The talk of the industry these days is the downturn in the economy - with the general consensus being that moldmakers are either too busy or don't have any work. There is no happy medium. With that in mind, Scott Wahl had a brilliant idea to form his own company - Stillwater, MN-based Midwest Mold Builders (MMB) - that would, in effect, broker molds to large molders and OEMs on a strictly commission basis by working with a specific group of moldmakers.
"Selling molds in this way has two distinct advantages," Wahl explains. "In today's economy there is no room for additional mark-ups in tooling. Working on a commission basis is the only answer for us because we have a much higher capture rate. If we were marking up the molds and reselling them (brokering) we would have a very low capture rate. Secondly, customers feel much more comfortable working with us when they know that we do not mark-up the tooling, and the money transfers are handled directly with the shops."
In the Beginning
According to Wahl, the development of MMB unofficially began more than 10 years ago when he was employed by various molders and finally at the helm of his former company - Global Tool & Engineering. "I have contracted these very same members of our group to build molds for me throughout the years - through other companies and Global Tool," he recalls. "The idea came to me about two years ago while still at Global. Many large molders and OEMs were forced to use us due to our rapid turnaround and quality of plastic injection molds and short-run molding, and we simply contracted the tooling to these outside mold builders. We were in effect brokering these molds."
After the sale of Global Tool, Wahl formed MMB last March. He then employed a full-time engineer so that the two could work together on each project. Wahl explains, "When a customer comes to us with a single mold or a package of molds, we review it and decide which shops should quote it based on our 10 years of experience with them, current shop loads, and whatever specialty the molds may require. Each shop has a niche of some sort, so almost every mold - or even customer - is a good fit for someone in the group. We'll have the shops submit the quotes directly to our customers, and we help see the project through from the beginning stages to the sampling and final shipment of the mold.
"What we have found to work well so far is the larger tooling packages," he continues. "We can easily take on a large tooling package as if we were one single shop. We simply meet with the customer, the chosen shop owners and the designers to coordinate the design and build of the molds. The molds are then built in different locations, but built as if by one shop. All are sampled, debugged and approved prior to shipping. And, since all of the shops are located close to our headquarters, customers can tour all of the shops in the course of two days. Engineers need only make one trip to this area to view a project, rather than travel all across the U.S. to single large shops."
Currently the MMB has 17 members and Wahl plans to add three to five more shops - depending on his customers' needs. "Although we have had countless offers from other shops that want to be members, we have to be very selective about who we add," he explains. "We need to have an intimate knowledge of potential shops' experience for the system to work well."
Proof of the system working well is the organization's survival in light of the current economic climate. Wahl feels that the combined resources of the organization allows it to offer many advantages that a single shop cannot - such as consistent speed and the capacity to take on large tooling projects.
Advantages of belonging to MMB extend beyond mold building. "Since we represent more than 35 million dollars in annual sales, it becomes advantageous for us to seek volume discounts," Wahl says. "In return for a discount on mold materials from a vendor, that vendor becomes our preferred supplier - we use its product wherever possible instead of its competitors'. We are in the process of setting this up and have had a great response so far from several major suppliers."
Additionally, once the member companies got acquainted through MMB monthly meetings, they found out that they could use each other's resources instead of contracting work to outside vendors. "In one case, Tolerance Tool (North St. Paul, MN) needed dozens of inserts turned - requiring the use of a CNC lathe," Wahl notes. "Normally they would have contracted the job to an outside vendor. But, during one of our meetings, they found out that Lindor Tool (St. Croix Falls, WI) had a CNC lathe, and thus contracted the job to them."
Since then, the members regularly job out wire EDM, mold base construction, jig grinding and other services among each other rather than outside companies. "By the end of the year, a substantial amount of money can be kept within our group," Wahl points out. "In the case where a shop has the opportunity to do a mold package - outside of my sales scope - and they can't handle all of the molds, they simply direct the customer to another shop within our group with no division of monies. They simply expect the shop that they recomend to return the favor someday."
Tolerance Tool president Rich White also notes that belonging to MMB affords his company the opportunity to have a salesperson on staff. It would not be cost-effective for this 13-employee, plastic injection tooling manufacturer for the automotive, computer and medical industries to have a salesperson to fly to trade shows and generate leads, White says. "We just picked up our first mold from a customer we actually targeted approximately a year earlier who went with someone else," he recalls. "But, with Scott targeting them and subsequently recommending us, they liked the entire concept of MMB and went with us.
"We are excited because we could never solicit these types of customers on our own - we're just too small," White continues. "As a group, we are generating more activity. Of course, the whole industry is down - it's very tough right now, and everyone is looking at the bottom dollar. This is helping us out even more because we can be more competitive. Plus, with the volume shipping discounts Scott has set up, we can build and ship our molds across the country for less money, and pass those savings onto our customers, which makes us look even more attractive."
In agreement is MMB member Kent Smith, president of Diamond Tool & Engineering (Bertha, MN) - a precision plastic injection moldmaker for the electronic, computer, automotive and medical industries. "It's hard for small- to mid-sized shops to come together - we're all fairly independent - and this is a good way of working together to everyone's benefit," he states. "It's been great to be part of a group of tool shops that can take on large projects and be able to deliver high quality molds to our customer base and perhaps serve as an alternative to outsourcing overseas.
"Right now I'm very satisfied with the work that has come through the shop by being a part of MMB," Smith continues. "Of course, I'd like to see more, but with the current economic times, I think that we are doing really well at this point. I believe that when the mold building industry picks up, it will be even better."
As for MMB's future, Wahl would like to expose it to larger molders and OEMs. "I don't believe that the shop owners even realize the quality and speed that they produce in comparison to the other areas of the U.S.," he comments. "In my beginning years in plastics, I had molds built in many areas of the country, but always had to return to the Midwest to get the speed and quality combination we needed."
Wahl also would like to add sales reps for the Western, Southern and Southeast regions - further strengthening the company and securing its future. He'd like to repeat his success with Global Tool. "We experienced rapid growth at Global Tool & Engineering and we outsourced more than five million dollars in tooling in our third year directly to the members in this group. The company was successfully sold in 1999 after only our fourth year in business, with record sales of more than nine million dollars. This was a direct result of the speed and quality of the mold builders within our group."