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March 05, 2018 01:00 AM

Automotive tooling demand to reach record heights

Bill Bregar
Plastics News
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    GRAND RAPIDS, Mich.—The automotive sector will spend $11 billion on tooling in North America this year, as auto makers plan lots of vehicle launches over the next few years, consultant Laurie Harbour told the American Mold Builders Association.

    Harbour said that 2018 will see "the largest tooling demand ever in the history of the automotive industry."

    Harbour, president and CEO of Harbour Results Inc. in Southfield, Mich., presented her bullish outlook at the mold builders' annual conference, held in Grand Rapids.

    She said that, over the last 12 months, builders of both molds and dies have experienced relatively strong build volumes. Capacity utilization for mold builders should reach 84 percent this year, she said.

    "Right now, you see demand is extremely high. Demand is super high from a capacity standpoint for many of these companies," Harbour said. That will lead to increased levels of outsourced work to other mold shops, she added.

    Automotive is a critical sector for tooling. Eighty percent of toolmakers in North America serve automotive, Harbour said. The sector impacts nonautomotive suppliers as well since automotive toolmakers shift to other markets when the vehicle market declines.

    But the strong mold market is broader than just automotive, Harbour said. Economic indicators are showing strong consumer confidence and spending. Home sales are up, and the Purchasing Managers' Index is at a high level.

    "New orders are up and we're seeing a lot of production at higher and higher levels," she said. "Production is up in the U.S. manufacturing industry."

    Harbour said that after the record-setting tooling year of 2018, the auto market will soften a bit and then level off.

    "By 2022, there's fewer vehicles launches. The industry's going to take a little bit of a breath. And I don't mean to say it's going to go in the tank by any means," she said. "It's going to take a breath, and then that next 10 years of tool launches, it's going to be new products on the road. It's going to be electric vehicles, new technology, new processing."

    Until the next wave of car technology comes out, Harbour said, demand for automotive molds will go back to the levels of 2012, 2013 and 2014.

    Harbour touched on NAFTA, which has injected uncertainty into the economic outlook.

    "They're well through the sixth round of negotiations, and I can tell you it is not going well," she said.

    Officials at smaller mold shops often think the free-trade pact negotiations won't impact them, she said, but that's a mistake.

    "It's really important to watch what happens with this and understand your customer base, because although it appears like if won't affect us, it will have a broader scope of impact if it falls apart," Harbour said.

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