10 AUGUST 20, 2018 production line Toolmakers get caught in tariff crossfi re Harbour: Hefty bills ahead for automakers, suppliers cent of the auto industry’s injection molds are tra- ditionally produced in Canada — largely in Wind- sor. In some cases, Canadian tooling companies also now rely on Tier 2 content from China. Lindsay Chappell lchappell@crain.com import tariff on the metal, as well as tariff s on specifi c Chinese-made automotive tooling. A profi t pinch point is developing for auto- makers and suppliers working on new vehicle platforms: the cost of the tools to build them.
Imported automotive injection molds have been hit with a tariff , and that is spinning uncer- tainty through the tooling industry, said Harbour, CEO of Harbour Results Inc. in suburban Detroit. “Every tool out of Windsor will face an added tax,” Harbour said. “It will change the equation on every part and every vehicle that relies on that tool. Toolmakers are adding tariff costs to their prices, says Laurie Harbour, a consultant who works closely with the North American supplier and tool-and-die industries. A major shift in automotive tool manufactur- ing has occurred over the past two decades with China emerging as a key source for North Amer- ican manufacturers.
“Adding 25 percent to the price of an item can have a huge impact on its profi t margin,” Har- bour said. “It’s not clear who’s going to absorb the added cost. If I’m a toolmaker, it might be all of the margin I had on the job.” CHINA HALEY Harbour warns that a wave of higher-than-ex- pected bills from tool shops will soon hit the auto industry. Toolmakers are dealing with higher prices for steel as a result of a new 25 percent U.S. Further complicating the outlook is how the United States and Canada will resolve the North American Free Trade Agreement. Some 80 per- Harbour: “On the positive side, this could be great news for U.S.
tool producers.” see TOOLS , next page JDA envisions supply chains that can predict JDA Software, a Scottsdale, Ariz., supplier of software and supply chain management con- sulting , is working toward a future in which supply chain managers will have better visibili- ty to make faster decisions. CEO Girish Rishi, 49, spoke with News Editor Lindsay Chappell . Q: What’s driving change in supply chain management ? A: Supply chains are still basically analog. And what manufacturers and supply chain managers are looking for now is the use of artifi cial intelli- gence and machine learn- ing. Where will AI most like- ly play a role?
T e areas of inventory and intermodal container shipping — to give visibili- ty in the last mile and the last inch of shipment. The company’s Power Solutions business is one of the industry’s biggest battery sources. QA & Johnson Controls ponders fate of its battery business What do you mean that supply chains are still analog ? T ey are being run with internal data. Going forward, supply chains will be heavily infl uenced by external data: de- mographics, local country consumer trends, real-time visibility of parts and equipment, and event data . GIRISH RISHI Supplier vows to make its decision this fall Why does an automaker want this? Automakers want to be able to serve a single consumer.
For a supply chain to have that level of agility requires more insight to be able to predict what that consumer wants. a J Jim Henry autonews@crain.com ohnson Controls International has imposed a fall deadline on deciding what to do with its Power Solutions business. But at least publicly, it is keeping all options open for one of the industry’s biggest battery sources. NUMBER TO WATCH $1 billion That’s General Motors’ estimate for the increase in its 2018 material costs. Automakers and suppliers are warily watching material costs climb. Reasons include higher oil costs, infl ation and tighter supplies.
But the industry also is absorbing the impact of tariffs — 25 percent on certain steel products and 10 percent on aluminum entering the U.S. GM’s $1 billion estimate is double its earlier forecast. “The challenge has been greater than anticipated,” CFO Chuck Stevens told analysts during GM’s second-quarter earnings call. He described the materials market as “uncertain and volatile.” JCI is discussing whether to keep the bat- tery business, sell it or spin it off . Johnson Controls’ Power Solutions business, under “strategic review” since March, may be retained, sold or spun off.
“As we previously dis- cussed, we are analyz- ing multiple options,” JCI CEO George Oliver told analysts during the company’s July 31 quar- terly earnings confer- ence call. about its deliberations. Oliver told investors that the results of the strategic review would be disclosed no lat- er than the company’s fi scal fourth quarter report, due in November for the period ending Sept. 30. ness.
Bloomberg said the top two contend- ers are Apollo Global Management, a New York fund that manages $69 billion in as- sets representing more than 150 compa- nies, and Brookfi eld Asset Management, a Toronto investment fi rm with $285 billion in assets under management, including $43 billion in assets in the renewable T e company has been tight-lipped about its plans since putting Power Solutions un- der “strategic review” in March. Oliver: “Analyzing multiple options” Bloomberg reported last month that, ac- cording to people familiar with the discus- sions, as many as four investor groups are interested in bidding on the battery busi- Management has provided no details see JCI , next page