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Eyeing the competition first hand

May 1, 2000

6 Min Read
Eyeing the competition first hand

A recent SPI trade mission to Asia proved to be an eye-opener for at least two moldmakers in the group. Rick Finnie, president of M.R. Mold & Engineering Corp. in Brea, CA, and Roger Klouda, president of MSI Mold Builders in Cedar Rapids, IA, brought home a new perspective of competitive pressures from Asia. With all the publicity about China’s moldbuilding industry and articles about mold projects going to Asian shops, both Finnie and Klouda wanted to see first hand what they are up against.

"I’ve had tools quoted in Asia, but I’m in no big rush to farm molds out to China," says Finnie. "I was over there on a fact-finding mission, looking forward to all the tours of the toolrooms. I was trying to find out if these guys are viable competitors, and they are."

Finnie told IMM that he was impressed with the toolrooms. In most cases, shops in China have the same equipment, use the same software and hardware, and to some extent have even better equipment than U.S. shops. "The only thing they’re missing is the skilled labor," he adds.

Roger Klouda was most impressed with the software programs used to track the mold builds. "You could look at monitors on the shop floor and see instantly at what stage of build any mold was," Klouda commented during an interview at the American Mold Builders Assn. conference in March.

Like Finnie, Klouda came to the conclusion that the Chinese are formidable competitors and that U.S. moldbuilders must do things differently if they expect to compete and retain business at home.

"We have to get out of the mindset that we’re just moldmakers," Klouda told the AMBA group at an Open Forum during the conference. "We’re in the plastics industry and we have to work with processors, work with other organizations, and involve ourselves with those who have government influence."

Finnie agreed. "We’ve got to change the way we do things here to be more competitive," he said. "They’re very competitive, they work hard, they work long hours, and people are happy to have those jobs."

Better Management
Both Klouda and Finnie, who are members of AMBA, noted that management in Asian shops was much deeper than in U.S. shops. "In my shop of 17 moldmakers, there’s me, a couple of key guys, the moldmakers, a few specialty machinists, and another five people to support them," explained Finnie. "In Asia there are multiple levels of management including project managers, engineers, and a lot more designers—a high percentage of people in support of the actual manufacturing."

Jobs were well planned out, he noted, with people sitting at computers detailing all the areas of the mold build, entering data. One shop Finnie saw had 30 seats of Unigraphics for a 200-person shop. It seemed they were working smarter on the front end to save man hours on the back end, noted Finnie.

Klouda concurred. Mold shops have to become better managers of their time. "We have blocks sitting on the floor waiting for the next operation. We need to eliminate dead time, and that’s a management issue," he said.

Asian shops are not without their shortcomings and problems, however, said Finnie. "They have a well-run organization but they’re not infallible," he noted about one large shop he toured.

"If you’re building molds for commodity parts with a short life span, you’re probably okay to get the molds [in Asia] because the tool doesn’t have to last," said Finnie. "But if you have a tool that needs to perform for millions of parts for a long period, even they will tell you they can’t do it. They will admit that interchangeability isn’t their bag. They have not mastered that art. Everything I saw was being hand-fit together. That’s mostly obsolete in the U.S."

Security in the shops is a high priority and theft of tools and equipment is a big problem, Finnie noted. "Over there, because of the income level, a micrometer is a week’s wages."

Unfair Competition?
Finnie is convinced that there’s definitely some unfair practices going on with purchasers of molds. "American toolmakers are being held to a different standard than Chinese toolmakers," he emphasized.

He saw one mold ready for shipping that had gouge marks where something had crashed into the side of the mold. The workers had made some attempts to try to hide it. "Would you ship a mold with this giant blemish?" Finnie asked. "If I shipped a mold that looked like this to one of my customers, they’d wonder what I was doing."

Although they are functional, Asian molds don’t have the cosmetics and "niceties" that Finnie’s customers expect from him. "Why do you accept molds like this?" he asks his customers. "What’s the thought process? It’s okay for them to be not up to par but I have to be perfect? My customers are content to get second-class tools for second-class prices, yet I’m supposed to compete with these people."

Competitive Strategies
Not long ago, in an effort to win business from a division of a large business equipment OEM that hasn’t built a domestic mold in eight years, Klouda asked outright, "What kind of premium could you give us if we could match the [Asian mold shop’s] delivery?"

In this exercise, Klouda discovered that mold purchasers are willing to pay up to a 25 percent premium for the value that domestic molds provide over offshore tooling, "if we’re in the same delivery ball park," he emphasizes.

"What I’m understanding is that there’s a value associated with a domestically produced mold, which approaches 25 percent more than an offshore tool, but only if we meet delivery requirements."

In this case, Klouda won the work and beat the offshore shop’s quoted delivery time. Recently, MSI, which specializes in large molds for a variety of industries, completed a 66-by-110-inch aluminum mold in less than seven weeks. Another mold was completed in just eight days.

In a similar situation, Finnie recently accepted a contract for a three-mold package he had quoted against an Asian shop. To get the work, Finnie negotiated with his customer a price that included the price of the mold the Asian shop quoted plus an estimate of the customer’s additional costs for travel expenses and importing the mold.

"They told me, `Here’s what we’re willing to give you for the job because this is what we feel our costs would have been had we gone offshore. Can you do it for this?’" said Finnie. "That’s a quarter of a million dollars worth of work we’ve kept here."

In the end, the prevailing issue may be this: What else can U.S. mold shops do differently to meet these global challenges?

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