Crain News Service
Several auto suppliers have shifted responsibility for most of their preproduction work to a small group of toolmakers.
That work - long the domain of automakers or their Tier 1 suppliers - is significant for those toolmakers fortunate enough to land a long-term contact that can last several years.
It has caused several large tooling firms to hire numerous global program managers and invest in expanded prototyping shops, design studios, auxiliary equipment and assembly operations. In turn, those shops have begun to contract for work with smaller toolmakers, a function traditionally under the aegis of suppliers.
The approach shifts the ground for toolmakers accustomed to frequent bidding wars for smaller jobs, said Thomas Ruczynski, marketing vice president of Proper Mold & Engineering Cos., a tool-making services provider in Center Line, Mich.
'We're involved for a longer period from start to finish on one project,' he said. 'It keeps us working, and we don't have to constantly look for new business.'
Many toolmakers have recrafted their physical operations to keep in tune with suppliers' needs. For instance, over the past decade, mold maker Reko International Group Inc. of Oldcastle, Ontario, has created an on-site umbrella of services: mold making, engineering, prototype parts, mold testing, custom and special machining, and the production of fixtures, gauges and assembly equipment.
The operation is parceled into separate buildings on a series of narrow streets throughout an Ontario industrial park. Trucks shuttle molds and equipment to different loading docks at the Reko complex.
The firm, which recorded C$68 million ($44 million) in sales for fiscal year 1998, now more closely resembles a sprawling campus of tooling services than the hardscrabble mold shop of its origins.
Other firms will need to follow a similar path to compete, said Reko business development manager Ron Beneteau.
'I really think our model is the way the industry must go to succeed,' he said. 'We're just a bit ahead of the curve.'
PME, a Reko competitor, has adopted a similar approach, offering an array of separate buildings for mold testing, prototyping and high-precision tooling.
Last fall, PME went one step further: It opened a 31,500-square-foot design and prototyping plant for its Pinnacle Technologies Inc. subsidiary in Center Line, Mich.
The facility includes three private design studios where carmakers, suppliers and tooling engineers work under a cloak of secrecy. Each studio offers a personal outside entrance and private elevator leading to the second-floor offices, where designers can gaze through windows at prototypes being made below.
'We want to give our customers a private place here to work,' said Mark Montone, PME business development director. 'We want them to feel comfortable coming here.'
The new era of tooling also comes with a few potential hazards. The ranks of toolmakers are expected to be winnowed further over the next few years, said Jeffrey Mengel, a tooling-industry analyst with Plante & Moran LLP in Southfield, Mich.
Many old-school toolmakers will be forced to build a wider array of services or find a distinct niche to survive, Mengel said. That will be a difficult transition for some shops, he said.
'Some of them have a reluctance to venture into new design, processes and other value-added areas,' he said. 'But there will be winners and losers here, and those that have an aggressive growth strategy should do quite well.'
The approach has other potential pitfalls. The process of passing product-development work to toolmakers can lead to a loss of production efficiency, said Tim Gale, operations director with T.A. Systems Inc., a secondary-equipment tooling supplier in Rochester Hills, Mich.
'Our customers are mainly toolmakers now,' Gale said. 'We can become an afterthought for a tooling company wanting to offer tooling and assembly equipment at one bare-bones package price. We're one more step removed from decisions that can help (suppliers).'