times, cost, equipment, size, and specific experience. Fiscal stability was very critical, as was start-to-finish project capability.

The company selected the Simoldes Group of Oliveira de Azeméis. The first project, an interior component for a German automaker, was selected because it was relatively simple. However, the OEM's short time frame turned up the pressure. Burnell cited Simoldes' ability to work cooperatively with Denso as a key factor in beating the deadline. Simoldes also recently finished reworking an existing Denso mold, cutting cycle time from 50 to 40 seconds on a 24-hours-a-day mold. Burnell noted that before this experience, the Japanese parent company saw Portuguese molds as simple, low-cost items. After analyzing the Portuguese mold, however, it decided to include some of the size and wear reduction technology into its own molds.

When speed-to-market counts

In February 1996, Philips project manager Paul Carter had a time-critical situation. The marketing group of Philips Domestic Appliances, a U.K. operation of Netherlands-based Philips, needed a new line of kettles to be on the market by February 1997. Previously, development cycles had been 18 to 24 months. Moreover, Philips' in-house design group already had a full slate of development projects. Carter and his group combed the world seeking suppliers that could handle complete projects from design and modeling to tested tooling, and do it fast. They screened many companies using a set list of requirements, and finally narrowed the choices to one in Taiwan, one in Italy, and SET S.A. of Marinha Grande.

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As with many OEMs, Philips needed molds fast to meet time-to-market pressures. Developmentcycle of this kettle was 12 months--six months from preliminary designs to tools from SET of Portugal.

The team of Carter, a designer, and a tool engineer decided on SET and went immediately to work. By April they had a preliminary design and were able to make evaluation models from the 3-D files. By using the maximum possible concurrent engineering, working models and a tool design were developed by the end of May. Models were tested, problems identified, and details fed back to SET for adjustments. Tool trials began around September 1, six months after preliminary designs--notably faster than previous projects of this type, notes Carter. Final product
testing in Holland and the U.K. dictated a few more changes. They were made at SET and production tools began running in early December. On February 1, Philips marketers had the 35,000 new kettles they wanted.

Philips is ordering more tools as a result of this experience. Perhaps more importantly, it now considers an integrated supplier a mandatory requirement. The shorter development cycle has also become standard. Carter says Philips places great importance on a supplier's ability to work with its system and to be flexible. Product development and testing cycles virtually guarantee changes will be made, and they have to be handled smoothly and quickly. In general, Philips thinks some added development time is better than seeing a "production-ready" tool taken out for reworking after a few days or weeks in a press.



Contact information
Portuguese Moldmakers Assn. (NY)
Teresa Ramirez
Phone: (212) 354-4610; Ext. 136
Fax: (212) 575-4737

Centimfe
Marinha Grande, Portugal
Joaquim Menezes
Phone: +351 (44) 569 616
Fax: +351 (44) 569 725

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