Study Says Auto Industry Will Face Future Tooling Capacity Constraint

The automotive industry can expect vendor tooling capacity to be constrained over the next five years.

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The automotive industry can expect vendor tooling capacity to be constrained over the next five years. By 2018, the required capacity of the vendor tooling industry will reach $15.2 billion, with available current supply of only $9.25 billion, according to the 2013 Vendor Tooling Study released by Harbour Results Inc.

Such tooling purchased by original equipment manufacturers to be run in Tier 1 or Tier 2 facilities is a crucial part of the automotive industry and the vehicle development process, accounting for an average of $550 per vehicle in North America in 2012, so this capacity issue affects the entire value stream, from the tooling suppliers to Tier 1 suppliers to OEMs, Harbour Results says.

The study was conducted in partnership with the Original Equipment Suppliers Association (OESA) and with support from LMC Automotive and Clinton Aluminum. It includes data from 10 OEMs, nearly 50 major Tier 1 suppliers and more than 50 global tooling suppliers, and identifies several factors that are expected to contribute to the increased tooling demand. These factors include mass customization, increased complexity, Europe and Asian OEM tool localization to North America, increased vehicle content, labor shortage and increased price pressure.

To reduce the capacity discrepancy, the study suggests early collaboration, focus on cost (as opposed to price) and management of the entire value stream.

According to Harbour, the industry would see a 10 to 20 percent reduction in absolute tool costs if there were more collaboration among OEMs, and Tier 1 and tooling suppliers as early as 36 months before vehicle launch. Increased collaboration can lead to improved manufacturing feasibility, increased input on part design, improved understanding of supplier capabilities and more.

In addition, the industry today is focused on the increased price pressures and the price of tools, rather than on the cost created throughout the entire tooling value stream. OEMs are using a number of different tactics to lower the price of tools and services, including adjustment of payment terms and low-cost country sourcing.

The study suggests that OEMs and Tier 1 and tooling suppliers need to analyze the entire value stream to identify key areas of improvement. A majority of the costs associated with the vendor tooling value stream are a result of process wastes and, when improved, can make a considerable difference on the overall cost of the industry, Harbour Results says.

For the full study or more information, contact Harbour Results at or 248-629-9331.