You're seeing problems right now with some of the tool production in China. There's a serious container issue at the moment, and so getting goods onto a ship and over from China has become a problem. The alternative is to put the product onto a commercial plane, but there aren't as many planes going back and forth to China these days. I can get it here on a Federal Express plane, but that's more expensive.
How is that affecting the North American industry?
Suppliers are attempting to be more competitive with the Chinese industry by reducing their lead times. That means meeting the needs of the OEMs and allowing for engineering changes that need to be made, but doing it in less time.
Can they do that?
Yes. Many are managing to take weeks out of their tool build process because that's what the OEMs need from them.
They're digging into their build process to look for wasteful practices they can eliminate. It's basic continuous improvement. You examine all the steps of building a tool and you identify the steps that are inefficient.
But they're also looking for more efficient ways to handle designs. Some companies are developing libraries of standard tool design elements that they can reuse to speed up the next tool. And when it comes to making the design phase go faster, they're also looking to work closer with OEM customers to perfect the design while it's still in the CAD software stage, before they cut the steel. Once I've cut the steel for you, if you have to make a change, we're going to have a lot of extra work to do.
That back-and-forth is part of the waste that bogs down the schedule. If the OEM makes late design changes, it adds to the schedule. The tool supplier can cut the steel pretty fast. What I need in order for the project to move faster is greater assurance that you've finalized the design.
What's really driving this push to speed up the schedule? Why are tool-and-die companies making an effort to improve their lead times?
It's competitiveness. There's a desire to make their companies more efficient. The Detroit 3 buy probably 80 percent of their tooling in North America and about 20 percent in China. For the Japanese, it's probably 50 percent in North America and the rest from Japan and China. The Germans buy probably 20 percent of what they need in North America and the bulk from either Germany or China. So there is a very real possibility among North American tool companies that if you don't improve your process, you could lose that business to competitors overseas.