A New Book
On Lean Manufacturing
From Manufacturing &
Technology News
Cries In Vain For Help
The American moldmaking industry is in trouble, says the president of the American Mold Manufacturers Association. Business has been depressed since November and is getting worse. Competition from Chinese moldmakers is taking a heavy toll. Worse, the federal government and Congress don't seem to care and have no plans to protect an industry under what it perceives to be an unfair competitive attack.
"It's more than getting very difficult," says Olav Bradley, president of the American Mold Builders Association and CEO of P.M. Mold Co. "Shops that have been in business for more than 60 years with more than 150 men are closing up every day. Getting work is really terrible."
Exacerbating the problem is the rapid migration of original equipment manufacturers to cheap overseas locations. As they leave, their moldmaking requirements go with them.
Pricing is a growing concern, since U.S. moldmakers face a 29 percent tariff on their products going into China, which is where most production is headed. Chinese imports into the United States face tariffs of only 3.31 percent, says Bradley. "Go into Wal-Mart or Kmart and try to buy something that isn't made in China -- it's ludicrous!" Bradley exclaims.
A mold that costs $100,000 in the United States can be purchased from a Chinese moldmaker for about $35,000. But U.S. producers have to comply with a plethora of environmental and OSHA regulations that contribute at least $25,000 to the cost of a $100,000 mold, says Bradley. "If we really want free trade, let's be honest about it: we should add the cost of OSHA and EPA regulatory compliance, insurance, workers' compensation, benefits and higher wages first, then add the MFN, VAT and tariffs. At that point, we would have a level playing field."
Foreign moldmakers receive government subsidies, low-interest loans and rent-free buildings to set up shop, Bradley claims. "Most of our employees make $25 an hour or more and it's hard to compete in places where they don't even have a minimum wage." In visiting overseas moldmakers, Bradley has seen shops that had dirt floors and no air conditioning or heat.
The $1-billion to $2-billion U.S. moldmaking industry is mostly losing companies that are producing simple molds for such things as garden tools. There are approximately 4,500 to 5,000 moldmaking shops in the United States, with an estimated average of 20 to 25 workers. The industry is the "backbone" of the plastics industry, says Claire Goldsberry, an independent marketing consultant and contributing editor for Injection Molding magazine. "This is one of the tougher recessions. '92 didn't have the impact because the offshore threat wasn't there, and the '83 - '84 downturn was not nearly as bad."
The companies that are struggling to survive are those that did not manage their cash well during the 1990s and those that did not invest in high-tech equipment. Moldmakers that are able to keep their shops open, albeit at much lower levels of production, are working closely with their customers in the design phase of new product development, and providing them with input on the total design and tooling.
"We have a customer we've had for 25 years and we would build molds for them in 12 weeks," Bradley recounts. "They didn't think that was good enough so we changed our processes and now build them in 10 weeks and on one occasion we built a 96-cavity mold in eight weeks. But they kept saying they're tired of the 10-week delivery, it's too long, and now they are going to China for their molds. The last one they had built in China took nine months to deliver and they said they didn't care because they were saving 50 percent of their money."
One of the problems the industry faces is the fact that many mold purchasers do not break out the total cost of ownership. The cost of fixing a poorly constructed mold is not factored into purchasing decisions.
Bradley says he's tried to draw political attention to the industry's woes, but to no avail. He has spent time in Washington and has joined the National Coalition for Advanced Manufacturing and the National Federation of Independent Business.
"When you only have a shop of 20 people, a congressman or senators doesn't care about you; they don't listen; they don't understand," he says. "The AMBA is not opposed to competition. We are not even opposed to free trade. But what we must have to survive for all manufacturing in this country is fair trade. How can U.S. moldmakers compete against such unfair trade? We can't. It's just that simple."
Bradley can be reached at 630-980-7667.