By Dianna Brodine, managing editor
The American Mold Builder

Shorter lead times, tighter turnarounds and pricing pressures … It’s no secret that the consumers’ demand for customization and immediate gratification has increased the burden on OEMs to add new inventory quickly. This burden slams downstream, impacting molders and then tool builders in turn and, sometimes, creating animosity and distrust. However, handling the swift changes brought about by the whims of those with purchasing power requires a team approach, with all parties in the supply chain working together to satisfy the growing demand in industries such as automotive, appliance, construction, consumer goods and medical.

In that spirit, at the AMBA Annual Conference in Dearborn, Michigan, two panel sessions gave mold builders an opportunity to hear plastics molders and OEMs discuss what they’re looking for in their tooling partners. Time and again, the messages came through loud and clear: Market the points of difference, add value and build relationships that will last by being present in facilities.

The molder perspective

The first panel, “The Global Viewpoint: The ‘Why’ Behind How Plastics Processors Source Tools,” featured Kelly Goodsel, CEO and owner, Viking Plastics; Tim Capps, president, Par 4 Plastics; and Gene Nolen, CEO and owner, Manar, Inc.

Viking Plastics, Corry, Pennsylvania
• $35 million company with four locations. Primarily automotive, plus a custom product. Purchases 50 percent of tooling overseas.

Par 4 Plastics, Marion, Kentucky
• 215 employees in two facilities. Primarily automotive, with some electronics, construction and sporting goods. Currently 50/50 domestic and international sourcing for tooling.

Manar, Inc., Edinburgh, Indiana
• $50 million company with seven facilities. Primarily aerospace, automotive, electronics and medical industries. Purchases 85 percent of tooling in China or Taiwan, 15 percent in the US.

Tooling trends from the processor viewpoint

Capps: Fifteen to 20 years ago, we were building molds locally with great vendors. Over time, pressure from customers required that we look at low-cost countries. We’ve been very creative about that – some of our local tool shops created their own partnerships with tool shops in low-cost countries. Now we’re at the next stage, unfortunately, which is making contact with builders overseas. We have to cut costs by removing the middleman.

Goodsel: The Big 3 and the appliance industry pushed to get lower cost tooling, and they ultimately came to molders like us and said, “You can either get your tools overseas at 40 to 60 percent of the price of US tooling or we’ll go to somebody else.” There’s definitely a balancing out now, because people are realizing the price quoted isn’t necessarily the end price once risk and tooling adjustments are made. Also, the US tool industry has been much more aggressive over the last five years.

Nolen: We’re forced by our customers – they’re the driving factor behind this. I started going to Asia 18 years ago and, at that time, it was difficult to find a good tool shop. That isn’t the case anymore. The shops over there are more competitive, and we build a lot of tools in Asia. It’s taken 18 years to find six shops in Asia we trust, but we’ve never had a quality problem.

The decision process – domestic or overseas

Both Capps and Nolen said they quote every tool domestically and outside the US, with Capps commenting, “Our number one goal is to keep the tool in the US, depending on cost, the complexity of the tool, lead times and anticipated changes. With new technologies or difficult materials, we try to keep those here, domestically, at all costs. The tools we’re shipping overseas are low risk, with longer lead times.

Goodsel: It often depends on the size of the program. We have tools being kicked off now – custom-molded, technical product, tight tolerances, engineered resins – where we’ve been able to work with US sources. On another new program, with 15 different parts on the same automotive platform, the customer has pushed us overseas. The reasoning is solid – when a customer sources 15 tools and can save 10 or 20 percent on each tool by sourcing outside the US, that’s a big measurable (cost difference) for them.

Selecting new tooling shops

Nolen: It’s a trial and error thing. We take serious looks at the on-time delivery rates, price comparisons and how long it will take to get a quote back. Our customers are demanding and want quotes in one or two days. That isn’t always easy to do here in the US, but offshore prices can be obtained in less than 24 hours. Is the equipment up to date? What capabilities do they have at the shop? Are they busy? For me, it’s a visual thing, and it comes from years of looking at tool shops.

Goodsel: Relationships matter – showing up at our facility matters. We want our people to know you. And our engineers and purchasing people don’t want maintenance issues or cavity-to-cavity differences in dimensions. We choose toolmakers that deliver that, and do it on time. We cannot live – and our customers cannot live – with late tools. And for me, the quickest way to become a toolmaker for Viking Plastics is to understand the products we’re going after and to bring me a way to make that product better. The toolmakers who have the creative ability to help us make something that otherwise can’t be made — those are the guys who are valuable, and price isn’t an issue at that point.

Capps: We have to get out and meet people. Once cost, quality and delivery are at expected levels, we want to come see you and we want you to come see us. We want to understand what you do. We want to meet your people, review how you address program management, learn how you follow up, find out how quickly quotes can be returned to us and possibly even do an audit. We want to make sure you do a great job — we’re going to go through that detailed process. It’s the same process our customers expect from us, and doing it with our suppliers helps us build trust. We’re in it together. Everyone wants to make money and, while you’ve got to have the right costs and the right quality, if you don’t have the relationship and the loyalty between each other, it’s a stop for us.

Advice for tool shops to compete

Goodsel: Tell us about yourself, who you are and what you can do for us. Marketing matters. And ask for the business: Ask what number you need to hit. But, most importantly, show up. Come see us. We want to buy everything in the US. Buying overseas costs money and takes resources. If someone comes in and their price is lower, but our relationship is with someone else, I do for my suppliers what I hope my customers do for us: I call and tell them what they have to do to get the business. That right of last refusal – that ask for the business – a solid relationship allows that discussion.

Nolen: We believe our employees are part of our family. What’s wrong with bringing someone from China into your family? Is there a way to let a Chinese partner build part of the mold or for them to build all of the mold while you take the responsibility? There are good tool shops in Asia, so is it possible to create a relationship that could allow you to keep more customers. Take your knowledge, put it with their knowledge and work together to get new business.

The OEM perspective

The second panel, “Cross Industry Tooling Strategies,” featured Gareth Jolly, executive director for global vendor tooling and cost engineering, General Motors; Jacob Carter, senior manager of supply chain, Briggs & Stratton; and John E. Meddles, NAR central engineering tooling lead for internal Whirlpool processes and supply base management, Whirlpool.

OEM objectives

Meddles: My team’s charter is to provide the best value back to Whirlpool as we build new tools, while also managing die standards and mold standards for all internal products. As I look at the industry, it’s important to ensure our suppliers know our expectations. One of the key failure modes I see within Whirlpool is that we have a tendency not to communicate our expectations well. We don’t necessarily build our relationships as we should, but building relationships allows you to be successful.

Jolly: We have responsibility for any tooling purchased globally, working with our product engineering and purchasing departments in deciding and developing the right solutions to approaching tools. We’re trying to achieve a fair price with the right quality and support the time requirements for programs around the world. We realized, as a company, that we need to develop more relationships with our Tier 1s, our tool shops and, even further, with our Tier 2s. Without that relationship – the transparent discussion and dialogue – no one is going to be successful. And, as much as we don’t like to send business to low-cost countries, we’re under the same pressures as you to achieve the lowest cost because we, as General Motors, are competing as well.

Carter: We’ve been put into an interesting situation in that we’re a craft, like mold builders, and when you commoditize a craft – when price is what drives the decision made by the consumer – you really have to decide how you can maintain your brand integrity and compete in a commodity-based scenario. As an organization, we’re taking a look at tooling in a different way. We’re leaning on the injection molders, die casters and tooling guys to help us design the best component for the fit and function we want to achieve. We add the value provided through design assistance back into our cost models and use that to compare the true end costs. We’re doing what we can do internally to balance this cost model and try to help our domestic suppliers.

Value in toolmaker/OEM relationships

Meddles: Bring things to the table that add value to our processes so we can optimize processes moving forward. Continue to evolve your relationship with the engineers and our processing people to allow you to be successful.

Jolly: One of our biggest challenges internally is maintaining a level of in-house expertise. If we don’t attract young people soon, we’ll have a significant resource issue, so we are relying heavily on the tool shops to provide the expertise to help us move forward with future programs.

Carter: Quality, cost and delivery are pretty standard these days. The service aspect is what I see missing. One advantage with smaller companies is they have a tendency to provide hands-on service. They’re in our shops more, they build relationships and there are meaningful discussions that happen. As you continue to market, it may be your best trait.

Evaluating potential partners

Carter: I go straight to the office. I want to see designers on staff and a support structure in place for when I need to engage in immediate communication. We are not perfect – in fact, we make mistakes on a regular basis. When those mistakes occur, we need to have a lifeline so we can pick up the phone and get support. I also want to talk to toolmakers and let them tell me about their craft. If I sense pride and engagement at every level of the organization, I know that what I buy will be well worth every penny.

Competing with overseas tooling shops

Meddles: One of the key things we do is drive a strong set of standards that ensures a set of tools being made here is consistent with a set of tools being made anywhere in the world. When we hold the different suppliers to that standard, I’ve found US toolmakers are as competitive as anyone. The key concern is: Are we looking at cost or are we looking at value? We have to make sure we don’t drive operational costs at the price of the tool’s quality.

Jolly: Chinese teams are investing heavily in high-end technology because they cannot produce tools to the standards all OEMs are demanding with their traditional approach. They’re spending as much as we are in North America on machines to achieve the quality levels that are required, but they’re also pushing lights out factories to get rid of the labor costs. We need to do more of the high-skilled machine operations in the tool shops and find alternative approaches to the lower skilled, less complex work. That will close the gap and, when you take into account other factors like logistics, duties and timing, you’ll close the gap significantly.

Advice for tool shops to compete

Carter: Our most valued suppliers are the ones that provide guidance and design assistance. They have a wonderful grasp of our products and have the courage to suggest design modifications. That’s a bold thing to do, but it’s useful conversation. When they can come in before the tool steel is cut and make sure we don’t make mistakes, those guys rise to the top.

Jolly: If we continue driving the lowest costs, we won’t be as successful because it puts tool shops out of business. It was a lesson learned from 2009-2010. There’s opportunity to close the gap if the larger tool shops can leverage the expertise of smaller shops to find different approaches to building tools in North America at more competitive rates. The gap will never be eliminated, but I think there are advantages we can leverage – for example, timing and quality – that can justifiably offset some of those cost differences. I would encourage mold builders to spend time marketing those differentiations you could offer to larger tool shops to help them close the gap and become more competitive going forward in the global market.