Interview “If you want to produce tomorrow, you must act fairly today”
The situation of German tool and mould makers is getting worse and worse. Interview with Udo Staps, Deputy Chairman of the VDMA Tool and Die Making Association.
Customers and tool manufacturers will only survive the hard international competition in partnership. VDMA Die and Mould therefore encourages all partners in the value-added chain to jointly pull together and act according to the guidelines of the Initiative Fairness+ for their mutual benefit.
Mr Staps, what is the significance of tool and mould making for the industry and what are its characteristics?
There is virtually no consumer product that is not produced with the aid of a mould or a die. On the one hand, the tool is only a small cost factor in production with a share of around 5 %. On the other hand, the design and quality of the tool is the biggest lever for the stability and efficiency of production and the quality of the parts. This is why tool making is considered the supreme discipline of the industry.
Three aspects characterise the industry: high relevance, small-scale structure and extreme innovative power. The challenges for these predominantly small companies are enormous. In relation to their size, they have to pre-finance gigantic projects, constantly invest in state-of-the-art machines, permanently develop themselves technically in line with customer-specific tooling requirements and, due to the enormous cost and deadline pressure, also have to cope with complex automation projects in order to ensure their long-term existence.
How do you assess the current situation in the industry?
Very worrying! Every day we see more and more market players collapsing. If the situation does not improve soon, it will be very difficult for our customers, the component groups/parts producers, to find regional partners for dies and moulds with appropriate know-how. In the end, of course, this also reduces their competitiveness on the world market. The spiral is turning downwards, especially for Germany as a business location.
What are the reasons for this toolmaking crisis?
Most people probably think that the Corona pandemic is to blame. But this is only the tip of the iceberg. Many companies in the sector have been struggling for over a year with the sales crisis in the automotive industry, which is being shaken by change, and against publicly supported competitors from China. Now, distortions of competition are being added by Corona subsidies to competitors from other European countries. And last but not least business practices and in particular the payment behaviour of some major customers have deteriorated again since March.
What do you mean by distortion of competition through Corona aid?
We know of foreign competitors who receive partial financial support for export business within the framework of Corona aid. They are currently flooding the market with tools that no one can build at a cost-covering level for the agreed price. This means that many already ailing tool manufacturers are being forced out of the market for good. We cannot let this happen without objection. My demand to politicians is therefore to ensure fair competition and to prevent dumping more strongly. After all, who benefits in the long term if there is no longer sufficient toolmaking capacity in Germany? Only those competitors of our customers who will be able to rely on their well-established mould suppliers from the respective region in the future.
You also spoke of a further deterioration in payment morale. What is behind this?
In short: Some major customers, who admittedly are not in the best of health either, are using their market power to obtain liquidity from their tool suppliers. Completed contracts are renegotiated, for example by offering a quick payment with discounts. Invoices are returned as defective after the payment period has expired or the acceptance of the finished moulds is delayed. In the end, the liquidity of the tool and mould making industry disappears like snow in the sun. This has already put some companies in a very critical situation. But, dear customers, it's as simple as this: If you want to produce tomorrow, you must act fairly today!
Do you still see a chance to save the tool making industry in Germany?
Let's be honest: All of us here in Germany have exactly one chance to overcome this economic crisis together by each of us doing our part — or failing together. Because if we do not manage to exploit all available time and cost potentials in a reasonable, prudent and fair manner to the advantage of all partners along the value chain, we will have lost together. Whereby — and I would like to emphasise this — I am not at all concerned with platitudinous nationalist demands. Every player in the market who plays by the rules of the game is most welcome. No matter where he is located in the world.
Team spirit and fair play in the industry — how do you imagine this and how do you want to achieve it?
To be precise, I imagine that we will follow the TCO concept (Total Cost of Ownership) so that in the end all partners benefit. We have already published the essential conditions for this to work in the guidelines of our Fairness Plus initiative, which can be viewed by everyone (www.fairnessplus.net/). In private life, most people adhere to these absolutely usual customs: fair negotiations, fair contracts and fair pay. Therefore, those who do not know the tool making industry will not even understand that these demands are almost revolutionary for our industry.
We must and want to succeed in removing the sand of unfairness from the gear of cooperation and replace it by the lubricant of trust. Then we will have an enormous leverage that will benefit us all. For example, fear and safety margins are eliminated. Contracts are easier to check, the lead times for moulds can be shortened. The design of the moulds must then also no longer be based exclusively on endless specifications, but predominantly on the real requirements of the customer. With the consequence that expensive over-engineering becomes unnecessary and the meanwhile completely oversized testing procedure can be reduced. Yes, and in the end, everyone benefits from the fact that the component effort and price become unrivalled additionally with better part quality. Because it is time that everyone finally understands: Fairness is not a weakness, but a question of reason and a plus for everyone! This is what we are promoting with the initiative ‘Fairness Plus’.