Will Growth In North American Auto Production Die Out From Lack of Tooling, Machinists?

According to a new study by the Harbour Results consulting firm, within the next five years, the North American machine tool and machining industries will fall 40% short of the capacity needed for the automobile industry to keep production up. North American toolmakers currently have the capacity for about $9.3 billion in business.

 

Should U.S. vehicle sales again approach the annual record of 17.4 million units, they'd have to ramp that up to about $15.2 billion to keep up with automakers' needs. The shortfall of toolmaking capacity is exacerbated by car companies ramping up the release of new models. A new car or light truck can require as many as 3,000 new tools. Next year, automakers are introducing 42 new models and 112 more by 2018. Cars are getting more complicated as well. A car model might have three possible fascias, depending on trim level. Each of those fascias might need as many as 35 different tooled parts. That means hundreds of thousands of new tools must be fabricated over the next five years and the U.S. and Canadian tool industry has shrunk so much that it simply cannot meet demand.

"Are we going to have the right capacity in place to support the record number of vehicle programs coming into the market?" Dave Andrea, senior vice president with the Original Equipment Suppliers Association trade group said. "The auto industry is trying to put so much through its current capacity that there's no room for error."

Global supply chains can be a problem, as seen following the 2011 earthquake and tsunami in Japan which crippled an electronic chip maker and the 2012 explosion and fire at a German factory that made a precursor chemical for an automotive coating. However, automakers with component and assembly facilities in North America face the additional issue of not being able to get the machine tools they need to make cars.

There are currently only about 750 tool shops in the U.S. and Canada capable of making the machine tools the auto industry needs. Most are located in the U.S. midwest and in southern Ontario. Before economic stagnation in the auto industry starting in the late 1990s and then the global recession, there were a third more tool shops. Not only are there fewer tool shops, the average age of the workers there is 52 years old. Training a skilled toolmaker takes about five years. More toolmakers will be retiring in the near future than will be trained in American and Canadian vocational schools.

Another factor is competition from Chinese shops, which compete on price. So far, though, automakers operating in North America haven't used Chinese vendors for complex tools, preferring to have them made in the U.S. and Canada. Likewise, Mexican tool shops are only entrusted by those automakers with maintaining and repairing tools, so for the time being, tool shops in the U.S. and Canada. Actually, as demand for machine tools goes up in North America, Harbour Results says that toolmakers based in China and Germany are looking to buy or set up operations in this region.

from The Truth About Cars http://www.thetruthaboutcars.com

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