Want a global tooling shop? Buy it!Want a global tooling shop? Buy it!

Locating facilities offshore to meet the lower-cost tooling needs of customers is not a new concept for U.S. molders and moldmakers. For some, no longer is the question should they go offshore, but rather how? Does it make the best business sense to pursue a strategic partnership, a joint venture, or purchase a shop outright? The latter is generally the path less taken, but for one Iowa-based company that wanted to expand its moldmaking capabilities, it has proven to be the right road. 

FRC Component Products Inc. (Mason City, IA) specializes in custom injection molding and the design and manufacture of components such as cockpit displays and aircraft antennas. FRC, formerly a captive supplier for Rockwell International that was sold in 1993, employs 110 people and operates 12 presses ranging from 50 to 250 tons. 

The company's customer base is global, including all of the major U.S. and European automotive manufacturers, plus Philips Electronics, Rockwell, Honeywell, and major white goods manufacturers. To effectively serve such a marketplace, FRC decided it needed to become global as well. "We wanted to provide our customers with greater tooling capabilities and injection molding capacity," says Michael Castek, FRC's vp. To do so, the company first invested in its Iowa-based molding facility, bringing it up to its current capacity. The second phase of its expansion was to find an appropriate overseas moldmaking investment. When asked why he preferred a purchase rather than a joint venture partnership—like many other shops have done—Castek's reply is a straightforward one: "We wanted to have control of the mold build and the schedule." 

Pluses and Minuses 
FRC wanted to position itself globally and still offer world-class, high-precision molds. This desire took the firm to Portugal. Here, the expertise of most moldmakers is equal to that of U.S. moldmakers, and employees are much easier to find, Castek says. With help from the Portuguese government, FRC found and purchased an existing business in Marinha Grande, home to more than 250 mold shops. 

"What we did was rejuvenate this business by combining the best of both worlds: the expertise of their moldmakers combined with the best practices from the U.S. moldmaking industry," explains Castek, vp of the new acquisition, Advanced Quality Moldes SA (AQM). 

Castek points out that one of the greatest strengths of the Portuguese moldmaking industry is its "centers of excellence," which promote cooperation among mold shops. These centers offer various types of services, including heat treating, texturing, and sales of supplies such as steel and mold components. 

"There are a lot of specialized subcontractors who can help you stabilize your workload," Castek explains. "There's competition, but also a lot of cooperation there. We tend to be so competitive here, that there's not much cooperation," he adds. 

Of course, every rose has its thorns. Although mold costs in Portugal average 15 to 25 percent less than the cost to build a mold in the U.S., there are some downsides. Production planning, for instance, stands out to Castek, who says it can be a weakness in Portugal. 

Also, right after the purchase, AQM lost several "good people" due to philosophical differences. "In hindsight," says Castek, "this turned out to be an opportunity because it allowed us to quickly hire employees with more progressive and compatible philosophies." 

Opportunity Ahead 
Castek says he's surprised that things have gone so smoothly with the acquisition, particularly in the area of communications. "We're quite pleased with the capability of electronic communications. The language barrier is minimal," he notes, adding that the two divisions can communicate at "lightning speed," and pass project plans back and forth. 

AQM, which currently employs 30 people, produces large molds (3-ft-by-4-ft mold base dimensions) as well as smaller, more complex precision molds. Within the past year, AQM has expanded its capabilities by purchasing a state-of-the-art Ingersoll EDM with 23-position electrode holder, a Charmilles wire EDM and EDM drill, Reis assembly press, a Brown & Sharpe DEA Scirocco coordinate measuring machine, and a CNC mill, grinder, and machining center. 

Castek notes that FRC's business is strong, and the company can now provide competitively priced molds for its global customers. Adding to its capabilities, FRC recently completed the acquisition of a design center, which is also located in Marinha Grande.