Moldmaking Today
The entrepreneurial spirit of Canadian moldmakers enabled the industry to survive long enough to look to the future
October 1, 2010
—Angelo Carnevale
Vice President
Canadian Association of Mold Makers (CAMM)
As automotive production slowed recently, work at Tier 1 and Tier 2 suppliers, such as the nation’s moldmakers, slowed too.
Restructuring, mergers, acquisitions, and shorter production runs are all part of the automotive landscape now. This means it is important for moldmakers to make the best use of their knowledge, resources, and equipment. New machines and processes, tooling, automation systems, and software can only bring about positive change if implemented timely and used correctly.
It’s almost as if it’s a new day for Canada’s moldmakers.
According to Canadian Association of Mold Makers (CAMM) Vice President Angelo Carnevale, however, this new day won’t dawn without government intervention and action.
“The new realities of the industry, without some type of government realignment of opinions on what value manufacturing brings to the country, will be sobering,” said Carnevale.
Many moldmaking companies take years to mature fully, and then only through the efforts of strong-willed entrepreneurs. It takes time to train staff, see a return on capital investments, and show a profit. If these businesses close, the bell cannot be unrung.
“Once we lose them, most do not start back up,” said Carnevale. “These closures are true losses of a skilled trade, with the resultant loss of highly paid jobs and their corresponding tax base.”
Business volume in this sector improved lately, but this may be caused by the shop closures over the last few years. There are fewer companies seeking a slice of the pie, and most of the existing companies have scaled back capacity to a certain extent.
The Role of the Automaker
While all the domestic automakers continue to play a significant role in the existence and success of their supply base, they also cause the main concern, thanks to policies of extended payment terms.
“The die/mold/tool sector is still being punished with extended payment terms, and this is a huge problem for most companies,” explained Carnevale. “The lack of cash flow would hurt most companies, but it hits the tool shops harder because of the requirement of investing in expensive equipment, software, and high wages for skilled tradespeople. When cash flow is unreliable, these purchases are deferred, which starts the tool shop into obsolescence.”
There are ways to counteract this trend, however.
Carnevale points to the government, which he says can help by passing new fair trade law whereby large companies cannot impose impractical payment terms on their smaller suppliers.
Export Development Canada can help as well, he said.
“EDC policies can be revised to better protect these small enterprises,” said Carnevale. “In cases when the EDC won’t act as an insurance company it forces small exporters to carry the full exposure of a customer’s finances.”
This again places a cash flow burden on smaller companies.
Canadian Content
Marketing the capabilities of Canada’s shops to the worldwide marketplace is one way to increase activity in the sector.
“Since a tool shop is usually an exporter, no matter how small, it requires help with more sophisticated marketing strategies,” said Carnevale. “This can be done through associations like CAMM. We attend tradeshows on behalf of our members to distribute directories, but CAMM also needs stronger government support to expand our efforts.”
While the expertise of the sector is well-known in North America, this is not the case outside of the continent, according to Carnevale. This is because it was easier getting work from the U.S., so no marketing was really ever done overseas.
“The question we need to ask ourselves is, Why did the Chinese, as well as other countries, want our manufacturing jobs so badly? And secondly, now that we have had an opportunity over several years to observe the shift of manufacturing work overseas, how do our respective countries’ economies compare from before the shift to after the shift?”
Maintaining a strong manufacturing base in this country is vital to the economy, and China is not the only jurisdiction gaining from Canada’s losses.
“New businesses are now approaching Mexico due to the migration of plants to Mexico and the maturing of their industries,” said Carnevale.
Attracting Work
Being flexible is important in today’s mold industry, but this flexibility is tied directly to the revenue stream of a company. The fastest way to influence flexibility in a shop is through the purchase of new equipment or new software, and today that means a need for cash.
“Suggestions to be flexible, and to possess the most advanced equipment, do not fall on the deaf ears of most shop owners,” explained Carnevale. “In many cases, they simply lack the necessary funds to move in this direction.”
In addition to attracting new business, retaining existing work still comes down to quality, on-time delivery and proper cost analysis. This is accomplished by implementing the latest machining procedures, such as five-axis machining, in an efficient manner.
“The horizontal pallet machine has been ‘discovered’ in the past two to four years by tool shops who benefit from the speed of the actual machining process and the multiple-pallet option, which in turn causes the realization of more spindle runtime for the machine,” said Carnevale. “Automation is essential to the future health of a tool shop in all aspects of the process. The proper implementation of automation will decide who lives and dies going forward.”
For more information, visit www.camm.ca.
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