TRAVERSE CITY, MI – There most likely still will be a North American automotive tooling industry in 10 years, but it will look different from today, a panel of industry executives and analysts conclude at the Management Briefing Seminars here.
The trend in the auto industry is to cut costs, many times beginning early on in the tooling stage.
That has led many auto makers and Tier I suppliers to adopt a “lowest price initial strategy,” says Kristin Dziczek, senior product manager at the Center for Automotive Research in Ann Arbor, MI.
“Survival mode is leading many to seek lower tooling costs,” she says.
One way to reduce tooling costs is through collaboration, Dziczek says, which has led to a new player in the auto industry.
“Integration brokers are people who set up a network around the world and take care of all (tooling) details,” she says. “They’re mostly (composed of) just an office, and they go to smaller shops or offshore to lower costs (for their customers).”
While the lowest-price strategy is widespread, the least-expensive supplier is not necessarily the best choice, she says.
Among potential pitfalls, the low-cost strategy provides little incentive for tooling shops to invest in new technology and equipment. In addition, past performance means nothing in securing future work.
Where the low-cost model ultimately will lead is difficult to determine, experts say. However, auto makers and Tier I suppliers here contend there always will be a need for a domestic tooling industry.
“Honda (of America Mfg. Inc.) does want and does need a domestic tooling industry,” says Tim Myers, senior manager-North American purchasing for HAM.
“Honda directors want to purchase where they produce,” Myers says. “We’re seeking to facilitate long-term, stable relationships between Tier I suppliers and selected North American tool shops.”
For domestic tool makers to remain competitive, they must adopt new strategies, Myers says.
The structural changes undergone by the auto industry in recent years provides a map for tool shops to follow, he says. Auto makers no longer produce vehicles in the volumes of the past, and product lifecycles are much shorter today – usually between three and five years.
As such, tooling must be designed to operate for a shorter lifespan, thereby leading to lower structural costs.
James Morgan
“Today’s tool and die (shop) focuses on multiple customers and smaller volume with more variation,” Myers says. “Tomorrow, it will be niche market vehicles.”
Despite the clear need for change, adapt or die may be too strong a warning for North American tool makers.
The very fact they are domestically based may be the key to their survival, says James Morgan, Ford Motor Co. director of stamping business unit-engineering, vehicle operations.
“We anticipate there will be a strong tool and die industry in North America,” Morgan says. “Those adopting outsourcing strategies are short-sighted, if it’s done by itself. The demands of Ford’s product-development system need very precise synchronization and coordination. Having tooling done overseas only exacerbates problems caused by time and space.
“And transportation costs are becoming more of an issue. The solution is to have a strong base here,” Morgan says.
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