2017 Q3 Pulse Tooling Update - OESA · 2020-01-03 · 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017...
Transcript of 2017 Q3 Pulse Tooling Update - OESA · 2020-01-03 · 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017...
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2017 Q3 Pulse Tooling UpdateSeptember 2017
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The OESA Automotive Tooling Barometer survey series was created by the OESA Tooling Council with the partnership of Harbour Results, Inc. to provide an indicator of the current state of the automotive tooling industry, and the perception of near-term prospects for the industry. The OESA Automotive Tooling Barometer captures the sentiment of the major companies in this market. Each survey in the series will have a different focus; this pulse will focus on industry diversity and capital expenditures.
OESA/HRI Auto Tooling Barometer - Sept. 2017
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▪ Across industries, geographies and shops types, skilled labor is the lead issue facing manufacturing.
– Shops remain positive about the state of the industry.
▪ Mold shops are less utilized than die shops, but are making slightly higher profits and investing more back in the business.
▪ Tooling customers are consistently less utilized than their tool shop suppliers.
– Customers are facing many of the same key issues, though, as their supply base
Executive Summary - I
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▪ On the surface, most profitable shops look very similar to less profitable counterparts
– The issues they are focused on are very different, though.
▪ Canadian shops continue to benefit from higher utilizations and profits.
– Canadian shops are taking advantage of this and investing over 20% more back into their businesses than US competitors
Executive Summary - II
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Location
30%
70%
18%
24%
30%
17%
11%
0%
5%
10%
15%
20%
25%
30%
35%
Revenue Range
77%
23%
Shop Type
Mold Die
Respondent Demographics
Question: Please identify your Revenue for 2017 Question: Please identify your company’s geographic location. Respondents: 132
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91% 89%87%
81%85%
88% 89%
83%87%
84%88%
77%79% 79%
76%
67%
76%77% 76%
81%83%
81%
60%
65%
70%
75%
80%
85%
90%
95%
100%
2015Q1
2015Q2
2015Q3
2015Q4
2016Q1
2016Q2
2016Q3
2016Q4
2017Q1
2017Q2
2017Q3
Capacity Utilization By Shop Type
Die Mold
Die Shops See Spike in Utilization In Third Quarter
81%78%
87%84%
85%
60%
65%
70%
75%
80%
85%
90%
95%
100%
2017 Q3 Capacity Utilization
Question: Current capacity utilization for design/machining/assembly. Respondents: 132
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Work On Hold Falls Under 10% Across Tooling Cyclical Nature of Work On Hold Continues, But Average Levels Continue to Drop
15.7%
11.9%
17.9%
12.2%
13.9%
9.3%
11.8%
8.6%
6%
8%
10%
12%
14%
16%
18%
20%
Work On-Hold Trend
Percent of Work On Hold Linear (Percent of Work On Hold)
Question: What percent of jobs that you have been awarded are currently on hold due to reasons outside of your control? Respondents: 132
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▪ In our recent study, 53% of tooling shops are taking advantage of prog payments, typically under 1/3 split or 30/30/30/10 terms.
▪ In general, smaller shops are obtaining prog payments more frequently
▪ Are you leveraging progressive payments?
Payment Terms and Timing Continue 2017 Decline
Question: Over the past three months, approximately what percent of your new booked business includes progressive payment terms and accounts receivables were being paid within contract terms. Respondents: 132
62% 62%68%
67%
61% 61%
71%69%
55%
60%
65%
70%
75%
2016 Q3 2016 Q4 2017 Q1 2017 Q2
Progressive Payment Terms and AR Paid On Time
Percent Progressive Terms Percent of AR Paid On-Time
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▪ 54% of shops indicated capital expenditure plans greater than 4% of their annual revenue.
▪ Overall average for capital purchasing hovers around 5%, or around $1M in annual investment for a $20M company.
21%
12%
22%
26%
19%
Capital Equipment Purchasing
Less than 2%
Between2% and 4%
Greater than 8%
Between 6% and 8%
Between 4% and 6%
Capital Equipment Purchases Up Among Tool Shops
Question: As a percent of annual revenue, how much is your business planning to contribute towards new capital expenditures in 2017? Respondents: 132
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56%
72% 72%68% 68%
73%
79%
79%
85%80%
78%
40%
50%
60%
70%
80%
90%
2015 Q1 2015 Q3 2016 Q1 2016 Q3 2017 Q1 2017 Q3
2017 - Tooling Sentiment Index
Sentiment Positive Threshold
The third quarter saw a repeated dip in overall
sentiment, but remains in the overwhelmingly positive
range.
Sentiment% of
Respondents
Very Pessimistic 1%
Pessimistic 4%
Neutral 19%
Optimistic 56%
Very Optimistic 20%
Sentiment Falls Further From First Quarter
Question: Over the next three months, the general outlook for your business. Respondents: 132
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▪ Overall, skilled labor stands out as the foremost issue, followed by profitability and on-time delivery.
▪ Key issues vary considerably depending on factors such as shops’ profitability, type and geography.
Biggest Hurdles in Tooling Right Now
Skilled Labor Shortage
38%
On-Time Delivery
18%
Maching Supply and
Demand15%
Profitability14%
Economic Uncertainty
9%
Political Uncertainty
6%
Tooling Business Challenges Over Next 12 Months
Question: Please outline your top challenges over the next 12 months. Respondents: 132
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DIE VS MOLD
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Respondent Demographics
$18.6M $18.4M
$M
$4M
$8M
$12M
$16M
$20M
Die Builder Mold Builder
Average Shop Revenue
Auto, 90%
Non-Auto, 10%
Die Builders
Auto, 73%
Non-Auto, 27%
Mold Builders
Question: Please identify your Revenue for 2017Question: Please identify your company’s geographic location. Respondents: 101 Mold Shops, 31 Die Shops
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Mold Shops Averaging About 10% Less UtilizedMold Averages Pulled Down by Significantly Under-Utilized Shops
95%
90%
95%
75%
70%
75%
85%79% 83%
50%
60%
70%
80%
90%
100%
Design Machining Assembly
Mold Capacity Utilization
Quarter of mold shops less than 75% utilized
100% 100% 100%
85%
80%
75%
92% 93%
85%
50%
60%
70%
80%
90%
100%
Design Machining Assembly
Die Capacity Utilization
Question: Current capacity utilization for design/machining/assembly. Respondents: 101 Mold Shops, 31 Die Shops
15
25% 31%
56%53%
8% 6%
11% 10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Mold Builder Die Builder
Profit & Loss Breakdown
EBIT
SG&A
Other COGS
Materials
Mold Shops Slightly More Profitable
Question: Please Identify your YTD Gross Profit/Operating Profit/Direct Materials percentage. Respondents: 101 Mold Shops, 31 Die Shops
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CapEx Spend Highest Amongst Mold Shops
Mold Shops investing, on average,
9% more than Die Shops
$0.3M
$0.8M
$1.5M
$2.9M
$0.2M
$0.7M
$1.3M
$2.6M
<$10M $10-$20M $20-$40M >$40M
Revenue Range
Avg CapEx Spend for Tool Shops
Mold Die
Question: As a percent of annual revenue, how much is your business planning to contribute towards new capital expenditures in 2017? Respondents: 101 Mold Shops, 31 Die Shops
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Die Shops More Concerned With Talent ShortageWhile Mold Shops Have Greater Diversity of Concerns
29%22%
16% 17%10%
6%
65%
8%12%
4% 4%8%
0%
10%
20%
30%
40%
50%
60%
70%
Skilled laborshortage
On-time delivery Profitability Matching supplyand demand
Economicuncertainty
Politicaluncertainty
Perc
ent
Sele
ctio
n a
s Le
ad Is
sue
Most Significant Industry Issues
Mold Builder Die Builder
Question: Please outline your top challenges over the next 12 months. Respondents: 101 Mold Shops, 31 Die Shops
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TOOLING CUSTOMER BASE
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Tool Builders Consistently More Utilized Than Customers
90%
80%
70%
53%
82%
67%
40%
50%
60%
70%
80%
90%
100%
Mold Builder Plastics Molder
Overall Capacity Utilization
Question: Overall Capacity Utilization. Respondents: 85 Mold Builders, 45 Plastics Molders, 27 Die Builders, 13 Die Stampers
95%
75%80%
55%
88%
65%
40%
50%
60%
70%
80%
90%
100%
Die Builder Die Stamper
Overall Capacity Utilization
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Plastics Molders Also Struggling With Skilled Labor
28%24%
18% 15%10%
5%
58%
9%
18%11%
2% 2%0%
10%
20%
30%
40%
50%
60%
70%
Skilled laborshortage
On-time delivery Profitability Matching supplyand demand
Economicuncertainty
Politicaluncertainty
Perc
ent
Sele
cted
As
Lead
Issu
e
Number One Industry Issues
Mold Builder Plastics Molder
Question: Please outline your top challenges over the next 12 months. Respondents: 85 Mold Builders, 45 Plastics Molders
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61%
11% 11%7% 7%
4%
45%
18%
9%
0%
18%
9%
0%
10%
20%
30%
40%
50%
60%
70%
Skilled laborshortage
Politicaluncertainty
Profitability On-time delivery Economicuncertainty
Matching supplyand demand
Perc
ent
Sele
cted
As
Lead
Issu
e
Number One Industry Issues
Die Builder Die Stamper
Question: Please outline your top challenges over the next 12 months. Respondents: 27 Die Builders, 13 Die Stamper
Die Shops More Concerned With Talent ShortageStampers Facing Much More Economic and Political Uncertainty
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TOP PERFORMERS
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Auto, 83%
Non-Auto, 17%
Low Performers
Auto, 86%
Non-Auto, 14%
Top Performers
Top Performers: • Operating Profit > 15%• 29 shops• Sentiment: Positive• Overtime: ~25%
$20.2M
$17.9M
$M
$5M
$10M
$15M
$20M
$25M
Top Performer Low Performer
Average Shop Revenue Low Performers:• Operating Profit < 5%• 19 shops• Sentiment: Positive• Overtime: ~25%
Question: Please identify your Revenue for 2017Question: To what extent does your facility support the following markets as a percent of annual revenue? Respondents: 25 Top Performers, 19 Low Performers
At A Glance, Top Performers Not That Different
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28% 25%
48%62%
5%
11%19%
3%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Top Performer Low Performer
Profit & Loss Breakdown
EBIT
SG&A
Other COGS
Materials
Question: Please Identify your YTD Gross Profit/Operating Profit/Direct Materials percentage. Respondents: 25 Top Performers, 19 Low Performers
90%
93%
81%
78%
80%
82%
50% 70% 90%
Design
Machining
Assembly
Capacity Utilization by Function
Low Performer Top Performer
How Are Most Profitable Shops Different?
25
32%
20%16% 16%
12%
4%
26%
11%
5%
21%
37%
0%0%
5%
10%
15%
20%
25%
30%
35%
40%
Skilled laborshortage
Matching supplyand demand
Economicuncertainty
On-time delivery Profitability Politicaluncertainty
Perc
ent
Sele
ctio
n a
s Le
ad Is
sue
Most Significant Industry Issue
Top Performer Low Performer
Question: Please outline your top challenges over the next 12 months. Respondents: 25 Top Performers, 19 Low Performers
Most Profitable Shops Thinking Very Differently
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REGIONAL DIFFERENCES
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$27.2M
$14.3M
$M
$5M
$10M
$15M
$20M
$25M
$30M
Canada United States ofAmerica
Average Shop Revenue
Auto89%
Non-Auto11%
Canada
Auto61%
Non-Auto39%
United States
Respondent Demographics
Question: Please identify your Revenue for 2017Question: Please identify your company’s geographic locationQuestion: To what extent does your facility support the following markets as a percent of annual revenue? Respondents: 37 Canada, 83 United States
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90%94%
70%
80%81%
87%
60%
65%
70%
75%
80%
85%
90%
95%
100%
United States of America Canada
Overall Capacity Utilization
Quartile Average
Question: Current capacity utilization for design/machining/assembly. Respondents: 37 Canada, 83 United States
80%
80%
77%
89%
85%
84%
50% 70% 90%
Design
Machining
Assembly
Capacity Utilization by Function
Canada United States of America
Canadian Shops Staying Busier OverallDriven by Subset of Under-Utilized US Shops
29
42%
19%
12%
5% 4%
16%
35%
23%
16%13%
6% 6%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Skilled laborshortage
On-time delivery Matching supplyand demand
Economicuncertainty
Politicaluncertainty
Profitability
Perc
ent
Ch
ose
n a
s Le
ad Is
sue
Number One Industry Issues
United States of America Canada
US companies more concerned about current profits, while Canadian shops focused more on future threats to profits.
Question: Please outline your top challenges over the next 12 months. Respondents: 37 Canada, 83 United States
All Countries Facing Skilled Labor ProblemsUS Shops Significantly More Concerned With Profitability
30
25% 29%
56% 52%
9% 7%
10% 13%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
United States ofAmerica
Canada
Profit & Loss Breakdown
EBIT
SG&A
Other COGS
Materials
Top Performers
Overall Survey
70%
30%
55%
45%
EBIT - Overall EBIT – Top Performers
USA 10% 18%
CAN 13% 19%
Question: Please Identify your YTD Gross Profit/Operating Profit/Direct Materials percentage. Respondents: 37 Canada, 83 United States Shops
Canadians Experiencing Margin Advantage
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Canadian Shops Using Profits to Reinvest
$0.5M
$1.5M
$2.5M$3.0M
$0.7M
$1.7M
$3.5M
$7.7M
<$10M $10-$20M $20-$40M >$40M
Revenue Range
Avg CapEx Spend for Tool Shops
US Tool Shops Canadian Tool Shops Canadian shops are investing, on average,
22% more than US counterparts.
Large Canadian molders are investing massively into their businesses.
Question: As a percent of annual revenue, how much is your business planning to contribute towards new capital expenditures in 2017? Respondents: 37 Canada, 83 United States
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▪ The lead concern facing the tooling industry is finding skilled labor. Even with this, shops still remain positive.
▪ Mold shops are seeing higher profits and investing most back in their business even though they are less utilized than die shops.
▪ Tooling customers are consistently less utilized than their tool shop suppliers; however, they still face similar key issues.
▪ The demographics of profitable shops and lower performers are quite similar but their issues surface, most profitable shops look very similar to less profitable counterparts
▪ Canadian shops see a benefit from their higher utilization rates and profits. They are taking advantage of this by investing over 20% more back in to their business compared to their US competitors.
Summary