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The tool and die industry conditions in most of the developed and developing countries are surprisingly similar to those in the U.S. and Canada. At the ISTMA (International Special Tooling & Machining Association) 2005 Board Meeting, held in Melbourne, Australia this past June, each country reported the status of its market, focusing primarily on tool and die, and secondarily on precision machining.

The consistent message from almost all of the developed countries and many of the developing countries was:

• Manufacturing is not appreciated.
• A shortage of skilled workers.
• Volume had fallen off and has recovered the last one to two years.
• Profits are down.
• Competition from China.

(Separate reports from China also show some similarities, with skilled labor shortages, margin shrinkage and a need to increase prices to cover rising costs.)

As an example of the commonality of market conditions, see the report on Hungary. Except for the reference to Germany, the reported conditions are almost identical to what is being said in the U.S., even though wages in Hungary are approximately 35 percent of the U.S. level.

This pattern is positive. We know that our industry is essential and will survive and, in fact, continue to grow as the world economy grows. Almost all countries face similar problems. Since all will not collapse, there will be economic adjustments, such as in product pricing, currencies, etc., so that the industry will survive and prosper. Far better to know that we are all in the same boat than to find that the U.S. and Canada are in a uniquely difficult position.

Data
Specific reports from the represented countries in North and South America, Europe and Asia follow.

North America

USA

• Pretty busy
• Margin off
• Trend 2005 versus 2004:
  • Tool & Die +8%
  • Molds +8%
  • Special Machines +15%
  • Precision Machining +13%
  • Aerospace +14%

Tom Garcia, NTMA; Egon Jaeggin, Numerical Precision; Harry Moser, Charmilles Mikron; Ken Seilkop, A-G Tool & Die; Geoff Anderson, True North Molds Ltd.; and, Les Payne, CTMA (from left to right, back row standing) and Brian Taylor, CTMA, Honorary Member; Manfred Hoffmann, Caco Pacific Corporation; and, Horst Just, H. J. Machine & Pattern, Ltd. (sitting). Photo courtesy of ISTMA.

Canada

• 80% located in southern Ontario
• Impacted by strong Canadian dollar and globalization
• Western provinces expanding with aerospace, oil, gas and mining
• Shortage of highly skilled people
• Ontario announced corporate tax credit of $15,000 per apprentice over three years

South America

Argentina

• Busy

Europe

Germany

• Output +60% in 10 years, versus +20% for overall industry
• Last two years a total 3 to 4% decline
• Dependent on the automotive industry
• 2004 exporting to:
  • 1st Switzerland
  • 2nd USA
  • 3rd Czech Republic
  • 9th China
    

• 2004 production
1. Dies 4.2 billion Euro
2. Injection molds 1.6 billion Euro
3. Die cast dies 0.2 billion Euro

Switzerland

• Similar to Germany
• Slowdown started 1Q05
• Capacity utilization = 87.9%
• Turnover equals 459.6 million Euro
• Export ratio: 78.2%
• Exports to the U.S.: up 4.3%
• Number of companies: 510
• Margins down

Italy

• Business conditions generally rated good
• Losing business due to large companies shifting to Eastern Europe and Far East
• Keen price competition from China

Great Britain

• Output and orders slow
• Margins under pressure
• Domestic market for dies and molds equals 450 million 52.9 million export
• Insufficient number of apprentices
• Fighting for better government support

Portugal

• Mold industry margins eroding
• 11% of production is consumed domestically
• Exported 335 million Euro, up slightly
• French market up, U.S. market down from 3rd to 5th
• Competitive in niche markets for highly complex molds

France

• Mold production = 1 billion Euro
• Employees 9,000
• 1/3 Exports, 1/3 Imports
• Business better the last six months

Spain

• OEMs moving to emerging countries
• Trading companies offering tools from emerging countries
• Exports: dies off, molds steady
• Imports: dies up 69%

Finland

• Year-to-date: +20%
• Backlog: two to three months
• Russia: market strong/becoming the major trading partner
• Hard to be profitable
• Mainly selling to domestic customers
• Skilled labor available but not in the needed locations

Czech Republic

• Dependent on automotive sector
• Generally reduced interest in technical jobs. Most recently moderate improvements due to ease of finding jobs and high average earnings

Slovenia

• Sales equals 121 million Euro
• Export = 72 million Euro

Hungary

• Lack of understanding of our industry. Concerned about: tax, regulations, energy costs, etc.
• Currently healthy, but expecting slow-down due to stagnation in Germany, especially in the auto industry
• Cost going up and increasingly tough competition from China
• Companies that are busy are typically specialists/experts in the field
• Severe reduction in the number of apprentices
• Loss of skilled workers due to retirement
• Need government incentives to invest and train

Estonia

• Going quite well
• All companies rating business conditions good or at least fair
• Average order backlog 11 weeks
• Sales up 10% versus '04

Asia

Japan

• Production down over the last several years, but up 20% in the last year
• Auto and electrical up
• Expect continued improvement

Korea

• Auto industry up
• Electronics off
• Profits up

Taiwan

• 650 member companies
• #8 in the world by value
• Tool and mold production = 56 billion Taiwanese Dollars (approx. 1.8 billion US$)

India

• Tooling strong
• Auto parts export booming
• Organization of the industry 
• Captive toolrooms in larger companies 600+
• Captive toolrooms in smaller companies 6,500+
• Independent commercial toolrooms, well organized 770+
• Training/educational institutes 50+
• Strategic partnerships with European and North American companies
• Increased aeronautical industry
• 2004/05 Production

Category $BUS
Dies $2.0
Molds $2.3
Die Cast Dies $1.0
Forging Dies $0.9

Australia

• Toolmaker shortage due to fewer apprenticeships. Recruiting overseas.

Summary/Forecast

There is confidence in an eventual adjustment of currencies because analysis shows that U.S. manufacturing is a lot more competitive versus low-wage countries than are many U.S. services and software. The advantages of low-wage countries are primarily in the area of labor cost. The cost of manufactured products (e.g. molds) includes significant material and capital (e.g. machine tool cost). Material and capital costs are much more uniform around the world than are labor costs. Also, manufactured goods require duty, freight, inventory carrying costs and, often, rework costs.

In contrast, software and services are almost 100 percent labor intensive and require no costs similar to duty, freight, local rework, etc. As the impact on software and services becomes more severe than on manufacturing, the dollar will come down in value versus the low-wage countries. Our government, which is more responsive to the software and service sectors, will feel our pain more readily when it starts to feel the greater pain of these other economic sectors.

Four U.S. NTMA member companies and three Canadian CTMA member companies attended the ISTMA board meeting—some as board members; others as interested participants. U.S. and Canadian shops are encouraged to join NTMA or CTMA for both the local and technical benefits that these organizations provide and the international insight provided by ISTMA.