Canadian Tool Shops Embrace Brighter Days
This time a year ago was one of the most precarious in the history of U.S. and Canadian automotive manufacturing base. General Motors Mountain of debt included severely delinquent–some back to 2006 tooling–was expected to signal the imminent closure of the majority of machine tool, die and mold shops in the Windsor and Detroit area.
Thanks to the warnings and efforts of many of you our governments stepped up and provided funding to ensure this tidal wave of bankruptcies stayed a mere nightmare.
Windsor Star columnist Chris Vander Doelen sheds light on the encouraging tooling climate in the Windsor area. His article, "Stepping back from the abyss" stated;
"Instead, the debts were paid — probably the first time in history that all the debtors got their money in a major bankruptcy. Better, the tooling industry started hiring again this month, thanks in part to new tooling ordered for the 2011 Chrysler 300 and Fiat 500.
Orders are now flooding back to the sector, investment has started flowing again on the Canadian side of the industry, and Windsor-area tool and die companies are calling back laid-off workers and placing Help Wanted ads…"
Reading the article a few things become apparent which lead to an encouraging, yet frustrating, conclusion. I'm thrilled for my Canuck friends enjoying a sense of stability missing from our trade for a long time. But why are American shops still closing their doors because of seemingly controllable circumstances (access to financing). Controllable? Well, Canadian MTDM companies are far more likely to receive finance for tooling programs than their American counterparts.
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A tool shop in Canada is 4 times more likely to get the financing they need to do new work than in the US
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Large part because of Export Development Canada Account Receivable Insurance – insures contracts to 90% against credit problems of the buyer
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EDC is a profitable government financing institution that fills financing gaps created by nothing but profit driven private banking system. In 2008, EDC provided $4.2 billion in financing support [A/R Insurance, Direct Lending to Canadian Exporters and their Buyers, Guaranteeing Banks, Equity, Bonding,….] to the Canadian automotive industry.
When is the U.S. going to put in place an EDC for domestic manufacturers? GM and Chrysler and their Tier 1 suppliers inability, or reluctance, to pay the sub-tiers (Tier 2/3) was the primary reason many automotive manufacturing base to cease operations. While GM is currently determining where to source tooling for future programs new Chrysler programs are keeping many MTDM shops in Windsor content with work.
Now Chrysler, which didn't launch a single new vehicle in 2009, has given the green light to a handful of new 2011 cars and trucks. Its new tooling "kicked off a month ago, and it's been hectic," according to Tooling & Equipment Capital Solutions Inc. Director, Craig Wiggins. And while consolidation continues in the U.S. MTDM industry, where weaker companies continue to file for bankruptcy at a rapid clip, the great contraction is over on the Canadian side, Wiggins says.
Wiggins continues, "I can't think of a tool shop that's failed in Windsor. But in Grand Rapids (Mich.) they're still going down, three or four a month."
