Laureen Belleville
Tool die and mold repair shops have been hit pretty hard economically in the past couple of years. The National Tooling & Machining Association (NTMA; www.ntma.org) estimates that some 30 percent of the country’s toolmakers have shut their doors since 2000. A declining U.S. economy coupled with a push by large international automotive and aerospace manufacturers to cut tooling costs have led to the increasing purchase of dies and molds from overseas, especially China.
In his state of the industry address at the NTMA 2004 fall conference, NTMA President Matthew Coffey reported that mold-making technology had taken the biggest hit over the previous three years. “The studies said that in 1997 the average molding company would have had a gross profit of 16 percent, and in 2001, 2002, and 2003 that gross profit margin was 1.4 percent. That tells you what is going on out there and how the pricing pressure is affecting the viability of our industry at that time.”
But the news from Coffey wasn’t all negative. He pointed out that the NTMA Forecast Report predicted that over the next year die orders will be up 10 percent and molds will be up 6 percent. ILS thinks the shops that are properly prepared-those who have seen the light (from the industrial laser, that is)-are poised to reap the benefits.
For example, Blair Learn, president of Chipsco (Meadville, PA; www.chipsco.com), tells us that business has dropped 40 percent since 2000: “Every day is a struggle to compete with China, and there will be continually less business for us,” he reports. But, despite the fact that his company already has 47 pieces of CNC equipment, it purchased a TRUMPF laser welder two years ago. “We want to be leaders in embracing technology,” he says. “Timing is everything, and in the purchase of the laser, the timing was right.”
Chipsco, a family business founded in 1980 by Learn, his father, and brother, specializes in designing and building multicavity/high-productivity plastic injection molds. Of its 60 employees, two work full time with the laser welder. The laser has definitely represented a profit center for the company and, in fact, has led to the development of the Chipsco Precision Services division. Learn says the laser has been a door opener. “Where we previously had trouble getting in the door, now companies will do business with us.”
In his experience, Learn has found that laser repair lowers costs and expands opportunity for the mold. “Laser is very successful with gates-holes for injection-which can enlarge over time and need to be repaired,” reports Learn. “The laser repair can make the mold like brand new for 10 percent of the cost.”
While Learn is frustrated with the fact that overseas companies have encroached on his livelihood, others in the business, like Accu-Mold (Portage, MI; www.accu-moldinc.com) and EIMO/Foxconn (Vicksburg, MI; www.foxconn.com) have decided that creating ties with China, for example, is an effective way to prosper.
“We’ve had a multipoint strategy to combat outsourcing of jobs overseas,” says Dave Martin, Accu-Mold owner/president. First, the company has diversified in two areas: the service business using the laser welder and the specialty mold business. Second, the company has a formal alliance with a Chinese manufacturer. With its motto of “globally sourced, locally serviced,” Martin explains that the company offers its customers the advantage of placing orders and doing design reviews here but having the part built in China. “We can give customers global cost savings and a high level of assurance that they can get what they want through our engineering design reviews. We also retain all the CAD data on the molds when we bring them in. Therefore, if they need service and repair in the future we have all the data to do that.”
While Accu-Mold offers both precision TIG welding and laser welding with a TRUMPF system, a few years ago it decided to focus on what it calls minimally invasive mold/die surgery. To explain the difference between TIG and laser welding, Martin uses the analogy of knee surgery. “Years ago, when they operated on your knee it would take a year to recuperate; today arthroscopic surgery requires a few days of recuperation,” he explains. “It’s the same thing in repair of molds-if you TIG weld it, it typically does a lot more structural damage. The laser is minimally invasive-about 80 percent of the issues with precision TIG welding are eliminated with the laser because of the low heat invasion.” The result is that molds can be turned around pretty quickly.
What’s more, the laser enables the company to weld on textured material structures and lens or diamond polished surfaces, without residual heat sink marks. Martin also points out that the laser can do a very deep rib whereas the TIG method requires “hogging” material away in order to get to the area to weld. This points to the fact that TIG welding requires a higher operator skill level than laser welding. “The advantage of TIG is that it has a very low entry cost. The disadvantage is that you usually have to have a very highly skilled person for it,” says Martin. “The laser requires a lot less skill but a lot more capital investment.”
Accu-Mold considers itself a local pioneer in laser welding for mold/die repair, having purchased its TRUMPF PowerWeld a year and a half ago. “As part of my strategic planning, I started investigating the laser because nobody had one around here and I knew there was a lot of demand,” relates Martin. Not only did the company expect to be the first, but also it wanted to be the best. So, in addition to purchasing new equipment, the company hired a mold maker who also has a four-year college degree in welding. “The difference in our people,” explains Martin, “is that they are mold makers that are welders.”
The good news for Accu-Mold is that business has picked up. “We’re still getting the word out,” says Martin. “But virtually every customer that comes in here and sees the laser has the same reaction: ‘Wow, I wish I could have had this before.’” Furthermore, the company has been able to expand beyond mold and die repair to processing medical instruments with the laser welder, an area where Martin sees possibilities for growth.
Medical tooling is also an application that FoxConn, a builder of plastic injection molds, is looking at to widen its customer base. The $8-$10 million/year, 60-man shop’s core customer is the telecommunications industry. Although the company has produced a significant amount of cellular injection tools for cell phones for companies such as Nokia, Sony, Ericsson, and Motorola, Jim Williams, the company’s tool shop supervisor, reports that much of that work is going overseas. “China is going after the high-volume work-like what you see in telecommunications,” he says. “We’re doing a lot of internal changes, like adding to our sales force and coming up with a new strategy, to try to capture more medical tooling. Like any other injection mold builder, it’s hard to compete with China.”
The company was founded in 1969 and in 1975 it created a tool shop known as Triple S Plastics. The company has been sold twice: first to Eimo Americas, which is a European company, and in the past year and a half to FoxConn, which is a Chinese company that has plants in the U.S. “We do 99 percent of our tooling for EimoFoxConn,” says Williams. “But we also do engineering changes, and that’s where the laser welding really comes into play.”
Because of the skill level required for TIG welding, Williams says the company previously did very little welding in-house. When researching laser welding equipment, the company prepared a cost analysis, which revealed an initial expenditure of approximately $90,000 for a laser. This figure was compared to an annual expenditure of between $45,000 and $55,000 in welding using an outside local welder. “We decided that if we were to do 70 percent of our welding in-house, it would only be about a three-year payback for this piece of equipment,” says Williams. “Our cost analysis included just base cost for TIG welding on the outside. You have to factor in that it was taking at least a day or two to have the product welded on the outside because of their current backlog. With our own laser, we’re able to weld the piece right away and get it back into the machining aspect-saving time and money.”
As it turns out, since the company purchased its PowerWeld it now actually keeps about 90 percent of it’s welding in-house and outsources about 10 percent-those jobs that require more weld than the laser can provide. What’s more, the company, which now has a full-time employee dedicated to the laser welder, is able to take in work from the outside, thanks to the flexibility of the laser system.
While neither FoxConn nor Accu-Mold have near-term plans to purchase additional systems, Chipsco is considering buying another laser. “If you’re not changing, you’re moving backwards,” Learn says. Interestingly, Williams at FoxConn reports that since his company purchased its laser welder, two other companies in the Kalamazoo, MI, area have also purchased laser welding equipment based on what they saw happening at FoxConn. Part of the appeal, Williams believes, is the simplicity of the system. “I feel that I could take any good toolmaker and, within one day’s time, he would be a very proficient laser welder.”
The author would like to thank Steve Roy, product manager at TRUMPF, Plymouth, MI, for supplying the customer contacts.
Strength in numbers
Ten of Michigan’s premier tooling shops have formed the United Tooling Coalition (UTC) to help build a collaborative business model that would be more competitive in global markets. The shops have extensive capabilities for engineering, prototype, tooling construction, and tryout for a full range of progressive dies and molds. The UTC was formed as part of a year-long pilot project funded in part by the Michigan Economic Development Corporation.
Dr. Jay Baron from the Center for Automotive Research (CAR) facilitates the collaboration and helps provide a conduit to major customer contacts and possible collaboration partners. In addition to state support, the UTC companies have contributed funds that are being applied to the assessment and implementation of lean manufacturing concepts.
Michelle Cleveland, from the Right Place Program, who helped conceive the project, comments, “We see the collaborative business model as a means of securing significant tooling contracts and building strength within our tooling companies to help head off further job losses.”
The UTC explains that tools that are individually sourced might still be subject to competitive bids, where coalition members are competing with each other. The collaborative approach realizes the greatest benefits when a collection of inter-related components are sourced as a single order. In this situation, when just one coalition member can’t handle the whole order, the greatest synergies of the coalition can be brought to bear.
The UTC includes the following companies: Accu-Mold, Autodie International, Enterprise Tool and Die, Lansing Tool and Engineering, Master Precision Molds, Northland Tool, Northwest Tool and Die, Paragon Die and Engineering, Precise Engineering, Richard Tool and Die, and Schmald Tool and Die.
For more information, visit www.toolingcoaltion.com.