Tool and Die Industry suffers uneven competition from imports

By Rose de la Cruz

AS basic as it is to local manufacturers of all kinds of products, the growth of the tool and die industry has seesawed to low levels due to an uneven competition from imported products and the lack of government support to the sector.

The Philippines had the lowest number of shops producing dies, molds and encapsulated parts for basic food, pharmaceutical, electronics, cars and trucks, housewares and other products consumed locally at only 170 shops versus 30,000 shops in China and 6,700 shops in Japan, according to a study done in 2006.

The shops comprised of corporations, single proprietorships, partnerships, cooperatives and government. And local demand for their products was at a mere $45 million in 2006 as against $12.7 billion and Japan’s $18.4 billion, the study noted. Imports of these products hit nearly $50 million in 2011 from just less than $40 million in 2006 while exports rose from close to $3.5 million in 2006 to $7.5 million in 2011.

Virgilio Lanzuela, president of the Rollmaster Machinery and Industrial Services and treasurer of the Philippine Die and Mold Association, identified the following challenges to the industry:

     1) Industry costs include huge retraining cost due to high piracy rate of die and mold makers and the high cost of inputs, power and capital equipment

     2) Technical setbacks include the need to import costly high speed machining, multi axis etc. for improved productivity and the lack of engineering services and support infrastructures.

     3) On the market, the domestic market is too small for tool and die and procurement decisions for die and molds are decided outside the country.


On the costs for local tool and die makers: dies, jigs for die attach and wirebonding consist of 90 localized; the molds for serial feed molds or epoxy resin encapsulation is 100 percent imported and dies for deflash, trim, form singulation (DTFS) is 90 percent localized.

On the costing of plastic injection molds, he said: 15 percent is die material cost; 33.5 percent is basic manufacturing cost (with Philippine value adding); 34.7 percent is mold base cost; 5.8 percent for secondary elements (screws and ejectors) and 11 percent die design fees (with Philippine Value Adding).

He recommended that the government should introduce policy reforms to encourage large companies to buy their requirements for dies and mold from the local industry and strengthen the gathering of industry data on manufacturing and SMEs.

There is no question on the globally competitive skills of technicians, engineers and specialists of the local tool and die industry which is why they get to be pirated by other countries but the weakness of the industry now is the high cost of inputs (labor, power, raw materials, cost of production, coolants and molds) and the unavailability of raw materials in the Philippines.

Also, the Philippines is not known in the world as a metal producing country.

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Monday, 20 January 2020
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