The US auto industry has officially put the agony of the late 2000s in the rearview mirror — US light vehicle sales were up more than 8 percent in the first nine months of 2013 compared to 2012, according to Autodata. However, industry watchers are pointing to a quiet but essential niche in the automotive supply chain that some see as a ticking time bomb.
Tool and die shops make the tools that stamp sheet metal and form plastics for many of the components in our cars. The problem is that the number of US tool and die shops is dwindling, and many of those that remain are located in the wrong region, and many have trouble replacing older workers. The number of tool and die shops in the US has fallen by 20 percent in the last 8 years, according to the US Bureau of Labor Statistics. With new-car sales on the upswing, auto industry insiders are starting to think the state of affairs within the US tool and die industry could create an automobile production bottleneck in the near future. An inadequate supply of tool and die shops could mean reduced vehicle quality, higher prices, production stalls, and delayed vehicle launches. Yikes. The really scary thing is that the problem has proven vexingly difficult to fix. At issue is the cottage-industry nature of the tool and die game. Many tool and die shops are family-owned mom-and-pop operations.
The industry is also heavily concentrated in the Detroit/Windsor, Ontario area. As more US vehicle assembly operations have shifted south, the tool and die shops have not. Foreign auto manufacturers largely selected the southern US when they set up shop. Few tool and die shops existed there to support their tooling needs. And very few of the established shops in Detroit migrated with the work or took the financial risk to set up branch offices. So what’s the big deal? Why can’t a Detroit-area die shop truck tooling to a Nissan plant in Tennessee? It can. But when tooling breaks and a production line has to shut down until it can be fixed or replaced, the distance between Tennessee and Detroit is a painful one.
Efforts to lure tool and die shops to the South have been largely unsuccessful, as have efforts to lure young people to careers in the industry. It takes years to acquire the necessary skills to craft automotive tooling, and few with those skills are eager to uproot their families and move them from suburban Detroit to Smyrna, Tennessee. It can cost $10 million to start up a tool shop from scratch, which discourages many Detroit-area shops from expanding to serve assembly operations in the South. However, opportunity exists for tooling firms that are willing to weather the risks and invest in new tooling shops that are closer to customers, and invest in training the workers to run them. Industry insiders agree that will take a lot of time. The key question is, can the tool and die industry evolve to meet the needs of a changing industry before time runs out and the bottlenecks begin?
