Mold shop executives agree that life has improved in their industry.

• China is probably not the challenge and fear it once was.

• Narrow, deep niches are the ticket to mold shop vitality.

• Product delivery is 30-60% faster than just five years ago.

• Early 2000 recession survivors are aggressive, flexible, creative and hard working.

By Joe Romanowski
Chairman & CEO
Machinery Systems, Inc.
Schaumburg, IL

There’s no debate.  No U.S. manufacturing segment suffered more in the early 2000 severe manufacturing recession than the mold industry.  Today there is probably less mold work available, but the mold maker supplier base is smaller too.  Work is available.

While not everyone agrees that the mold industry is in full recovery, everyone does agree that the climate is better.  We saw a significant part of our mold maker customer base disintegrate in the early 2000s as manufacturers and OEMs rushed to take their work overseas, especially to China.  To recall the once presidential candidate Ross Perot’s campaign slogan, there was a “giant sucking sound” in the mold industry.

Recently, however, we have felt a resurgence.  Mold shops have been showing up on our Mazak project lists in an increasing number.  We started to receive machine tool orders from mold shops about 12 months ago.  This new activity peaked my interest.  I decided to find out what was going on.

According to Dave Malo, President & Owner of Acomtech Mold in Elgin, IL, business has “definitely improved.”  Dave explained that China quality just isn’t there and there are many hidden costs with doing work overseas.  Certainly, there’s fewer mold makers since the early 2000s, so there is less competition for the work.

Dave’s strategy is very interesting.  Ninety percent of all the work he does is for companies within 20 miles and forty minutes of his business location.  Dave said, “I have a personal and deep relationship with all of our customers; more than half of them know my guys by name.  If they have a problem or a question, they can either call or drive over and talk directly to my guys.”  Dave continued, “It would take them longer to get to O’Hare (airport) than to get to my shop.  I’m convenient and easy to deal with.”  Dave went on, “I deliver very fast.  What took 12 weeks to manufacture and ship in 2002, we now do in 8 weeks.”

I asked Dave how he was able to survive the great recession.  Dave said, “Our philosophy is to be frugal and flexible -- I do almost everything.  I have 12 guys working for me with another 10 guys on the outside doing local subcontract work.  If times get tough, I don’t have to use the outside guys.  I keep my core staff intact.  I have the right people and good equipment, plus, I’m loyal to my guys and customers and they’re loyal to me.”

Andy Mendala, owner of A&C Mold in St. Charles, IL, still feels that there is chaos in the U.S. mold industry, particularly in the automotive sector. He’s not worried about China, though, because “they make pretty bad tools and their costs are rising.”  He noted that his customers are not happy with China tools.  He acknowledges that high tech, high speed machinery has helped him a lot.  While he acknowledges losing money in the early 2000s, he feels good about being a survivor.

Ron Gawlik, President of 3D Pros, Inc., in Schaumburg, IL, confidently states that he did not experience a recession during the early 2000s.  He explained, “Our company specializes in graphite electrodes and hard steel machining.”  Ron stated, “We are experts.  My guys spend ten hours a day designing and machining electrodes.  They are the best!”

Ron said he could see things changing in their industry and sat down and strategized with his son on how to be the best in the graphite business: to become specialists and deliver in days.  Ron continued, “Our goal is to make it cheaper, faster and better quality.”

Mike Shambo, owner of Precision Turning in Huntley, IL, stays competitive by keeping his overhead very low.   Mike said, “I manage to do that because I do much of the work.  For a rush job that has to be delivered fast, I’m the one that’s working nights and weekends and I don’t charge overtime for my time.”  I asked Mike, another survivor of the early 2000 recession, how he was able to do it.  Mike quickly answered, “I stayed away from debt.”

Dan Lamz, President of Illinois Pro Turn in McHenry, IL, is an interesting story because he started his business in the depths of the 2000 recession.  He feels that many mold shops are still struggling and that there is still work going overseas.  He enthusiastically explained, “I feel we do things differently.  We charge 30-40% less than my competition and we still manage to earn a profit.  We deliver in 4 weeks versus a competitor who might take 12.”  Dan believes their “secret” is hard turning.  Dan said, “I believe that we’re better than almost everyone at hard turning.  We just did an 80 piece job and held +.0002/-0 at two different points and charged the customer only $5.06 per piece.  If the customer would have had that part ground, it would have cost him three times that, and we delivered it in days.”  Dan went on to say, “I definitely wouldn’t be where I am today without my great employees.”

Mike Meyer, President of Journeyman Tool in South Bend, IN, believes that bad China molds are driving the industry resurgence.  His focus is to stay lean and watch his costs.  As Mike explained, “In the early 2000s, we could take 10-12 weeks to deliver a job.  Today, we deliver that same job in 6-8 weeks.  There’s little or no backlog because the work turns so fast.  I’ve also invested a lot of money back into my company.”

Paul Stoll, President of Armin Tool & Manufacturing in South Elgin, IL, believes that things are getting better for their industry.  Paul’s company is almost 60 years old, so he’s experienced many industry cycles.  He believes a significant part of the resurgence is that many mold shops are gone.  Although he does believe that China tools can be problematic, he sees mold materials as a significant issue.  It is difficult to prevent independent Chinese mold makers from unilaterally changing the specifications of mold materials.  They can’t always be trusted to use the specified material.  When they do use the right material, the China cost advantage falls off quite a bit.

Paul explained, “We have very good resources.  Our people are talented and experienced.  Our customers have confidence that whoever they talk to in our organization, they will get the same answers from everyone.  We always do what we say.”

I asked Sergio Cescolini, President & owner of Dice Mold in Itasca, IL, if they felt things were improving.  Sergio stated, “Yes, they are.”  Sergio adapted a special strategy to make sure his company would survive and prosper in the changing mold industry.  Sergio said, “Ninety-eight percent of all credit cards in the world are blanked in our dies, as well as most luggage and plastic tags.”

Sergio is so focused on molds that produce tags that he confidently stated, “We are the largest consumer of hardened metal in the U.S.  We have material precut in stock so that we can deliver everything within two days.  Also, we have a 24 hour service for re-sharpening our dies.”  Sergio told me a story of a customer from Midland, TX, who recently sent his die to Sergio to be re-sharpened.  Sergio explained, “The sharpening charge was $800 and the customer spent $450 in shipping costs.  Why do you think he did that?”  Sergio answered his own question, “Because he knew we would turn it around within 24 hours and it would be right.”

Dave Long, owner of Pro-Mold & Die in Roselle, lL, has focused his mold business on automation and lights out machining.  Dave’s business makes plastic molds for the automotive industry and, more specifically, automotive lighting.  Dave said, “We make it very easy for our customers to deal with us.  We work hard to develop relationships because we know it’s harder to lose business when you have a strong relationship.  Five years ago what would take us 12-14 weeks, we now deliver in 6 weeks.”

Dave continued, “Canada used to be a big competitor of ours.  In the early 2000s, the Canadian dollar was worth about sixty five cents.  Our customers could go just over the border to Windsor, Canada, and get their work done.”  I asked Dave how he was able to survive that period.  Dave said, “I competed for and took that business at Canadian prices, which I knew I couldn’t afford.  I then designed the mold in seventy to eighty components and sent whatever components I could overseas.  Today, the Canadian dollar is worth $1.08.  We can compete with this.”

In a related matter, in spite of housing and automotive economic sectors being down and other negative economic media news, we see a very healthy U.S. machining environment.  General purpose job shops, in particular, are strong and looking to a solid 2008 with confidence.

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