The Michigan Economic Development Corporation released an important study today offering ideas for the state’s tool and die industry to restructure and redevelop to remain competitive.
Michigan leads the nation in the number of tooling firms and workers employed by this industry.
The study, conducted by the Altarum Institute’s Center for Automotive Research, was completed in response to the current issues facing the threatened industry.Problems that include 30 to 50 percent overcapacity, intense foreign competition and increasing demand for cost cutting are threatening the viability of Michigan’s tool and die firms.
“The tool and die industry is the foundation for a healthy Michigan manufacturing economy.These firms make all the dies, molds and tools for making everything from trucks, washing machines to plastic medical devices,” said Doug Rothwell, president and CEO of the Michigan Economic Development Corporation.“Our state’s tool and die industry is currently at a crossroads.To avoid further losses to foreign competitors, the industry must adapt to the changing demands of the marketplace.We believe our study offers suggestions which will allow this valuable Michigan industry to remain viable.”
The study suggests that the tool and die industry must adopt new lean practices and collaborative relationships in order to respond to the growing need of the automakers and their suppliers to cut costs.These practices have been shown to result in lower costs and improved manufacturing performance.These practices include process specialization in which each employee becomes a specialist in their job function or synchronous process flow that is used to create a production-line style manufacturing process for tool and dies.
Lean practices have already been adopted by many foreign competitors. Some competitors can make dies at up to one-third the cost and in approximately one-half the time of Michigan tool and die firms.
The study also suggests tool and die shops must learn to collaborate with one another and with their customers in order for the industry to remain competitive.Forming tool and die coalitions, for example, would allow firms to offer a broader range of services to their customers.These collaborative efforts have the potential to reduce tooling costs by up to 40 percent.
“Most shops cannot achieve 40% cost reductions by independently implementing lean systems,” said Jay Baron, the study’s author and director of Manufacturing Systems at the Center for Automotive Research.“Collaboration with other suppliers allows them to provide linked products more efficiently.Truly lean operations require a collaborative relationship so that you can “tune” your operation to your customer requirements, and help your customers avoid expensive alternatives.”
To ensure the recommendations are enacted, several action steps by the local, state and federal government are suggested in the study including:
· Funding the creation of coalitions or initial development into the structure of coalitions.
· Creating investment tax credits and faster depreciation schedules to enable tool and die firms to keep pace with changes in technology.
· Changing laws to allow coalitions to purchase group health care coverage.
· Providing more funds for education and adoption of lean manufacturing methods.
· Providing funds to support coalition cost reduction initiatives.
In 2000, Michigan’s tool and die industry employed more than 30,400 workers in 1,099 establishments.Michigan lost 6.8 percent of its employees and 7.7 percent of its establishments in the tool and die industry between 1998 and 2000.
To view the complete study, CLICK HERE.The Michigan Economic Development Corporation, a partnership between the state and local communities, promotes smart economic growth by developing strategies and providing services to create and retain good jobs and a high quality of life.
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