U.S. mold shops face stiff overseas competition
By Jianfeng Pei -- Purchasing, 10/5/2000 2:00:00 AM
U.S. mold makers are having a tough time this year as many OEMs are buying molds from overseas. To compete with foreign manufacturers, domestic mold shops are trying to improve quality and reduce leadtimes.
"The mold market is like a roller coaster," says Clare Goldsberry, marketing consultant for the moldmaking and molding industry. "One year the demand is so strong that manufacturers have to refuse orders, and the next year the market will go way down."
Last year was a very good year for mold makers, but the situation is quite different this year. "Demand from the automobile industry, the biggest customer of the moldmaking industry, is declining," says Goldsberry. "Orders from computer and business equipment industry and medical industry are also down this year."
Olav Bradley, president of the American Mold Builders Association, expects the market to improve a little bit in the second half of the year, but not much. "For U.S. mold makers, the demand is down 25% to 30% this year because many of the orders are given to overseas manufacturers," he says.
The biggest advantage of imported molds is the price. Compared with U.S.-made molds, imported products from Asia and other countries are much cheaper. "Their prices are often only half of U.S.-made molds," says Kevin Maziarz, sales manager, Sipco Inc., based in Meadville, Pa. "It is impossible for U.S. mold makers to compete in price with overseas manufacturers."
Labor costs account for about 60% to 70% of total mold costs. U.S. labor is much more expensive than that in developing countries. To make things worse, with the nation's unemployment rate at nearly record low levels, many mold makers are complaining that it is difficult to find skilled employees.
During the past few years, mold prices have been declining because of overseas competition. "Prices are expected to remain stable or go down a little bit this year," says Bradley.
In a bid to compete with overseas manufacturers, U.S. mold makers are making efforts to improve quality and reduce leadtimes.
Many mold makers have adopted high-speed machining and computer-aided design equipment. These new technologies help U.S. mold makers improve efficiency and cut costs.
During the past three years, U.S. mold makers have reduced their leadtimes by 30%-40%, says Goldsberry.
The average leadtimes at U.S. mold shops are about four to six weeks. "Leadtimes of overseas manufacturers are at least 50% longer," says Maziarz of Sipco.
Not just prices
"When buying a mold, customers should not look only at the price of the mold," says Goldsberry. "They should take into account the total procurement costs."
OEMs often need to work closely with mold makers and monitor the mold-building process. When a mold is finished, it needs several tryouts and changes. If a mold is made overseas, it will involve frequent travel by both buyers and suppliers.
"When buyers take into account all these procurement costs, a mold built overseas is often more expensive than a locally made mold," says Goldsberry.
Bradley advises mold buyers to pay attention to the real value of using a mold. "U.S.-made molds have far greater value than imported molds," he says. "The value is not the initial cost of buying a mold. U.S.-made molds offer more value because they last longer, produce more products and require less maintenance."
E-commerce is getting popular in many industries, but not to mold makers and buyers. "Mold is not the type of product for online purchasing," says Goldsberry.
Moldmaking is a very detail-oriented process. OEMs prefer to know the mold maker and work closely with the mold maker to get the kind of mold they need. It is very rare for OEMs to give their orders to mold makers that they are not familiar with.
For more information, see "Purchasing Injection Molds: A Buyer's Guide" by Clare Goldsberry. Order by calling (303) 321-2322.
Market at a glance
Demand: Expected to decline 25% to 30% this year for U.S. mold makers. Many OEMs give their orders to overseas manufacturers.
Supply: Not a big issue. Many mold shops are complaining about the labor shortage.
Prices: Remaining stable or going down a little bit.
Leadtimes: Average four to six weeks for U.S. mold makers. Leadtimes are about 50% longer for imported molds.
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