Canadian Plastics April 7, 2022
A new study from Harbour Results predicts the North American automotive tooling spend will be $7 billion in 2022, up from $5.4 billion in 2021.
The North American tooling industry rebounded in 2021, a new study says, with companies on average seeing year-over-year revenue growth, and both mold and die shops seeing utilization ranges of between 81 to 89 per cent.
And according to the results of the Q1 2022 Harbour IQ Manufacturing Pulse Study by consulting firm Harbour Results Inc. (HRI), although Q1 2022 has started out slightly slower, shops forecast utilization to reach 90 per cent (mold) and 82 per cent (die) by Q4 2022.
“However, the manufacturing industry continues to face challenges – supply chain shortages, raw material availability and costs, a talent gap and global economic uncertainty,” HRI said. According to study respondents, the higher cost of business and access to labour remain the top concerns for manufacturers. “Additionally, for the tooling industry work-on-hold is trending up in Q1 2022 and payment terms and on-time payments of accounts have dropped after a brief improvement in 2021,” HRI said. “As a result, in Q1 2022 overall sentiment has dropped for the first time since 2020.”
“Despite all the chaos in the manufacturing marketplace, we are feeling positive about the opportunities for the tool and die industry in 2022,” said Laurie Harbour, HRI president and CEO. “According to our automotive tooling launch analysis, HRI predicts the North American automotive tooling spend to be US$7 billion in 2022, up from US$5.4 billion in 2021. This increase in vehicle launches will positively impact the industry.”
The study focused on manufacturers’ performance, and last year both die and mold saw significant efficiency improvements, however average profitability only ticked up slightly from 2.9 per cent in 2020 to 3.6 per cent in 2021. This suggests that the efficiency improvements may be a result of the talent shortage, or the increased cost associated with outsourcing and overtime. Furthermore, the study indicates that shops expect to invest between 4 to 5 per cent of revenue in capital expenditures in 2022 – likely to support further efficiency improvements.
“For most shops, 2021 was a year of improvement – on average tool shops improved utilization and their financial stability,” Harbour said. “To continue improvement, it will be important for shops to focus on flexibility – collect data and intelligence and make informed decisions – to capitalize on the opportunities in 2022 while managing the challenges.”
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