Conglomeration of tooling shops into Giants.

[Matt-Aburg]

Down here in my neck of the woods, we have the highest concentration of Tooling manufacturers in North America. For the last few years many have been absorbing others. These new bigger shops are usually owned by investment groups and are publicly traded. I think in the next few years many of the smaller ones that don't get absorbed will be out of business, squeezed out. Shop rate will be enormous, and they will not take on small work.

For new entrepreneurs, this leaves a big opening to take on the small stuff. Jobbing shops.. Also, depending on the recession, much stuff up for Auction as the current small shops go under.

I want to give one example. I personally have a lot of connection to this company. When I moved back to the Windsor region after ten years in GTA (1994), they were the first lasting job. I graduated from programmer to designer under them.

Yesterday they got absorbed for a huge chunk of Greenbacks. 165 million USD plus dibs on two years projections for another 100 million. The new giant competes with the other biggys. There are 3 other big fish that have done the same thing. Results are huge multinational firms. This particular merger now is a company that has manufacturing in Europe, Asia, Mexico as well as USA and Canada.

ABC Technologies buying Windsor Mold Group Technologies - Canadian Plastics

The deal gives Toronto-based auto parts supplier ABC more expertise in both injection molding and tooling.

www.canplastics.com

https://abctechnologies.com/wp-content/uploads/Project-Freeway-Signing-PR-12.21.22v2.pdf

 

[Former Member]

I have several friends that own small shops and they all make the same mistake in how they look at pricing jobs.

An example, one of the parts I manufacture I looked at jobbing it out. Now materials are a none issue as I supply them, it just the work, nothing else.

Price per part $15.00 for labour. My first question was shop rate between $75 to $100 per hour. So a quick mental math let say about 7 pieces an hour are made. I started laughing as didn't have all the fancy tools, automatic cutting machines and feeders, I did it manually and do about 100pcs an hour from raw stock to finished wrapped part. My sell per part is close to $3.00 so my rate is close to $300.00 per hour.

So job it out or invest in upgraded tooling and machines so that production get even faster. Guess which way I went and what shop didn't get the business.

In short small shops need to rethink how products are produced and their methodology in order to survive. Most unfortunately are stuck in the old ways of thinking and not willing to change which leads down one path of closing down.

Foot note, the shop I tried to contract the work out to is closing down.