SOUTHFIELD, Mich.—A profit pinch point is developing for auto makers and suppliers working on new vehicle platforms: the cost of the tools to build them.
Tool makers are adding tariff costs to their prices, says Laurie Harbour, a consultant who works closely with the North American supplier and tool-and-die industries.
Harbour warns that a wave of higher-than-expected bills from tool shops soon will hit the auto industry. Tool makers are dealing with higher prices for steel as a result of a new 25 percent U.S. import tariff on the metal, as well as tariffs on specific Chinese-made automotive tooling.
Imported automotive injection molds have been hit with a tariff, and that is spinning uncertainty through the tooling industry, said Harbour, CEO of Harbour Results Inc. in Southfield.
A major shift in automotive tool manufacturing has occurred over the past two decades with China emerging as a key source for North American manufacturers.
Further complicating the outlook is how the U.S. and Canada will resolve the North American Free Trade Agreement. Some 80 percent of the auto industry's injection molds are traditionally produced in Canada—largely in Windsor. In some cases, Canadian tooling companies also now rely on Tier 2 content from China.