Asia tooling industry continues to lead growth, despite reshoring
Asia's mold industry continues to grow despite some reshoring, suggesting a shift in the types of tools sourced from the region.
The global mold making industry grew 22 percent globally from 2011 to 2013, with the majority of that growth coming from Asia, analyst Laurie Harbour said at the Center for Automotive Research's Management Briefing Seminars in Traverse City. Asia alone showed a 33 percent increase.
"What we're still seeing is that we're still buying tools in Asia in a high degree, particularly on the mold side, as opposed to stamping dies," she told Plastics News. "And this data proved it -- that from 2011 to 2013 revenue was up 33 percent in the mold side of the business [in Asia]."
That number is based on molds leaving Asia, not necessarily all of which ended up in North America.
Harbour has previously discussed how rising costs and lead time constraints can drive reshoring of tools from Asia. The question, then, is why that's not represented in the data.
"If it's something that's really tight and needs to be made quickly, it's not going to go to China. There's no time. The more cost increases in China, not just labor rates but costs in general -- transportation, energy -- it won't make the math work on large, large tools," she said.
But for simple tools where engineering changes and lead time constraints aren't an issue, the low initial pricing available in Asia make sourcing tools from the region an attractive option. That is likely what's driving Asia's growth, Harbour said.
"I think the mix is shifting," she said. So even though some reshoring happens as costs in other regions rise, "the data doesn't show it. The data just shows continual growth."
Harbour predicts the mold making industry will grow another 12 percent in 2014. As released in Harbour Results Inc.'s October 2013 tooling capacity study, Harbour believes the tooling industry faces a pending tooling capacity gap, and new data collected by her firm confirms that, she said.
The global mold making industry operated at 94 percent of utilization according to her data, Harbour said. After seeing a dip in early 2014, business is now picking up again in preparation for 2016 automotive releases.
North America had the lowest percent utilization, operating at 85 percent capacity, compared to Asia at 97 percent capacity and Europe at 114 percent capacity.
"There's more availability here," Harbour said.
Harbour Results announced on Aug. 4 it was working with the Michigan Economic Development Corp., in collaboration with the Original Equipment Suppliers Association, to support Michigan's tooling industry ahead of the capacity constraint.
HRI is working with the state on developing programs to provide benchmarking, assess businesses and develop best practices, Harbour said. A key goal is to attract more people -- especially young people -- to the industry.
"Somebody will take the work if we have a capacity gap," Harbour said. And Michigan's dense tooling industry -- 867 tool and die shops in the state -- means it has a unique opportunity to absorb that increasing demand.
"Michigan has the highest skill level to be able to support that activity," she said. "If the state can support them as those costs in China and other regions go up, and reshoring does occur, we have to have the people here to actually staff these shops and be able to take on the work."