by Dianna Brodine, managing editor
The American Mold Builder
The current year has been one of contradictions for many of those in the mold building industry. In 2017, the US economy experienced a range of positive indicators: The S&P 500 is up more than 20 percent since Q3 20161, unemployment is at its lowest since 20002 and manufacturing order activity reached a 13-year high in September3. Profitability is up for tool builders, but the volume hasn’t been consistent across all industries, and the potential changes from Washington, DC, in tax plans and healthcare mandates are a dizzying mix of positive and negative implications for businesses.
And, some of the old worries remain. Hiring and retaining qualified employees is a struggle without an easy answer in industrial trades. China continues to pressure US manufacturers, and now Mexico is more of a concern than it has historically been, particularly in the automotive and appliance sectors.
Despite the uncertainty, those in the mold building industry are looking to 2018 with cautious optimism. In this article, mold builders and suppliers share their perspectives on what’s happened in 2017 and what’s in store for the coming year.
Challenge and opportunity: consistent sales volume
Building a consistent sales volume throughout a year begins with consistent prospecting and quoting activity. Success also depends heavily on the industries in which a tool builder operates and the program fluctuations that occur with the OEM – an issue that was evident in 2017.
Larry Patten, co-owner of Dramco Tool in Grand Island, Nebraska, has a varied business mix, working within the aerospace, military and automotive sectors. “Our current business situation is encouraging,” he said. “We are having a phenomenal year, and it doesn’t look to slow down, although I get a little nervous when I hear some of the economic predictions.”
Patten said much of his positive outlook is based on the type of customers serviced by Dramco. “The aerospace industry is focused on efficiency and building lighter planes. Those are long-term propositions. Military also is going gangbusters, so we’re probably a little more optimistic than some of the automotive-focused guys. We have automotive, too, but it’s not the only portion of our business.”
Patten and his team have experienced high quoting volume with both existing and new customers in 2017, and a high percentage of the quoting opportunities have turned into purchase orders. “We have been able to increase our workforce and our overtime, which has translated into more sold hours for the year,” he said. “Competition continues to be tight on pricing but focusing on shop efficiencies has allowed us to turn these opportunities into profitable projects. The immediate future looks bright, and I would characterize our attitude as cautiously optimistic, since we all know how quickly things change in the worldwide economy.”
Robbie Earnhardt, president of Superior Tooling in Wake Forest, North Carolina, is combatting concerns about industry slowdowns by focusing on mix and customer needs. “I think the biggest challenge is always keeping the right amount and type of work in the shop without being over loaded or under capacity,” he said. “Sales is a top priority, no matter what the work load is. I’ve quoted quite a bit of potential work, and we’re starting to see activity, but it takes forever to get things off the ground now. People seem to be afraid to make decisions – scared of the markets.”
Partially due to those delayed decision-making processes, Earnhardt believes 2018 will remain steady as compared to 2017. “I don’t think we’re back to where we were five years ago,” he explained. “We’ve had quite a few visits this year from potential customers, and I’m excited to see those materialize. But, these days I don’t believe anything until I see a purchase order. The molds we’re building now were quoted two years ago.”
Serving industries that range from automotive and aerospace to packaging and consumer electronics, the focus at Superior Tooling is on making sure the company is prepared to provide its customers with what they need to move forward. “Customers today demand more services than they ever have,” Earnhardt said. “In order to appeal to them during the quoting process, we must continue looking for means of providing those services. Sometimes that involves new equipment, but many times it requires training, so we have really stepped up our training in our apprenticeship program and with our overall staff.”
At Industrial Molds in Rockford, Illinois, a change in sales strategy led to rough waters in 2017, but the company was confident in its overall goal. “It was a tough year for us, and that was intentional as we made moves for the future,” said Tim Peterson, vice president. “We’re primarily automotive, and we made a strategic decision two years ago to be more diversified. We changed our sales strategy to allow us to enter the caps and closures and medical markets, which led to a lot of expense without an immediate return.”
Industrial Molds has a very systematic process that has allowed it to absorb the change in business type without impacting its existing customer base, but fluctuating quote volumes led to uncertain production from month to month in 2017. Confidence in the company’s direction and a commitment to servicing its current customers has Peterson confident as he looks at 2018. “We’re on the right track and what we did was right,” he said. “We have new customers and some potential customers we’re excited about for the next year. I think as we get the sales people more dialed in, we’ll see dividends.”
Industry suppliers INCOE and Meusberger also weighed in on the challenges mold builders are facing in maintaining consistent volumes. “The processors are loaded with work,” said Jim Bott, business development manager for INCOE, “but, quite frankly, the mold builders’ volume varies depending on their industries.”
Automotive is a concern, with a large number of program launches anticipated in 2018 bringing an influx of new work. “The challenges will be keeping up with the workflow,” said Bott, “because the work doesn’t come in steadily. The mold builders’ quotes were all based on relatively equal distribution, but it will come in heavy. When that happens, there’s an opportunity for moldmakers not historically in that business to network and be a supplier to shops that are over capacity.”
Tom Worcester, managing director of sales for Meusberger, agreed that opportunities are available for those open to them. “Overall, the mold building market in the US will be strong,” he said. “There is new innovation coming up, and with innovation will come new opportunities for the right type of moldmakers.”
Worcester pointed to the shortened time from concept and design to production in all industries. “Moldmakers have to be right there when the individual is thinking about a new project, product or application,” he explained. “Fast prototyping with 3D printing has changed the game, and the mold building industry has to be on the thought process side – because once that’s over, they may have lost the opportunity. More moldmakers will have to be innovative in the design of new products.”
Solving the workforce issue
Workforce development will remain a top priority in 2018. Dire statistics about the number of retirees and how their exit from the workforce will affect manufacturing have been a concern for several years, and companies throughout the trade industries are putting in work to solve the problem through apprenticeship programs.
A lack of available skilled tradespeople was one factor in Industrial Molds’ recent sales strategy shift. “Employees in the five- to 10- year skill range aren’t available,” said Peterson. “They either have 50 years of experience or none. Industrial is particularly well suited for those with no experience because we are very systematic and have automation in place. If we can find people with good technical aptitude that know how to work and want to work, they can fit in.”
“Dramco’s main challenge continues to be workforce related,” said Patten. “We have had good success in our partnerships with local high schools and tech school programs, but it still is a long-term issue. While there are many positive things happening in the pipeline, it is a challenge to find experienced candidates for our toolmaking positions.”
In November of this year, Dramco formally signed an agreement to host Nebraska’s first registered apprenticeship program. “We’re excited to train young high school kids and introduce them to the industry,” he said. “We’ve been doing that through a local technical program in our high school, and 90 percent of our new hires over the last three years have come out of that program. The apprenticeship program will let us take the next step.”
Earnhardt also has a state-supported apprenticeship program in place at Superior Tooling, while also working with local high schools and tech schools. “We now have more employees than we have ever had, and part of that is due to our apprenticeship program,” he said. “We have six apprentices, and they have really enhanced our work force in a very positive way.”
While the US is bringing apprenticeships back, many European companies have thriving programs. “In Europe, Meusberger has a totally different approach,” said Worcester. “The company has approximately 1,400 employees and about 100 apprentices. Wherever there’s a need for a trade, Meusberger brings in apprentices – not just for machinists, but in electrical and machine rigging, too.”
Worcester explained that many European organizations have six-year apprenticeships, working alongside technical schools to offer associates degrees after completion of the apprenticeship term. “Finding talent is a struggle – that’s just a fact of life,” he said. “In today’s market, the technology involved in the new equipment means that apprentices need to learn the IT and technology aspects of the job, as well as the mechanics. Companies are making long-term investments to teach employees what they need to know.”
Keeping up with technology
Despite the additional training required, technology advances also bring advantages to mold building shops through time savings, process efficiencies and labor reduction.
Dramco invested in a 4k laser cutter and CNC press brake in 2017, and the company continues to look at what’s available. “Our biggest opportunities for increased profits at Dramco remain in our ability to pinpoint inefficiencies on the shop floor and a continued focus on spindle hours,” said Patten. “This involves being willing to invest in new technology, as well as keeping track of information that shows if what we are doing is making a difference.”
NPE 2018, to be held in Orlando, Florida, in May, offers an opportunity to see the latest equipment updates, and Patten isn’t the only one hoping to take advantage of it. “We live in a very fast-paced industry, and unless we pay attention to what is going on we will find ourselves far behind,” said Earnhardt. “NPE keeps me in touch with the new technology being used on the molding side, as well as for tooling.”
Peterson and Industrial Molds will be exhibiting at NPE in booth space dedicated both to Industrial and its sister company, injection molding firm Pyramid Plastics. “It’s a strength in the marketplace that we have Pyramid as an asset – we can ppap molds or do short-run production,” he explained. “At NPE, we’ll have salespeople in the booth to talk with potential customers, but we also will have people dedicated to looking at what others are offering that could be of value to us.”
The upcoming year will bring adjustments to every business, courtesy of tax law changes, continued discussion on healthcare, trade policy updates and safety regulation implementation. However, members of the industry are optimistic and are aggressively finding ways to succeed through sales strategy shifts, apprenticeship programs and new technology investments.
“INCOE’s fiscal year ended October 31st, so we’ve wrapped up 2017 and that was a great year, domestically and globally,” said Bott. “We’re forecasting that we’ll reach those levels again in 2018. INCOE serves all of the plastics markets – we are best known for automotive and appliance, but we also supply caps and closures, medical, toys, cutlery and more. There’s a lot of opportunity out there for tool builders.”
References
- CNN, http://money.cnn.com/2017/11/08/investing/trump-rally-anniversary-stocks/index.html
- Wall Street Journal, https://www.wsj.com/articles/hiring-rebounds-in-october-unemployment-rate-falls-to-4-1-1509712307
- Markets Insider, http://markets.businessinsider.com/news/interestrates/U-S-Manufacturing-Index-Pulls-Back-Off-Thirteen-Year-High-In-October-1006457848
