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Automotive Tool-and-Die Shops Hit by Slowdown

Survey shows 2Q capacity utilization at new low point, and forecast for recovery is not promising

A recent survey of automotive mold-and-die shops reveals that the North America’s tooling sector’s capacity utilization has dropped to a new low point since the coverage three years ago. The Automotive Tooling Barometer Survey, conducted by the Original Equipment Suppliers Assn. and Harbour Results Inc., revealed mold shop capacity utilization fell to 74% during Q2 2019, down 4% compared to Q1 2019, mainly due to new lows in automotive-sourcing activity.

The OESA Automotive Tooling Barometer survey was developed to provide an indicator of the current state of the automotive tooling industry, and to gauge its near-term prospects.

During Q2 the survey was conducted among mold shops (63%) and die shops (22%) in the U.S. (56%), Canada (34%), and international (10%). Shops with revenue ranges less than $5 million up to more than $40 million were represented, with the largest percentage being shops in the $10 million to $20 million (29%) range.

Die shop utilization dropped from 74% to 70% during the second quarter of this year, and "work on hold" surpassed 20% (a record high) due to automotive program delays. Based on these factors, tool shop owner sentiment dropped to 61%, according to Harbour Results.

“With this challenging environment, we can expect shops to continue to struggle as the year progresses,” commented Laurie Harbour, president and CEO of Michigan-based consulting firm. “This, coupled with the fact that Chinese tool shops continue to significantly underprice North American shops, means we will likely see more layoffs and bankruptcies in the balance of the year.”

The survey also revealed that majority of both mold shops (79%) and die shops (86%) responding to the survey indicated they had a three- to five-year strategic plan. However, these companies also revealed they did not have the same level of plans in place for adopting technology, sales process, or labor and hiring.

In regard to sector-wide labor and hiring readiness, a majority of those surveyed are experiencing a shortage of qualified talent, and many shops indicate they currently have difficulty filling open positions. Also, 67% of die shops and 81% of mold shops indicated they are "not prepared" or "somewhat prepared" for the next generation workforce.

“In my perspective, a robust strategic business plan would include a sales plan, technology plan and specific details for labor and hiring,” Harbour commented. “With the automotive industry changing so rapidly, it is imperative for the tool and die industry to start preparing for the future today.”

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