Tooling & Manufacturing Association

2. Tooling & Manufacturing Association Founded in 1925 by 8 tool & die co’s. Chicago area association of 1,330 co’s. Advocacy, Community, Information, Employee Benefits, Education, Group Purchasing & Business Services You can find TMA and our membership at www.tmanet.com or just put “tooling” into Google and we come up one of 1.6 million (until they change their algorithm).

3. We’ll be discussing . . . • What TMA members do • Import penetration of metal components, dies, and molds • How small and medium size manufacturers view global trade • Issues impacting small manufacturers: ownership costs pricing workforce productivity marketing

5. Here’s what TMA members do? Means of production tools, dies, molds, jigs, fixtures, automation equipment Intermediate inputs components made of metal and plastic and subassemblies Value-added services Design, engineering, prototyping, product development Related services heat treating, plating, engraving Customers Sell directly to OEMs or tier one or two suppliers to OEMs. Sell to companies larger than themselves. Key links in the domestic and global supply chains.

6. NAICS3321 Forging & Stamping2001

7. NAICS 333514Special Die/Tool,Die Set & Fixturing Mfg.2001

8. NAICS 333511Industrial MoldMfg. 2001 60% of imports from Canada, but China growing rapidly.

9. Component suppliers feel underappreciated “The economy is becoming increasingly conceptual. I think that’s good, not bad, for the economy as a whole. But if you’re a maker of stuff, it isn’t [good].” – Fed Chairman testifying at a July 2003 Senate hearing.  “. . . firms benefit from falling prices on intermediate components and parts, . . . ”   Quoted from “Midwest manufacturing and trade with China” from the November 2003 Chicago Fed Letter

10. Who moved my cheese?

12. Just Kidding

13. Free but Fair Free Republicans NAM Larger multinationals Academic community and the Fed Fair Democrats Labor Smaller Manufacturers Single issue fair trade groups Playing Field

14. Free but Fair Free Republicans NAM Larger multinationals Academic community and the Fed Fair Democrats Labor Smaller Manufacturers Single issue fair trade groups Playing Field

15. Free but Fair Free Republicans NAM Larger multinationals Academic community and the Fed Fair Democrats Labor Smaller Manufacturers Single issue fair trade groups Playing Field

16. Metalworking Manufacturing Coalition Industrial Fasteners Institute Forging Industry Association Metals Service Center Institute National Tooling & Machining Association Non-Ferrous Founders’ Society Precision Machined Parts Association Precision Metalforming Association Spring Manufacturers Association Steel Founders Society of America Tooling & Manufacturing Association

17. Which path is most critical?Both important – One essential

18. Excellent Very Good Good Fair Bad 45 38 28 26

19. Contract Mfg. ownership Value is in owner and his relationships. Sell design and production capability, not product. Owner/operators take long term view. Succession planning. Some sell to familyor employees. Some sell to competitorsor customers. Without a succession plan why invest? Should I invest in my business or in my retirement account? Access to capital an issue. Banks are tough.

20. Difficult to control costs Tariffs lifted. Steel prices up 30% to 60%; shortages looming. Due to weaker $, transport cost, Chinese demand. Material 5% to 60% of sale price. Strong supplier (not just customer) relationships. Double digit increases in healthcare. HSA AHP. Product liability insurance. Was mainly problem with aerospace. Now also automotive and medical. Underlying issue is tort reform.

21. Squeeze on margins Breakeven on the first run. Squeeze out cost and make money on the second run. That doesn’t work for “one shot” tooling or automation equipment jobs. Used to be Price, Delivery, Quality – pick two. Now it’s China Prices, Today, Perfect. Throw in FREE design and engineering services. And if material costs go up, absorb it.

22. Workforce I don’t want to run three machines! How does this thing work? Sensor groups. Manufacturing technology programs at risk. If I train them they leave. The changing face of apprentice programs. Life long learning – moving up the value chain. Fewer, but better people.

23. Multiple CAD Systems 40 person Pro Mold & Die in Roselle operates with seven CAD systems UNIGRAGHICS PRO-E CIMATRON CADKEY FastSURF SMART CAM SOLIDVIEW

24. Productivity – IMTS 9/8-15 Machines that cost $50,000 to $2,000,000 or more. Automation. High-speed (30,000 rpm). Pallets. Program and set-up in day to make parts overnight. Automatic tool changers. Rapid set-ups.Flexible Cells. In die or in mold assembly. Lean manufacturing & 5s.(Sort, Set In Order, Shine, Standardize, Sustain) Reduce secondary operationsand human intervention.

26. Marketing strategies Diversify customer base and diversify process. Brand the process or special tooling or equipment. Develop niche. Do “no way in hell jobs” and earn better margins. Move up the complexity curve. Form strategic alliances with U.S. or foreign partners.

27. Component suppliers look for opportunities to make: Subassemblies, not just discreetparts – move up value chain. If not subassemblies, kits of parts that go into a subassembly. Parts coupled with valued-added services like design & engineering.

28. Some marketing examples Chicago area metal stamper selling to Japanese Tier 1 in Mexico. A machining company has a strategy for producing “orphan products”. Diversified 100 person company provides product development service, designs in Ukraine, build molds in-house and also acts as an agent for overseas mold source. Addison, IL stamper makes parts for Motorola worldwide in Addison, in Mexico, and in China. Strategic global supplier.

29. Target industries likely toremain strong in North America Electronics Health & Medical Hydraulics/Pneumatics Industrial/Consumer Hardware Instrumentation Packaging Telecommunications Truck Aerospace Agriculture/Off-highway Appliance/Home Products Automation Automotive Computer/Business Machines Defense/Ordinance

30. Target industries in theU.S. with products that: Are highly engineered complex electro-mechanical devises. Are produced with capital intensive highly automated processes and skilled labor. Are assembled from high value components Have unique technologically advanced applications. Require extremely tight tolerancesand/or advanced materials.

31. Target industries in theU.S. with products that: Require considerable service support and maintenance Are heavy and/or difficult and expensive to ship. Are industrial or commercial, not consumer. Are short lived, rapidly obsolete, or for one time use. (packaging, medical) Are frequently changed and revised

32. Target industries in theU.S. with products that: Depend on short run production and JIT shipments. Are demanded in both domestic and export markets – get involved in a global supply chain Are demanded in U.S. for security reasons -- defense, homeland security, NASA, etc. Require complex communications among engineers and project managers.

33. NAICS 3391Medical Equipment& Supplies Mfg.2001 Percent Change from 1997 to 2001 in 1997 dollars was plus 18.9%.

34. The Hedgehog ConceptFrom Good to Great

35. How to reach TMA . . . Bruce Braker, President Tooling & Manufacturing Association 1177 S. Dee Road Park Ridge, IL 60068 Phone: 847-825-1120 Fax: 847-825-0041 Web site: www.tmanet.com E-mail: bbraker@tmanet.com