By on November 13, 2013

Bottlenecks are bad things to experience. Around 70,000 years ago, the Toba supervolcano eruption reduced humanity to anywhere from 1,000 to 10,000 breeding pairs — thus creating a genetic bottleneck — alongside a global cooling event concurrent with the Last Glacial Period.

For automakers in the United States and their North American supply chain, their Toba event is coming.

A study from Detroit consulting firm Harbour Results, Inc. warns that in five years’ time, the North American auto industry will experience a 40 percent bottleneck in their ability to screw together the cars and trucks we so love, due to falling short $6 billion in tooling capacity. As it stands, the industry will need $15.2 billion in tooling each year to avoid this fate; current industry capacity is $9.3 billion.

The issue isn’t helped by the fact that there are only 750 tool shops in North America, down a third from their peak in the late 1990s in part due to the global recession. On top of this, the average age of a toolmaker in each of the shops hovers around 52, with few new toolmakers coming up in the ranks to replace them; Harbour Results’ CEO Laurie Harbour states the training needed to bring aboard a toolmaker takes six years to complete.

On the other side, the automakers are planning to introduce 154 new models between now and 2018, a third alone coming down the ramps in 2014. With each new model requiring around 3,000 new tools to screw them all together, if not more due to increasing complexity, capacity can only continue to be strained.

Along with the other issues at hand, there’s also the fact that the automakers producing their goods in North America prefer to keep their business inside the NAFTA zone, ignoring Chinese toolmakers who could make the tooling needed quickly and cheaply. That said, Chinese and German toolmakers are planning to set up shop in the economic zone soon in an effort to encourage automakers to reach out for their tools once the latter opts to remove their blinders.

Another potential cause of the coming automotive production bottleneck? Disasters such as the Marl Chemical Park explosion in 2012, the Fukushima earthquake and tsunami in 2011, or a similar incident like the Lac-Mégantic derailment this year.

The only solution to all of these scenarios, in the words of Charlie Sheen, is for automakers to plan better by finding where the bottlenecks could occur, and promptly finding ways to avoid them, whether it’s through shifting key component manufacturing elsewhere or simplification of their latest and greatest.

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29 Comments on “Supply Chain Bottleneck Due In Five Years According to Study...”

  • avatar

    I have been advising younger teenagers to look into tool and die careers. Look on Monster, CareerBuilder, whatever and it will validate this study.

    This is what happens when you shutter plant after plant after plant – your local tool shops die off due to their inability to diversify. Global tool makers have their shortcomings. The tooling for the newest fiesta’s decklid was all f*cked up. There was major oil canning issues that Ford’s Mexican and European tool makers tried to resolve for 12 weeks. When it came down to the drop dead date to get it fixed, they shipped the die to Dearborn and some old UAW *ssholes fixed it in two days.

    Way to go, global economy.

    Another shortcoming for global tool makers (besides lack of extensive tribal knowledge): when it comes down to having to make a drastic change quickly, you have to charter a Antonov 124 cargo jet for some of the big boy dies. You do that once and all your cost savings in cheap labor and shot gun engineering for a decade can’t make up for it. If you can’t get your tool there on a boat, your just plain f*cked. Blinders, my #ss.

  • avatar

    “Harbour Results’ CEO Laurie Harbour states the training needed to bring aboard a toolmaker takes six years to complete.”

    6 years? Are American public schools really this bad?

    I’m sure Asia will pick up the slack.

    • 0 avatar

      Public schools don’t really teach tool making. Some high schools might have basic machine shops which can be a decent foundation to toolmaking, but generally a toolmaker’s training is had on the job with some vocational post secondary eductation mixed in.

      Cheap labor in Asia has taken on a lot of tool making work, but the quality is predictably bad.

      • 0 avatar

        I was in my neighbor’s garage woodshop the other day, cutting some spindles for a deck/treehouse, and I quipped to him that I hadn’t used a real radial arm saw since shop class in 8th grade.

        As a grandparent, he was quick to point out that most schools don’t even have shop anymore (or home ec, or auto shop, or agriculture..)

        I don’t LOVE the idea of my kids working unsupervised with power tools, but I look back on my experiences as great primers for possible careers — or at least hobbies. Now parents have to do 100% of that themselves, or through Boy Scouts, etc. Schools are increasingly just paths into higher education, nothing more.

        It’s going to look pretty crappy in 10 years when entry-level engineers are making $30k (if they can find a job) and plumbing apprentices are making twice that and can work anywhere. The skills gap is becoming really strange.

        • 0 avatar

          It is true that the majority of schools no longer have shops of any kind. Heck most schools no longer even offer driver’s ed classes and if they do it is an after school offering, not a regular class.

          Concerning the need for entry level engineers they will be in demand for the years to come and still get a fairly high rate of pay. Currently there is a seriously huge lack of entry level engineers in this country. Talking with someone I know who is high up in engineering at a well known airplane manufacturer they could use about 3000 engineers now, but they just aren’t available.

          I do agree that people in the traditional blue collar jobs will also be in high demand. The fact is the average home or automobile owner struggles with changing a light bulb let alone something more involved.

          I work with FIRST an organization who’s goal is to inspire students to be science and technology leaders and pursue careers in STEM and the number of students that come into the programs that can’t even operate a screw driver is astonishing.

          Once a student has been in the program I see some go on to study engineering or computer science, but I also see a number that go right into careers as machinists.

          I encourage you to look into getting involved with FIRST,

          • 0 avatar

            The shortage of engineers is a myth. The employers just want more applicants for each job to keep the wages down. There is an epidemic of older engineers (40s & 50s) getting downsized and laid off. Instead of hiring these engineers and train them in their specialty, the companies just claim about the lack of trained engineers; then they either outsource the work or bring in foreign engineers on work visas.

          • 0 avatar

            @conslaw: There are engineers and there are engineers. Many jobs call for “engineers” but actually want computer specialists or designers. Actual civil, structural, mechanical, electrical, hydraulics, or chemical engineers are in short supply.

          • 0 avatar

            Today’s kids are not interested in the trades. No parent I know encouraged their offspring to get involved in anything that got their hands dirty. Sports and “an Instrument” were about it. And grades. Those born into blue collar families where the father was a toolmaker/machinist saw dad lose job after job in the name of “competitiveness in the global economy”. No father would ever encourage their son to follow in their footsteps. Fast forward to today, skilled machinists are in very short supply. The short sightedness of allowing America to outsource its future is amazing. I know some “house” plumbers that all make 150K or more. Same for elevator mechanics. No status, but plenty of money.

            …..The shortage of engineers is a myth. The employers just want more applicants for each job to keep the wages down. There is an epidemic of older engineers (40s & 50s) getting downsized and laid off. Instead of hiring these engineers and train them in their specialty, the companies just claim about the lack of trained engineers; then they either outsource the work or bring in foreign engineers on work visas…..

            That is the truth. I saw it in the company that I worked at 12 years ago. That same company has been swallowed up by Aecom and the song remains the same. The foreign born engineers pounded our ablility to get raises into nothing. Once they wised up they would leave, only to have more foreigners to take their place….and around it went.

  • avatar
    Vipul Singh

    Quite a few of the B&B are from the automotive / manufacturing industry. Can someone please elaborate on what exactly is tooling and why is a new set required for a new model. Same question for jigs and fixtures.

    Links would be much appreciated as well. Thanks!

    • 0 avatar

      Tooling can be basically any of the machinery or equipment used to make specific automotive parts. For example a mold or a die used to make body panels. They wear out with use, and also need to be replaced when the look or design of the vehicle changes to make the new parts as their designs are usually fixed.

      • 0 avatar

        OEM’s sometimes include the machinery that is attached to the tooling as ‘tooling.’ Most of the time, it is the physical components that make contact with a part that forms a contour, mold, stamping or casting. It all really depends on the capital situation of the program.

        Quick example: For a high pressure line – The OEM does not own the tooling that makes the steel pipe. They do not own the dies that make the stamped brackets used to secure the line to the vehicle. They do not own the die sets that crimp the rubber hose onto a steel tube, nor do they own the tooling that makes the end forms that are used to make connections to other components. They own the check fixture and the pieces of steel inside of a CNC bender that forms the tube to fit inside their engine bay packaging.

        The suppliers own the rest of the tooling. This article forgets how much skin the suppliers have in the game for tooling. Global suppliers use regional tooling shops. I’m not sure if Harbour was intelligent enough to factor in the drop in North American tooled parts in the supply chain. I sincerely doubt they did. There is significantly less North American content on vehicles than there were even 2-3 years ago.

        All that aside, there is a strong demand for tool and die skilled trades personnel.

    • 0 avatar

      No links but here’s a quick run down:
      Tooling is the physical surface that contacts the part to either cold form it, or the physical die that is used for forming via injection molding or casting.

      There is no ‘tooling’ per se for wiring, besides check fixtures, which are for all parts. Check fixtures are fixturing that you place the part in to check contour, feature content, no-go gauging that checks tolerances to print, etc.

      To address JK321, tool and die isn’t something covered in a typical educational system. Most of it is passed down through apprenticeships or taking classes from retired professionals. You’re not going to learn much unless you’re working with significant capital. So schooling can only get you so far.

      Tooling wears out over time, thus you carry an inventory of dies / moulds. When one wears out, you swap it out, send it off to a vendor and get repairs done. You can only weld on a die so many times before you start producing junk. Same goes with benders, moulds, and quality check fixtures. Eventually you need to replace what makes the physical contact with the part and these surfaces must match a designated print that have been proven to be capable to make a part to print via the PAPP process. Even with the introduction of a new too, the tool needs to be re-PPAP’d.

      Tool makers usually need to be local as engineering changes (especially during launch of the platform) happen quickly and lead times need to be within 6 weeks. You also cannot predict what happens in production, a tool may get damaged, frozen or a total loss to your capital could occur from a natural disaster.

      If you want to see old dunnage and a post-service storage facility for tooling that is no longer in service (for service parts), look at this location on google maps.

      14100-14198 Oakland St

      Highland Park, MI 48203

      inside that old plant, you’ll see die sets piled stories high from past platforms, stowed away for what OEMs think may be for service. Suppliers also hang onto OEM owned tooling from past production due to service contracts. There are benders and check fixtures from a 70’s mustang 30 feet from me as I type this.

  • avatar
    el scotto

    The cynic in me thinks that Harbour Results will help guide the company through this crisis. For a consulting fee, of course.

  • avatar
    schmitt trigger

    On the other end of the spectrum, at the nano-meter level, there are the silicon foundries required to build the ultra-sophisticated microchips that are ubiquitous and indispensable in today’s automobile.

    True, US makers Intel and Qualcomm are market and technology leaders, but their focus is computers and/or wireless communications, not automotive electronics. This market is dominated by Japanese or European companies.

  • avatar

    As a consumer, I’d be perfectly happy with 8-year product cycles instead of the standard 4-year. Maybe manufacturers would be more careful with their sheet metal and work towards more timeless designs. Then they could focus more on the high-margin items like interior options, etc.

    The idea that a car should look totally different every 4 years seems strange to me, even if we have the manufacturing flexibility to accomplish it.

    • 0 avatar

      As the focus shifts back to regulatory considerations such as meeting CAFE I think we might see a return to longer product cycles. Look at the 60’s most cars had product cycles of 2-4 years. Then the 70’s hit and there was the double whammy of emissions regulations and CAFE looming and product cycles were stretched out much longer as development money was spent on meeting regulations rather than styling changes.

      • 0 avatar

        The manufacturing trend has been for shorter cycles. The Japanese found they could crank out new models every 3-4 years and avoid the drop-off in sales in the later years due to a design that’s long in the tooth. True, they’ve adopted the Detroit naming consistency with models like the Corolla and Civic, but been criticized when the new models looked too much like the “generation” they replaced.

        The company that is nimble and can bring fresh-looking designs to market more frequently will get the sales, even though much of the mechanicals are the same underneath. When we short-attention-span people shell out for a new car, we want it to stick out, not look so much like a 3-year-old model already on the street, and even we slackers know the same car with a new front and rear clip is a refresh, not a new model.

        As the article points out, there’s already a need for the new tooling for new models, and the need for fresh designs is going to make it worse. The automakers will not lengthen cycles, but have to be creative to meet the customers’ expectations, maybe to the extent of making more of their own tools and dies.

        • 0 avatar

          The Japanese used to have a full redesign every four years like clockwork. That was just too expensive and they moved to a 5 year or longer cycles. They also started updating parts like engines instead of redesigning them.

  • avatar

    Can we talk about supply and demand? There is no need for concern. When the labor cost increases beyond that of neighborhood dope suppliers, toolmakers and engineers will come crawling out of the woodwork.

    Not enough schools for them? They work the same way.

    Am I worried that detroit will not keep up with production? Not in your life. What concerns me is that gap between when they do and when the can’t if I want a new, really cool car. Then you an bet that they’ll be expensive. Too bad for me, but great for the dope dealers who see the light.

    • 0 avatar
      SCE to AUX

      Agreed. This ‘problem’ won’t suddenly appear in 5 years. Each mfr will adjust along the way to meet their own requirements.

    • 0 avatar
      Brian P

      On the contrary, there IS a need for concern, because there is a substantial time lag between a need for tool/die manifesting itself, and qualified people actually showing up who can and want to do the job. The experienced tool and die makers who retire, might not necessarily want to come back (or be able to come back).

      Today’s kids are trained to punch buttons on their smart phones and game stations, and they imagine their future job is some sort of programmer or IT position. We don’t have enough kids working with wood, steel, and aluminum, building stuff, getting their hands dirty from time to time – with the occasional “ouch” that comes along with it.

      My dad was a machinist. I was out in his shop at a young age – first building things with Lego, then “helping”, then actually helping (!), then building and fixing stuff on my own. (Still do.) Then came the engineering degree, then came getting paid for designing stuff that the shop where I worked was going to build. Then came a more supervisory/conceptual design position which is more or less what I still do. (automation/robotics, most of which is automotive related).

      This did not come overnight. I went down the engineering path rather than the tool and die route, but the amount of time would not have been much different. You can’t take someone who grew up playing video games and expect them to suddenly be able to cut, fabricate, weld, and bolt things together. It just doesn’t work that way. They don’t know how to do it.

      All the shops that I work with right now, are having a hard time finding qualified machinists, robot technicians, PLC programmers, and industrial electricians. I don’t think kids today are even thinking of that career path. If they don’t start working with their hands at a young age, they never will.

  • avatar

    How will 3D printed metal affect the tool makers. I see where a 3D printed 1911 pistol shot 500 rounds without fail.

    • 0 avatar
      Brian P

      Large metal parts that need contoured shapes are produced today using CNC. I’m sure the 3D printing will find its niche, but it’s not like we don’t already know how to make a large, contoured chunk of metal.

      Still need someone who knows how to design and build the tooling so that the sheet metal parts come out with the right shape.

  • avatar

    Now you know what’s behind efforts like VW’s MQB platform engineering. A vastly reduced overhead for all the models they want to produce because of standardization.

    If the UAW/CAW were smart, they would be holding apprenticeship classes on a regular basis to get new members into the fold instead of trying to force assembly plants to unionize.

    • 0 avatar

      The majority of tooling is out of reach of the UAW workforce. Stamping dies are about the only tooling the OEM skilled trades work on. And man are those guys worth their pay.

  • avatar

    What’s up with all the “Mégantic” and “Results” recently, Derek? (The latter was fixed). Stop using Microsoft Word to write articles! Jeez!

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