Published in Manufacturing

Q&A: Laurie Harbour, President and CEO, Harbour Results Inc.

BY Sunday, May 12, 2019 10:01pm

At Southfield-based Harbour Results Inc., Laurie Harbour leads a company of analysts and consultants who use data and experience to help small- to medium-sized manufacturers develop strategies to improve their operations, reduce risks and optimize business. She spoke with MiBiz about opportunities and challenges for the region’s tool and die shops.

There has been a revenue dip in the tool and die industry this year. What do you attribute that to?

Laurie Harbour, President and CEO, Harbour Results Inc. COURTESY PHOTO

What’s happening is not recession or contraction of the market. What’s happening is that the automotive industry, in particular, is going through a shift in its business model. We’ve launched a lot of new products in the last five years, like new CUVs and SUVs and interesting new products, but not enough vehicles in this electric and mobility space that everybody talks about.

What are you predicting will happen now?

As we go forward, we need to take those models in their next iteration. If we’ve launched a product last year, its next iteration has to have some form of hybrid model or something moving to the future of mobility because it’s where the market is pulling us. It’s this pivot point in the auto industry where they have to now look forward to new types of engineering for the next decade, the decade after 2020. We need to be looking at what’s going to be different with technology in that era.

Will that bring another uptick in business for tool and die shops?

I think we’re going to see a period of time where it started sort of fall of last year — October, November, December — and has carried into this year of slowdown. There’s quote activity, but people are in delay mode a little bit. And so I think the back half of the year will pick up a bit.

How much?

We’re not going to be at the 2017 level, which was off the charts the biggest year in tooling that we had in history, because we were launching all sorts of new products that were coming out in 2018, 2019, 2020. People bought new machines and they bought a bunch of capacity. And the reality is, that was an anomaly of a year because of all that launch coming out.

What is the market looking like now?

We’re going to settle in at a level that is forecast somewhere around $8 billion in tooling this year. We did just over $10 billion in 2017. If companies built themselves up too big from a capacity standpoint and haven’t right-sized their business, they’re going to struggle. Two billion dollars is a lot to come out of the market, and what that means is that some of these shops have got to readjust.

FOCUS: TOOL & DIE INDUSTRY REPORT

What does that look like for smaller shops?

A lot of the small shops were living off of the big shops, which were outsourcing work to some of these little guys. Well, that work is gone now. We’re not over-capacity, we’re under-capacity. It doesn’t mean that the industry is bad. Those little shops have got to position themselves to get their own work, first of all, and then they’ve got to position themselves to absorb the downturn a little bit.

Are there any quick changes that a small shop can do to readjust in time for a market that is already settling down?

This is going to sound a little bit bizarre, but I think one of the biggest challenges these small companies have in reinventing themselves is marketing. I was at a molder, somebody making plastic parts, and I was helping them find a toolmaker. We were looking at three toolmakers that are all under $10 million in value to make these molds. First thing that the head of engineering did is look at their websites.

How bad were they?

One out of three of them had pictures of the tools that my client was looking to build. They had a definition of the quote competencies — what they’re good at and what they’re not. The next day, when we were going to visit tool shops, my client took those two off the list and just went to the one. They won a $4 million contract at a $9 million company. They basically won about 40 percent of their business in one tool order from their website.

Because the first thing people do is Google everything.

Absolutely! Don’t think that all these young people in the future, who are working at these processors that you’re selling for, are not going to Google. You might not like it, but that’s what they do.

Does that represent a larger cultural shift for the industry?

It’s some of these old cultural business things that have always been done the way that they’ve been done that need (to shift) in order to change who their future customer is and the pipeline of business that they’re going to get.

If automakers increase their pace of change along with the rate of technology, it seems like that should be better for the tool and die industry as a whole.

When I look from a forecast standpoint at the business, I don’t worry. I think there’s plenty of business for tool shops out there. But all of those things are changing at a pace that some of these toolmakers are not even aware of or thinking of. When I talk to a 65-year-old toolmaker, in their lifetime, it’s probably not going to matter. But if they want this legacy to go on, they need that younger generation who is going to start reinventing toolmaking.

As long as they can make it through the present.

The industry is still very strong. The car sales are projected to be high and the tool industry is projected to be high. My caution is to work on your business. Don’t allow yourself to take a hit and fall apart. You’ve got to position yourself for uncertainty.

Interview conducted and condensed by Jessica Young. 

Read 403 times Last modified on Sunday, 12 May 2019 23:42
SUBSCRIBE TO MIBIZ TODAY FOR WEST MICHIGAN’S FINEST BUSINESS NEWS REPORTING >