Harbour Results, Inc. (HRI), a leading manufacturing industry consulting and benchmarking company based in Southfield, Michigan, recently released the results of the Q1 2022 Harbour IQ Manufacturing Pulse Study. The analysis indicates that the tooling industry rebounded in 2021 with companies on average seeing year-over-year revenue growth of 10. Additionally, both mold and die shops saw utilization range between 81-89% throughout 2021 and, although Q1 2022 has started out slightly slower, shops forecast utilization to reach 90% (mold) and 82% (die) by Q4 2022.
However, the manufacturing industry continues to face challenges – supply chain shortages, raw material availability and costs, a talent gap and global economic uncertainty. According to study respondents, the higher cost of business and access to labor remain the top concerns for manufacturers. Additionally, for the tooling industry work-on-hold is trending up in Q1 2022 and payment terms and on-time payments of accounts have dropped after a brief improvement in 2021. As a result, in Q1 2022 overall sentiment has dropped for the first time since 2020.
“Despite all the chaos in the manufacturing marketplace, we are feeling positive about the opportunities for the tool and die industry in 2022,” said Laurie Harbour, HRI president and CEO. “According to our automotive tooling launch analysis, HRI predicts the North American automotive tooling spend to be $7 billion in 2022, up from $5.4 billion in 2021. This increase in vehicle launches will positively impact the industry.”
The study focused on manufacturers’ performance, and last year both die and mold saw significant efficiency improvements; however, average profitability only ticked up slightly from 2.9% in 2020 to 3.6% in 2021. This suggests that the efficiency improvements may be a result of the talent shortage, or the increased cost associated with outsourcing and overtime. Furthermore, the study indicates that shops expect to invest between 4-5% of revenue in capital expenditures in 2022 – likely to support further efficiency improvements.
“For most shops, 2021 was a year of improvement – on average tool shops improved utilization and their financial stability,” added Harbour. “To continue improvement, it will be important for shops to focus on flexibility – collect data and intelligence and make informed decisions – to capitalize on the opportunities in 2022 while managing the challenges.”