Automotive ToolMaking To Stay Tight

June 4, 2002
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GRAND RAPIDS — As far as Joe Gill is concerned, 2002 looks as if it may be a bit better than 2001.

“It doesn’t look extremely grim,” he told the Business Journal. “Reports coming out now indicate an up-tick in things, perhaps.”

And for sure, he told the Business Journal, the view ahead from December 2002 doesn’t look nearly as gloomy as the view from December 2001.

Gill is president of Gill Industries, a local tool firm.

He also is president of the West Michigan Chapter of the National Tool and Machine Association. The chapter has 65 member firms here and in the shoreline communities.

And that number has dropped. Gill says he’s heard indirectly of several firms that have gone out of business.

“There have been a few firms that have closed. I know of two personally that have gone away.

“It’s very competitive,” he said.

“We’ve definitely had to tighten our belts and it has been pretty thin out there. We are landing an occasional job. There are a few pockets of work out there, but it’s ultra-competitive.

“I’d say we’re looking forward to an okay year.”

Gill explained that his firm’s normal crew of 80 is down to 59 people. “So we’ve got 20-some people on lay-off.”

He explained that part of the industry’s difficulty stems from automakers’ recent demands that suppliers reduce prices — demands the automakers have enforced rigorously, setting off intense competition among suppliers and the tool and die makers — without whom suppliers can manufacture nothing.

And now, Gill said, the cost-suppression posture of automakers is beginning to take an even more ominous turn.   

“The people that we supply — the people who supply the auto industry — already are getting hit hard with cost reductions.

“And the latest thing is that their customers are no longer going to pay for tooling.

“The Fords, the Chryslers, GM,” Gill explained, “are saying, ‘You pay for tooling.’ And that’s going to make it all the more competitive.”

He explained that the new auto industry posture now forces an entirely new burden upon stamping manufacturers.

He said such firms now must find a way to amortize the costs of complex devices built by firms like Gill Industries. Stamping manufacturers use tools and dies to produce everything from the lacy electronic parts for today’s “smart” rear view mirrors, to thousands of more mundane auto parts from bumpers to headlight cowlings.

“This is definitely going to be a challenge,” Gill said, “when you consider that the average tool I build here runs $125,000.”

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