The automotive tool industry faces a shakeout as automakers confront the need to simplify manufacturing and cut costs, an industry consultant said.
“We are going to lose a lot of our manufacturing base,” Laurie Harbour, president and CEO of Harbour Results Inc., said in a presentation this week. “We could lose 30 percent” of the automotive tool making base.
The consulting firm estimates that 30 percent of auto tool makers are doing well, 30 percent are in trouble and 40 percent are “on the bubble.”
Toolmakers make dies and molds and other parts used to produce cars and trucks. Until now, such companies have benefited from how automakers have added new car and truck models and variations of models.
Automakers are under pressure to invest in new electric and self-driving vehicles. To do that, Harbour said automakers are going to need to pare their lineups to concentrate on profitable cars and trucks.
Habour Results estimates only 6.3 percent of General Motors Co.’s fleet and 9.4 percent of Ford Motor Co.’s fleet actually make money. The companies rely heavily on large pickups for profit.
“OEMs have to decide ‘which vehicles can I afford?’” Harbour said. “’Which ones make me money? Which ones generate cash for my future investment?’”
That means automakers will require fewer tools as the number of models decline and the variations of those models get reduced.
“OEMs have some very hard decisions to make,” Harbour said.
Also, she said, electric-car makers such as Telsa Inc. have fewer design updates and use “very simple tools” for production.
The pressures on tool makers were occurring before the novel coronavirus (COVID-19), the consultant said.
“The COVID crisis has moved that timeline forward,” she added. “It’s an unfortunate forecast.”
Some auto tooling operations may move from China to other markets, Harbour said during a question-and-answer session. Under President Donald Trump, the U.S. levied tariffs against Chinese goods. Tariffs typically get passed onto customers and are not payments from one government to another.
“We’re definitely seeing a move of tools back here in North America,” Harbour said. “The challenge is coming here at China prices…My fear is it’s short-lived.”
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October 15, 2020 at 08:17PM
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Automotive Tool Industry Faces Shakeout - Advanced Manufacturing
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