The Original Equipment Suppliers Association (OESA) and Harbour Results, Inc., (HRI) recently released the results of their Q2 2018 Automotive Tooling Barometer. The study shows that the tooling industry experienced a slower than predicted first half of 2018 with a significant amount of business being pushed to the second half of the year.
"Our original forecast called for 2018 North American vendor tooling spend to be $11 billion, however, due to a number of factors including shifted or cancelled product launches, we are now expecting it to be closer to $8.5 or 9 billion with the remaining $2 billion shifting to 2019," said Laurie Harbour, president and CEO of HRI. "We saw a record year in 2017 with tooling spend just over $10 billion and now automakers are focused on launching the vehicles they built tools for in 2016 and 2017."
From Q1 to Q2 2018, both die and mold shops experienced a decrease in utilization (88 percent and 77 percent respectively). Additionally, work on hold continued to climb with an average of 13.5 percent (compared to 11 percent in Q1 2018), which is a result of several automotive program delays. Sentiment also dropped 4 points (76 percent) from Q1 2018 results.
The study also looked at shops' investment strategies. On average, mold builders are planning to contribute 4.8 percent of revenue toward new capital expenditures, compared to 7.7 percent in 2017; and the average die builder is expecting to invest 4.6 percent of revenue, compared to 5.9 percent in 2017. Additionally, the percentage of a shop's total investment that's earmarked for machine expenditures is expected to decrease this year: 84 percent to 75 percent for mold builders; 85 percent to 72 percent for die builders.
"Tool shops are shifting capital spend from big ticket equipment, to productivity improvements, particularly in the areas of automation and high-speed cutting equipment," commented Harbour. "Additionally, we are seeing shops looking to invest in software with 68 percent of mold builders and 42 percent of die shops indicating they have plans to invest in machine monitoring solutions."
Finally, as shops continue to bridge the skilled trades gap, the Tooling Barometer looked at recruiting methods and apprentice programs. Organizations are leveraging many options including school partnerships (68 percent), apprenticeships (58 percent) and job placement websites (57.5 percent). For molders, 14 percent of their total hourly employees are apprentices while die shops average 10 percent. This number has remained consistent over the past several years.
"Results of the Tooling Barometer reflect what we hear directly from toolmakers on our Tooling Council," said Julie A. Fream, president and CEO, OESA. "Toolmakers expect a busy second half of the year as programs catch up with earlier forecasts."
The survey population was comprised of mold shops (74 percent) and die shops (26 percent) in the U.S. (57 percent), Canada (28 percent), Europe (9 percent) and Asia (5 percent). Shops with revenue ranges less than $5M up to greater than $40M were represented, with the largest percentage of shops coming from the $5-$10M (32 percent) range.
Want more information? Click below.