Moldmakers showing hard-won gains

The Summer 2010 Business Forecast Survey of the American Mold Builders Assn. reveals that the recovery seems to have taken hold as business continues getting better for a majority of respondents. The quarterly survey revealed that current business conditions once again improved over the previous three months, with 9% of the respondents saying that business is “Excellent”—up two percentage points from 7% of respondents in the Spring 2010 survey, better than it has been in more than a year. A total of 40% of the membership responded to this recent survey. (You can view a PDF summarizing the results here.)

Current business conditions also improved significantly, moving up 9% for those reporting “Good” conditions (44%) compared to 35% of the respondents in the Spring survey. That is up a full 21% as the outlook continues to move in the right direction. “Fair” business conditions exist for 41% of the respondents compared to 43% of the respondents in the Spring survey. The number reporting “Poor” business conditions continues to improve, with only 6% noting poor conditions, down from 14% in the Spring 2010 survey.  This category continues to show a decline—from 27% reporting poor business conditions in the Fall 2009 survey. Certainly this tends to prove out what is being heard throughout the industry that things are turning around for many mold companies. 

No one in the survey reported “Bad” conditions for the first time in many quarters. Last summer, during the heart of the recession 12% reported bad business conditions. What a difference a year makes.

Projections for business over the next three months are a also optimistic with respect to the outlook of future business among respondents. Nine percent expect business to Increase Substantially, compared to 4% in the Spring survey, as this continues to improve. Those expecting business to Increase Moderately however, fell from 44% in the Spring survey to 31% in the Summer survey. Respondents expecting business to Remain the Same came in at 47%, up a bit compared to 45% in the Spring survey. Respondents expecting business to Decrease Moderately increased by four percentage points to 11% compared to 7% in the Spring 2010 survey. Two percent of the respondents expect business to Decrease Substantially, also an uptick from 0% in the Spring survey.

When asked to compare their company’s current level of business with that of three months ago, responses indicate some movement in a positive direction:

Quoting activity is again Down for 32% of the respondents compared to 46% of the respondents in the previous survey; the Same for 44% of the respondents, up from 35% in the Spring 2010 survey; and Down for 24% of the respondents compared to19% in the Spring survey.   

Shipments are Up for 36% of the respondents, the same as the previous quarter, but stayed the Same for 45% of respondents (up from 42% in the Spring survey); and Down for 19% of the respondents, fewer than the 22% reporting in the previous quarter.   

Backlog is Up for 37% of the respondents, up slightly from the 34% in the Spring survey, confirming the “excellent” and “good” business projections. Backlog is the Same for 34% (down two percentage points from the Spring survey); and Down for 29%, a slight decrease from 30% in the Spring survey. Work seems to be keeping steady with little fluctuation.

Profits in the Summer survey are Up significantly for 29%  of the respondents, compared to 20% in the Spring survey. This category has also trended up from a low in the Spring of 2009. Profits are the Same for 47% of the respondents, down two percentage points from the Spring survey, and identical with 47% in the Fall 2009 survey. Profits are trending down for 24%, a significant drop from the 31% of the respondents in the Spring survey.

Employment levels are also confirming that responding companies are much busier, with employment Up for 26% of the respondents in the Summer survey, compared to only 14% of the respondents in the Spring survey. Employment numbers remained the Same for 63% of the respondents, down from 66% in the Spring survey. Employment is Down for only 11% of the respondents, a significant drop from 20% of the respondents reporting reduced employment in the Spring survey.

The current average number of shop employees ticked up by one at an average of 23. The current average number of design and engineering employees remained steady at five, after a drop of one in the Spring survey to five employees. Work-week hours for shop employees also ticked up by one hour to 46 for the Summer survey. For design and engineering employees, the hours continue to remain steady at 45, the same as the Spring 2010 survey.

Questions
The questions in the Summer Survey asked respondents, “What is your biggest technological challenge?” and “Do you use quoting software when quoting jobs?” If “Yes,” what type? If “No,” why not? And what percentage of quotes become actual jobs?

The biggest technological challenge for moldmakers seems to be as varied as the companies.  Cost of purchasing technology was mentioned several times, as was finding and training new people to run the machine tool technology; reducing the programming time; and meeting shorter and shorter lead times.

One respondent said, “We do not have a technological problem. Our problem is no work.” 

Responding to the question regarding the use of quoting software to help with the task of mold quoting, 49% of the 99 respondents who chose to answer this question use quoting software; the remaining 51% do not use quoting software. Of that 49% who do use quoting software, 75% use a system they developed themselves; with 26% using software they purchased.

When asked why they don’t use software to quote molds, 44% of the 27 respondents who chose to answer the question said they “don’t trust the data” provided by the software. Another 56% of the respondents said the “software is too expensive.”

Comments from respondents included, “Custom moldmaking proves to be too diversified and creative . . . especially creative!”  Some found the software not flexible enough for their use; some find that it doesn’t provide accurate numbers; or they tend to quote for the same customers.

The percentage of quotes that turn into jobs continues to be quite low: 57% reported that only 1-10% of the quotes they submit result in getting the work. 29% get 11-25% of the jobs they quote; and 14% get 26%+ of the jobs they quote.
   
Additional Comments
Overall, business is looking quite good for the majority of those responding to the survey. “The first half of our fiscal year was horrible,” said one respondent. “The second half is starting off crazy. We can’t keep up. I will actually be hiring another tool maker.”

“We’ve seen more quotes in the last 90 days than we usually see in six months,” said another respondent. “But the time to release orders promised is now months instead of days.”

In spite of the optimism, some expressed a degree of reluctance to believe that the recession is completely over for this industry. “Presently it is looking more positive, but I have the feeling it will probably still take a considerable amount of time before we all will be satisfied,” said a respondent.

“We are cautiously optimistic about the future,” said another respondent. “The workload is good but we are concerned about continued offshore sourcing.”

That comment indicates that China is still a burr under the saddle of some, in spite of word from many mold shops that China seems to be less of a problem, and noting that they are quoting against China less often. “Offshore tooling is still driving prices down,” said one respondent. Another noted that, “We are seeing more and more Chinese tooling! Something needs to be done!!” —Clare Goldsberry