Harbour Results, Inc. Predicts 2018 North America Automotive Vendor Tooling Spend to be $11 Billion
Harbour Results, Inc. (HRI), a leading authority to the manufacturing industry, recently released the results of its in-depth study on the current state of the automotive vendor tooling industry. The analysis predicts 2018 automotive vendor tooling spend to reach a record high of $11 billion.
The key factor driving increased tooling spend is the high level of North American vehicle launches predicted between 2018 and 2020 – 177 vehicles. Additionally, 66 percent of these launches are sport utility vehicles (SUVs) and truck platforms, which require more tooling to manufacturer than a car platform.
“In 2017, we are estimating tooling spend to be approximately $9 billion, which has resulted in high capacity utilization among tool shops – 88 percent for die shops and 81 percent for mold shops,” said Laurie Harbour, HRI president and CEO. “This created a new tooling model of outsourcing. In fact, $1-$1.5 billion of tooling was outsourced this year to help manage the growing demand. We can only expect this trend to grow in 2018.”
However, HRI projects a drop of 40 percent in tooling spend from the high of $11 billion in 2018 to approximately $6.7 billion in 2020.
“Our team looked at a number of factors and issues impacting the automotive industry in addition to vehicle launches – including the elimination of vehicle models, new foreign owned plants and products, OEM profitability, political and economic climate and the changing consumer landscape – and we developed an automotive vendor tooling spend forecast of $50 billion from 2016-2021 with 2020 being the lowest spend year during that time.”
HRI’s research also uncovered that there is a threshold for any given year of $9-$10 billion in tooling spend. According to Harbour, the North American auto industry struggles to achieve spend beyond this threshold due to a number of factors primarily found across the OEMs and Tier 1s.
“We conduct our annual study to help the automotive tooling industry develop better near- and long-term business strategies and to prepare for the future,” said Harbour. “Although the predicted dip in 2020 is not nearly as significant as we experienced in the recession, it is important that tool shops continue to focus on improving operations and investing in technology during the good times to remain competitive during the dip.”
About HRI, Inc.
Harbour Results, Inc. a leading business and operational consulting firm for the manufacturing industry offers operational and strategic advisory expertise, and proprietary assessment programs to help optimize a business’s performance. Focused on small- to medium-sized manufacturers, many of which are family-owned or privately held, HRI utilizes its knowledge, experience and relationships to build upon the established foundation with sound strategies and operational improvement. Headquartered in Southfield, Michigan, Harbour Results was founded in 2005 by industry analyst Laurie Harbour. Today, the Harbour Results team is comprised of manufacturing experts, and clients also have exclusive access to Harbour Results’ network of partner companies and worldwide resources.