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Jeff Rowe
Jeff Rowe
Jeffrey Rowe has over 35 years of experience in all aspects of industrial design and engineering. On the publishing side, he has written well over 1,000 articles for CG, CAD, and other technical publications, as well as consulting in many capacities in the design community. As editor of ShareCG, … More »

Tool Maker Survival – Part 2

 
March 14th, 2012 by Jeff Rowe

It’s no secret that many tool makers have experienced and are still experiencing difficult times.

By necessity, the tooling industry is transforming from its roots as a craft to a future as a complex business. For this transformation to be successful, the tooling industry as a whole must realize that it is not just undergoing a temporary downturn in business, but a radical restructuring. This restructuring is evident in not only mergers and acquisitions (consolidation), but also in cooperative and collaborative practices taking place between small- and medium-sized tool shops. Additionally, new business models are being developed by innovative toolmakers for supporting their ability to compete today and tomorrow with just about anyone, regardless of geographic location.

Restructuring an industry, however, is an extremely tall order because it involves cultural change as much as it does developing new business models. One of the toughest cultural aspects that must be recognized and addressed is the fact that although tool making historically has been regarded as a craft requiring high degrees of skill, unfortunately, it is increasingly becoming regarded as a commodity.

What, a commodity with no real distinguishing characteristics?

To a certain extent, yes, (although there are notable exceptions) because what was done by hand and eye by a select number of tool shops can now be performed by just about any shop anywhere, due to technologies (3D solid modeling, rapid tooling and manufacturing processes, high-speed machining (HSM), etc.) available to just about anybody who chooses to employ them. There is a remedy to this commodity perception; however, by seeking out niches and having outstanding product, material, process and customer knowledge, and many North American tool shops are embracing these practices.

Like virtually all other aspects of manufacturing, integrating technologies in tool making assist in becoming more competitive, but in the end, it is the creativity and adaptivity of people (both on the production floor and in the management office) to an ever changing business climate, in concert with appropriate technologies, that will ultimately win the battle and more business.

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2 Responses to “Tool Maker Survival – Part 2”

  1. Robert Burke says:

    I have done 6 months of research and it very apparent there is a big move to re-shore production and it has grown increasingly popular in the U.S and Canada. over the last few years in the face of higher transportation and fuel costs, higher wage rates and large reject rates in developing countries.

    Robert

  2. Robert Burke says:

    When other North American manufacturers started moving their operations to other countries like China, Mexico, Brazil and India, Mr. Datta wasn’t tempted to follow them.

    Although his input unit labour cost of 18 per cent of total cost was much higher than it would be in China, for example, he believed that low offshore wages were a temporary phenomenon.

    “I’ve always thought that, as the Chinese economy grows, Chinese employers will have to provide better compensation for their workers – better wages, better housing, and a better quality of life,” he says.

    He sees now that his prediction was accurate.

    “Their labour costs have increased to the extent that they’re within 10 per cent of ours. When you add that to the high cost of transporting your goods from Asia, in our industry, there is little or no cost benefit to manufacturing offshore.”

    He points out that he had the luxury of not responding to economic temptations that he believed would be short-lived.

    “We’re fortunate in that we are a private family business and don’t have outside shareholders who worry mostly about short-term profitability,” he says.

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