The World Class Tool Shops and Its Prospects in Michigan

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Buyers for many automotive OEMs—and, in fact for other large companies beyond that industry—are focused on getting the lowest price for their tool, die, and mold (TDM) purchases. The frequent message to TDM sources is that they must meet or beat the “world price” for tools or risk losing their bids to suppliers who can provide TDM at this lower price. Winning bids often include tools made in “low-cost countries” (LCCs). LCCs are thought to be lower cost because they employ a lower-wage workforce, do not pay benefits, have fewer worker health and safety protections, and sometimes utilize inferior engineering and sub-standard materials. When you combine LCC cost advantages with state-of-the-art engineering systems and manufacturing resources, the potential for significant cost savings is obvious. There are other critical factors affecting overall costs, however, especially those that pertain to technical capabilities and logistical costs for managing offshore sources. This paper examines how the cost advantages and systemic disadvantages affect a domestic TDM. This paper is the result of a nine-month study made possible by the generous support of the Michigan Economic Development Corporation.