Page 8 - MetalForming-May-2018-issue

News Fronts
Market Outlook
The tooling outlook through year-end remains strong, according to the Q1 2018 Automotive Tooling Barometer, released by the Original Equipment Suppliers Asso- ciation and Harbour Results, Inc. (HRI). Key indicators—sentiment, back logs and utilization—all are moving in a positive direction, though there may be a leveling off of the trajectory.
to be up 11 percent (from 8.4 percent), but staying true to its cyclical nature, work on hold appears relatively flat throughout the remainder of the year.
“We feel that the reason these two factors continue to trend down is twofold,” says Harbour. “First, the indus- try is starting to normalize, with supply outpacing demand. Second, the indus- try is coming off an unprecedented 18 months of tool spend—nearly $15 billion in tools—which has cash tight across the automakers and Tier One suppliers. If payment terms and AR paid on time continue to decrease, this adds risk to the tool and die industry. Additionally, if there is a small dip in the automotive market, it could put many shops—partic- ularly small shops—in a challenging financial situation.”
Report: Automotive Tooling
to Remain Strong and Steady
During the past 12 months, die and mold shops experienced strong capacity utilization (90 percent and 81 percent, respectively). Average throughput, a sign of efficiency strongly correlated to prof- itability, also shows die shops experienc- ing slightly higher efficiency levels than mold shops. According to Harbour, levels of efficiency independent of shop size show some of the best as being shops with more than $40 million in sales, as well as those smaller than $5 million.
“Although we believe 2018 will be a strong sourcing year for the automotive tooling market, we see some indications of a return to more normal sourcing levels in the near future,” says Laurie Harbour, president and CEO of HRI. “It is important that shops stay vigilant, monitor industry data and be prepared to make quick deci- sions to stay profitable.”
For the first time, the study looks at die- and mold-shop liquidity, with data showing that a shop’s liquidity is linked directly to payment terms and accounts receivable (AR) paid on time. Both fac- tors continue to trend down, with pro- gressive payments terms dropping from 55 percent in Q4 2017 to 51 percent in Q1 2018, while AR paid on time dipped one percent.
Survey respondents included mold shops (69 percent), die shops (18 percent) and others (14 percent), in the United States (56 percent), Canada (37 percent), Europe (five percent) and Asia (two per- cent). As for revenue ranges, the largest percentage of shops represented the $5 to $10-million (25 percent) range, though shops with ranges below $5 million and above $45 million were represented.
The tooling sentiment index is at 80, a slight increase over Q4 2017. Additionally, the cyclical nature of work on hold looks
6 MetalForming/May 2018
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