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CAMM chair says bumpy EV transition pushing mold industry into crisis

CAMM chair says bumpy EV transition pushing mold industry into crisis

Those gathered at Caesars Windsor for the Canadian Association of Mold Makers annual general meeting last week heard the bumpy transition to electric vehicles, which has been dotted with product postponements and cancellations recently, is creating a ‘crisis’ in the automotive supply chain.

Combined with slower than anticipated customer interest and automakers looking to squeeze their supply chains for the savings that will bring down EV prices, newly appointed CAMM chair Saylo Lam said companies are being pushed into financial distress.

“The mould industry is in a state of crisis in North America,” said Lam, president of Windsor’s Circle 5, a manufacturer of precision molds for a range of industries. “There are fewer of us than 15 years ago.

“Companies are searching for quotes exclusively from outside of North America for parts. We’re not even getting to bid to be competitive.

“That’s not acceptable. It’s time to stop this and protect Canadian companies.”

Newly appointed Canadian Association of Mold Makers chair Saylo Lam, also president of Windsor mold-making firm Circle 5, addresses CAMM’s annual general meeting at Caesars Windsor Thursday, June 27, 2024. PHOTO BY DAVE WADDELL /Windsor Star

Lam assumed his new position Thursday, but he already has a call scheduled for this week with federal Industry Minister Mary Ng to discuss the situation and what can be done. He said his membership’s fear is a return to rampant offshoring and the Chinese backdooring into North America by setting up in Mexico.

“We have to examine what policies can be put in place to level the playing field,” Lam said.

CAMM executive director Nicole Vlanich said delays of projects and cancellations has piled the financial stress on companies.

Announcements such as Ford’s postponement of EV production at its Oakville Assembly Plant until 2027 sent shock waves through the automotive supply chain.

“A lot of local companies have made significant investments, took out loans to fill contracts for EVs for different (parts),” Vlanich said. “Suddenly everything is changing with the automakers pulling back on EVs.

“A lot of these local companies are small shops. Now, they’re scrambling.”

Vlanich said fortunately many companies have protected themselves from such industry volatility by diversifying into packaging, medical supplies, aerospace and the defence industries. Others have enough automotive business to ride out what everyone feels is just a pause in the EV transition.

“Mould makers are a resilient group,” Vlanich said. “We’re going through a slowdown that is very reminiscent of 2007-08. These are challenging times.”

Laurie Harbour, a partner in the automotive data analysis/consulting firm Wipfli and founder of Harbour Results, said one of the biggest drivers of the slowdown this year was General Motors awarding contracts for future products but then not putting anything into action.

GM isn’t alone in slowing its EV transition.

In addition to Ford’s postponement of new EV production at its Oakville Assembly Plant to 2027, the company has also announced other postponements of new electric product launches.

“We’re seeing projects pushed back 12-18-24 months,” Harbour said. “We’re creating an unintended bubble of demand that poses its own problems.”

Harbour blames many automakers for creating some of their own problems by trying to make the leap from internal combustion engines to full battery electric. Ford and General Motors are now backtracking and introducing more hybrid products while Stellantis had the foresight to design their new platforms to accommodate battery-electric vehicles (BEV), hybrid and internal combustion engines.

“Too many automakers tried to skip the hybrid step,” Harbour said. “Now, they’re having to redesign their platforms to accommodate gas-powered engines.

“That’s the case with the two-year postponement by Ford in Oakville. The platform for that plant is already designed, but now they’re redesigning it to also handle hybrids.”

As automakers pull back, mould makers predict the investment in tools and molds will be only about half of the pre-pandemic peak of 2018 when the auto industry spent $12 billion. Harbour is forecasting combined investment in tools and molds will be $6 billion in 2024, $7.2 billion in 2025 and $6.5 billion in 2026.

Despite the current gloom, Harbour thinks things will pick up in the back half of the year once the uncertainty of the U.S. presidential election is resolved and expected U.S. interest rate cuts kick in. She also feels the second half of the decade will see EV sales and demand pick up momentum as charging infrastructure is expanded.

“I’m still very bullish that it’ll be better in the second half of the decade because we have to eventually launch these products,” said Harbour noting the average age of vehicles on the roads in the U.S. is 12.9 years.

“We’re going to be replacing all these cars that are aging out.”

Reposted from The Windsor Star – https://windsorstar.com/news/local-news/camm-chair-says-bumpy-ev-transition-pushing-mold-industry-into-crisis

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