North American Tooling Spend Forecasted to Reach $8.3 Billion in 2025

November 15, 2022

harbour-results-north-american-automotive-tooling-spendRecent automaker profits are funding an increased number of new vehicle launches over the next few years, which Harbour Results, Inc. (HRI) says will lead to a year-over-year 13.4-percent increase in North American automotive-vendor tooling spend.  HRI, a leading authority to the manufacturing industry, includes this data in its recently released Harbour IQ in-depth study on the current state of the automotive-vendor tooling industry. 

Several key factors are driving the increase in tooling spend, the report notes. First, despite a drop in North American vehicle demand from 15.8M to 13.7M units, most automakers are experiencing record levels of profit per vehicle sold. This strong performance is funding investment in technology and new vehicles. From 2023-2029 the number of vehicle nameplates in the region will grow 18 percent--from 210 to 249. Additionally, battery electric vehicle (BEV) nameplates will grow from 20 percent of the mix in 2023 to 46 percent in 2029. New nameplates generate new launches, which require more tools. Further, the Detroit Three automakers, who source most of their tools in this region, plan to source tooling for new full-sized pickup trucks and SUVs in 2024/2025 and 2026, which significantly increases tooling demand. The Harbour IQ study shows that the discrete number of tools will increase by 14 percent CAGR from 2022 to 2025, driving more demand for tooling with all of the new models.

“Despite economic uncertainty and supply-chain challenges, we see a bright future for the automotive tooling industry,” says Laurie Harbour, HRI president and CEO. “Although we see growth within the industry, it is important to note that NA tooling spend per vehicle for BEVs on average are lower than ICE vehicles by about 30 percent, so although we see tooling spend and the number of tools sourced increasing over the next few years, the average spend per tool will decrease. So, it will be important for mold and die companies to focus on improved efficiency and throughput.”

HRI predicts that automakers will continue facing difficult strategic decisions regarding where to invest and what vehicles to launch. And, that vehicle-launch timing will adjust, and new vehicles will be planned.

“Although our forecast is positive, several risk factors that could negatively impact tooling spend,” adds Harbour, “including a prolonged recession, increased supply-chain issues or a drop in vehicle demand below 13M units. Businesses need to continuously monitor the health of the industry and their customers to better understand the impact on their bottom lines.”

In HRI’s most recent Manufacturing Pulse Study, conducted in August, 45 percent of tool shops indicated they were “optimistic” or “very optimistic” about the future and predicted ending the year at 83-percent utilization. The industry’s top concerns remain finding talent and the increasing cost of doing business—and neither are predicted to significantly improve near-term.

“As the tooling market grows, shops must position themselves for the future,” Harbour concludes. “Leadership must put steps in place to improve flexibility, drive resiliency and focus on improved efficiency. Regardless of the forecast, now is the time to be smart and establish plans to shore up weaknesses and address the talent issue facing this industry.”

Industry-Related Terms: Die
View Glossary of Metalforming Terms


See also: Wipfli LLC

Technologies: Management, Tooling


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