Some plastics processors and mold makers won't survive the coronavirus pandemic, said Laurie Harbour, a consultant in manufacturing operations and financial issues.
She also thinks toolmakers won't feel the pain immediately.
Harbour said many mold shops are running right now.
"If they were busy going into this, then they'll continue to build those tools," she said. "They're going to feel this impact six to 12 months from now. And it'll be because we delayed programs, or maybe the financial impact is so bad that we cancel programs."
Harbour said mold makers should expect to see a drop in new business.
"I think the quoting activity will slow in the back half of the year and we'll see fewer tooling opportunities," she said.
Harbour said April 1 she has talked to people at several hundred tool shops and injection molding firms in the past couple of weeks.
Automotive—a major market for tooling—already was facing a tough time as auto makers pull back on new model launches to save money for electric and self-driving vehicles. Some mold shops shut down last year, and some were gobbled up by other players.
"It already was soft, which makes this have a great impact," she said.
Her comments about the impact of the pandemic cover the entire industrial spectrum, not just automotive.
Defining 'essential'
Some molders are busy, others are not.
"It really varies what the impact is. At the molding level, I have a lot of clients that are open and deemed essential in terms of medical and in some cases automotive. It seems to be fine line on what's essential," Harbour said. "Part of it is people are helping to make necessary equipment and if they do that they've got to be deemed essential."
Manufacturers are trying to respond quickly to rapid-fire events. "It's a day-to-day, hour-by-hour kind of process for these companies. They're meeting and making decision on an hour-by-hour basis," she said.
For tool shops, Harbour said, "some shut down completely and others are still running and deemed essential." She said the Canadian government has decided that tool shops generally are essential; some are open, but some have closed, sometimes because of pressure from worried employees.
"Over here in Michigan, it's a very gray line. Technically tool shops are not essential, however, some of them are building tools for ventilators, and that's deemed them essential," she said.
The U.S. government has approved a $2 trillion stimulus bill, the largest in American history. "That is going to protect their labor, but it may not provide them with working capital, she said.
Harbour said some mold makers will close their doors.
"I believe that more than ever, because even with the government stimulus, there are some shops that went into this poorly positioned and they may not come out of it," she said. "To be honest with you, there's molders who will not come out of this, either. There are molders were not financially stable going into this crisis."
'Cash is King'
Company executives will scrutinize how much money they want to spend, Harbour said. Each situation is different.
"Cash is king. So I need working capital to re-launch my plant, buy materials, launch new products and get back to some semblance of normal," she said.
"If you're financially strong going into this crisis, then the stimulus will bridge the gap, and you'll be successful coming out of it and returning to profitability," Harbour said.
"If you were financially struggling going into it, then coming out of it—even with the stimulus—will be a challenge."
People want to work, but they can be worried about their safety from the coronavirus. Harbour said managing a company in this health crisis requires a kind touch and sincere communication.
Harbour said employees are looking for direction.
"They're watching their leaders and they're saying: 'If I'm being taken care of, then I'm OK, for the most part.' If companies are being dismissive and not taking care of them, it will instill fear in the employee base," she said.
"The ones who are going to get through this are leaders who are producing a sense of calm and that they're in it with them — they're out on the shop floor and they're in it with them," she said.