Comparing True Cost of Injection Molds – Foreign vs. Domestic
As a plastics injection molding company, why wouldn’t you buy your molds for the lowest possible cost? Instead of paying $100,000 for molding, why wouldn’t you just pay $40,000? At first glance, that would seem to be a “no brainer.” But remember the old adage, “You get what you pay for.”
It doesn’t take much online research to find cautions about the “true cost” of obtaining an overseas low-cost mold. Most of the articles center around molds built in China. “Product quality risks, supply chain risks, payments risks, and communication risks” is how The Rodon Group categorizes the “Hidden Risks of Offshore Sourcing” on its website.
A Canadian molder, Unique Tool and Gauge, which has chosen to work with Chinese mold makers, provides its perspective in the article, “What’s the True Cost of Buying A ‘Low-Cost’ Mold Overseas?” in Plastics Technology. Darcy King, President and CEO, shared challenges that they have with China. “To source a mold in China … involves managing and dealing with the potential compromises that are an everyday fact of life in the Chinese market. First, our experience suggests that mold design takes longer in China than it does here. When we source a mold in China, we always need to revise mold designs, sometimes several times until it’s correct. Second, while mold construction is significantly faster in the Chinese shops we work with, we just about always find that, upon inspection, we need at least some rework to be done … In both of these areas—design and build—we can trace the additional time needed due to manpower issues and practices.”
Acknowledging the challenges of buying in China, one of the Chinese mold makers, Aco Mold, offers “Buying Tips in China” on its website. “Many foreign injection mold buyers faced buying problems in China, different business culture and language make things complicated and sometime risky. This article will provide a basic guide for you to understand and identify the Chinese injection mold companies.”
Dave Seedorf, Engineering Manager for Team 1 Plastics, a plastic injection molding company for the automotive industry, shared his perspective about molds from China. He said that although Team 1 has never had tooling built in China, they have had a lot of Chinese tooling in the plant. “All of it has been transfer tooling obtained from our customers. We’ve had horrible experiences with it. It has cost us a lot of money by wasting a lot of effort, resources, and time.” In contrast, Seedorf acknowledged that he has talked with people in the plastics industry whose experience is totally different. “There’s a guy I know whose company builds all their tooling in China, and they absolutely love it.”
Seedorf added that low-cost overseas molds is not a new phenomenon. “There’s always a better, cheaper place. Back in the 1990’s, it was Japan. Then, it was China … then India … and now Mexico. It’s sort of like the whales – they travel around in the ocean to find out where the new, bigger, and better school of small fish are. For example, years ago, a mold built in Korea used to be to 30-40% cheaper in cost compared to domestic. I think now, it is very close to the same cost. In fact, sometimes Korea is more expensive than local U.S. toolmakers because Korea’s cost of living has gone up, their economy is stronger, and they are not as desperate for business.”
Seedorf said that the main factors which Team 1 Plastics uses to determine where to source a mold are costs, timing, and previous experience with a company. As Seedorf says, “The big elephant in the room is always cost – that’s going to be the driver from now to the end of time.” Timing is often driven by the customer. “If the customer wants first samples sooner than we can get them overseas, then the decision is domestic.” The final factor is previous experience with a company. “If we built a similar product in Korea, for example, and it was a good relationship and worked out well, then maybe that’s a good match for us. If a previous job did not go well sourced overseas, then we’re going to keep it in the U.S.” Speaking of relationships, Seedorf emphasized that he believes building relationships with your suppliers is vital. In fact, he sees it as a key to a business’ success.
Team 1 Plastics has learned that among different countries, you have different strengths. Seedorf said that what Korea continues to do well is timing. “They can turn around things quickly.” But there are still challenges. “When the mold leaves Korea, we want it to be 100%; so all the trials and the adjustments take place in Korea. When it arrives at our plant, it’s already been trued. However, when we put it on our machines, we haven’t yet established a process or set up automation, such as an end of arm tool, which creates delays for us. We lose some of the time saved in trying to get things automated and prepared for production here at Team 1.”
And, Team 1 Plastics has learned that among different countries, you have different quality. For example, Team 1 Plastics partners with Georges Pernoud, a French toolmaker, which has a very sophisticated operation that is highly engineered. Seedorf said, “They are very expensive, but they can really do some complex things. It depends on what you are looking for. When people say low-cost country (LCC), you’re probably talking about China where I think the tool quality and integrity is really hampered.”
Another factor to consider, Seedorf said, is the complexity and size of the part being produced. “If you are producing small, complex, precision, and tight-tolerance injection molded plastics parts, then LCC tooling is probably not ideal because of the criticality of the molds and parts. However, if the parts being produced are large – for example, door panels, bumpers, or dashboards, then the LCC tooling is more attractive due to the large size of the molds. The tolerances of these parts and molds themselves are usually more forgiving.”
Seedorf said that Team 1 Plastics is currently considering a company in India. “We recently had a meeting with a gentleman who has a source in India that he uses for Engineering tasks, like design work –not necessarily for mold building. I asked him about his knowledge and experience of the actual Indian tool builders. His thought was that they do a good job machining but not on the finishing touches – they lack the finesse.” Seedorf then described what he meant. “Mold building is not just simply cutting steel and putting it together, and you’ve got a great tool. There’s kind of a finesse to it – you’ve got to fit things, you’ve got to polish things, you’ve got to knock edges off, you’ve got to round corners – things like that. What really makes the difference between a machinist and a mold builder is the fitting, polishing, fine detail that has to take place.”
When exploring a new mold builder, Seedorf describes the steps as the “dating process before you get married.” He said that Team 1 Plastics has “visited with several new companies over the last six months. We’ve had a lot of companies visit us, and we talk with them and tell them how we operate, and they tell us how they operate. We send them a lot of RFQs (Request for Quotations), have a lot of conversations, maybe visit their shop, things like that, trying to get a good comfort level. That is really what you’re looking for – a good comfort level. If somebody’s willing to stay close to us through this dating process, and ultimately, we use their numbers to quote to our customers and win the job, and we have no reason to not source them, then we give them a job and see how it works out. If they do a great job, then we’re moving forward together. “
Finally, if all the decision factors — costs, timing, and previous experience with a company — are equal or close to it, Seedorf said that his recommendation of where to source the mold would always be local. “What a great opportunity to employ people in your local community and help them out. That to me is not a driver – that’s just a consequence. You make whatever business decision that you have to make, but what a great result if you can source it locally.”