In Spring 2002, The Right Place Program, a regional economic development organization of the west Michigan tooling industry,16 conducted an assessment of the tooling industry
in Michigan and presented the analysis at the Commission’s public hearing. The report concluded that the competitive challenges that face the die and moldmaking sectors, “when added up, {these} amount to a ‘paradigm shift’ for this highly traditional sector.”17
The report notes that the essential characteristics of world-class tooling firms are control of the customer relationship, picking the right customers, differentiating the firm with unique product or process knowledge, building intellectual capital, continuously
experimenting with new technologies, building “lean” organizations, knowing the firm’s costs, and pursuing global sourcing and production alliances.18 The report also identified
a number of strategies in which economic development organizations might support the tooling sector, including establishment of tooling councils; the development of a world- class tooling business model, marketing and technical consortia, user groups, and new financing tools; offering customized consulting and training products; and assisting in the formulation of public policy.19
In March 2002, the Economic Research Institute of the Japan Society for the Promotion of Machine Industry published a report looking at the current state and future prospects of the die and mold industry in Japan.20 The report profiles the die and mold industry in
Japan, notes the migration of Japanese TDM consumers to overseas production locations, assesses changes in the competitiveness of foreign TDM producers, and defines goals for the industry and problems that must be overcome in attaining those goals. The report observes that Japanese TDM producers must enhance their technological capabilities, shorten lead times and lower production costs, and cultivate foreign markets. Challenges facing the industry in meeting these goals include developing better human resources and management practices, including the use of consortiums; optimizing subcontracting
21 Alan Christman and Jeanné Naysmith, The Worldwide Moldmaking Environment and How
to Compete (Ann Arbor: MI: CIMdata, Inc., 2000), p. 14.
22 Ibid.
23 Hong Kong Mould & Die Council, Hong Kong and Foreign Countries Investment Benefits
Explanation Handbook, 1st ed., (Kowlon, Hong Kong: Hong Kong Mould & Die Council, Aug.
1997).
24 Communication Technologies, Inc. and AMBA, AMBA State of the Industry Survey
Results–06/28/2002, found at http://www.moldmakingtechnology.com, retrieved July 17, 2002.
practices, introducing and utilizing to a greater extent computer-aided-design (CAD) and computer-aided-manufacturing (CAM) and electronic ordering systems; concentration of expertise in certain niches; lowering firms’ cost structure; and protecting intellectual property rights and preventing the flow of know how to foreign countries.
In October 2000, CIMdata, Inc., Ann Arbor, MI, published a major report on the industrial mold industry entitled The Worldwide Moldmaking Environment and How to
Compete. The report noted that the “center of gravity” for growth in the moldmaking
industry was shifting from the United States and Europe to the Asia-Pacific region.21 The
report noted that capital to purchase machinery and equipment was easily accessible in the Asia-Pacific region, reported the region’s efforts on training the next generation of moldmakers, and reported the multiplier effect in the growth of molds produced in the region due to the shift of molded part production to the Asia-Pacific region. The report observed that price and delivery were the principal basis of competition and that
improving delivery time would be the “primary means by which worldwide moldmakers intend to remain competitive.”22 Finally, the report covered business and technological
trends among U.S., European, and Japanese moldmakers.
In 1997, the Hong Kong Mould and Die Council issued a report that cataloged Hong Kong and foreign countries’ investment benefits available to mold and die producers.23
The report, in Chinese, covered Hong Kong, North America, selected EU countries, Japan, Taiwan, South East Asia, and Australia, but did not cover China. Most of the programs listed appear to be programs open to any small- and medium-sized businesses in the particular country studied.
Surveys
During April and May 2002, the American Mold Builders Association (AMBA)
conducted a survey of the state of the moldmaking industry24 The survey noted that from
2000 to 2001, the average backlog fell from 10 to 6 weeks, and the employee’s average work week fell by 8 hours from 51 average hours to 43 average hours. The average moldmaking shop employment fell from 34 persons in the past 3 to 5 years to 25 persons in 2002. Respondents to the survey reported that of the total number of jobs lost to foreign competition, most were lost to China (59 percent) followed by Canada (26 percent)—these jobs would include both molds built in foreign countries for use in foreign production locations and also for export to the U.S. market. Of the factors that may be adversely affecting the moldmaking industry today, moldmakers ranked as first, competition from low-cost offshore shops; second, overall economic conditions; third, high U.S. labor costs; fourth, competition from Canadian shops due to the U.S. dollar- Canadian dollar valuation issue; and almost tied for fifth were the high cost of capital equipment and over valuation of the U.S. dollar. Approximately 93 percent of
25 Jerry R. Lirette, president, D-M-E Co., written submission, May 9, 2002.
26 USITC, Competitive Conditions Relating to the Importation of Industrial Molds into the
United States from Canada, investigation No. 332-169, USITC publication 1522, Apr. 1984.
1-8
to offshore locations. The number of moldmaking firms responding to the survey totaled 345.
D-M-E Company, a subsidiary of Milacron, Inc., Cincinnati, OH, in spring 2002 commissioned a Mold and Die Making Industry survey “for the purpose of quantifying the economic trends in recent years for presentation to the U.S. International Trade Commission.”25 Approximately 1,000 U.S. die- and moldmaking firms responded to the
survey. Major points from the survey are that during 1997-2001, combined data for all respondents indicate that sales revenue fell by 28 percent, employment fell by 24 percent with over 46,000 jobs lost, the average number of hours worked per week fell by 19 percent (1997-2000), capital expenditures fell by 36 percent, and profits before taxes dropped from almost 16.6 percent of revenue to just 1.4 percent of revenue. The main factors identified as adversely affecting U.S. moldmakers were the shift of production to foreign locations, increased U.S. imports of molds and dies, and pricing pressures. The survey was supplemented by commentary provided by many of the approximately 1,000 respondents to the survey.