Talking Tooling

Laurie Harbour cites a somewhat startling set of statistics about North American automotive production. Back in 2000, there were 149 models in production. The average volume was on the order of 300,000 units. By 2020 there will be 275 models in production. The average volume will be more along the lines of 70,000 units. These numbers are of particular interest to Harbour, who is the president and CEO of Harbour Results, Inc. (HRI; harbourresults.com), a manufacturing consultancy with particular depth of knowledge when it comes to the tooling required by OEMs for producing vehicles. 

HRI has recently conducted a study looking at the amount of spending that will be made in North America by the OEMs on vendor tooling (i.e., molds, dies, die-casting tools that are run at supplier plants, not OEM facilities) and it indicates that the spend will be on the order of $11-billion in 2018, or about $2-billion more than they were calculating for 2017.

The reason for this robust number is because HRI is estimating that there will be 177 vehicle launches (new models or major refreshes) between 2018 and 2020, so that means a whole lot of things like progressive dies and large fascia molds being necessary for supplier shops.

What’s more, about two-thirds of those launches are going to be for SUV and truck platforms, which require more tooling than a sedan. 

But then there will be a decrease of about 40 percent for the tooling spend in 2020, down to a projected $6.7-billion in 2020.

While that will be not-so-good for the tooling industry, Harbour says that this will provide the OEMs with the opportunity to invest in new technologies for those vehicles: “If you’re spending a billion or more on tooling and then have fewer new launches and no longer have that level of spending, it frees up spending for other things.”

But there will be some challenges, some known and some unknown.  A prime example is NAFTA. At this point in time (mid-December) it is unknown what the consequences will be with the U.S. trading partners to the north and south. According to Harbour, a significant number of molds are produced for the auto industry in Canada, in the Windsor, Ontario, area in particular. (Not so many dies, which has concentrated production in the states of Michigan, Ohio and Indiana.)

“There isn’t the current capacity in the U.S. for the type and quantity of tools coming out of the Windsor area,” Harbour says. “There would definitely be a gap.”

Which would have a deleterious effect on new launches and refreshes, especially for the Detroit Three. According to Harbour, about 80 percent of the vendor tooling sourced by those companies is done in North America. For the Asian Four (Toyota, Honda, Nissan, Hyundai) the number is on the order of 40-50 percent. For the European Three (BMW, Mercedes, Volkswagen) it is 20-30 percent sourced in North America.

As for something that is known for a problem it is skilled labor. “We are not convincing our kids to go into this market even though it is some of the highest-paid skilled labor jobs out there,” Harbour stresses.

Consider this: the average age of a toolmaker right now is 56. In the next decade, there is likely to be a large number of people retiring, which is going to leave a significant gap in the tool and die industry. And this gap, Harbour suggests, isn’t going to have a quick technology fix: “New technologies are not coming along fast enough at a cost structure that could replace people.” And while there are new technologies in terms of both machine tools and programming systems that make it so that the skills required 10 to 20 years ago can be handled by those with a reduced skill set, there is still the issue of people.

“We will need tools for vehicles for many years to come and we will need skilled labor to make them,” Harbour insists.

She points out that toolmaking can be lucrative, with starting pay on the order of $11 to $12 per hour and quickly increasing into the $20s. Experienced toolmakers are making, Harbour says, $30 per hour, and with the amount of overtime that is characteristic of many operations, this can translate into six figures annually.

“It’s not dirty anymore. It is very high tech. Young people can use their video game mentality to program the machines. Those who get into it love it,” Harbour says.

But as is the case with many other jobs associated with the automotive industry—jobs that are associated with the physical aspects of making cars and trucks, jobs that are a world away from the Dickensian image that some people have when they hear the word “plant”—there is probably less encouragement for young people than there should be. (Anyone looking for encouragement should look to Mary Barra’s career: she spent plenty of time in manufacturing before making it to the top of GM. Her dad, incidentally, had been a die maker at GM.)