2000 Top 25 Diemakers
Feeding the Beast
On the surface, the 10th annual survey of North America's diemakers shows an industry growing its revenues. Beneath that facade, however, are individual companies struggling to remain technologically and financially in the black.
by David Luttenberger, Consulting Editor
Trends identified and either feared or embraced during the past several years continue to shape the cutting edge of the diemaking industry. Technologies that turn the craft of diemaking into science; more efficient, less manually intense and cost-effective machining and rule processing capabilities; and, industry consolidation continue to be harbingers of further change in a segment already deeply enveloped in transition.
"A lot of diemakers fear they will be quickly left behind if they don't embrace [new technologies], regardless of the long-term implications on their business," says die industry veteran Nick Crabtree, technical and educational facilitator for the International association of diecutters & Diemakers (IADD). The rub, and where the revenue-to-profit ratio is being lost, is diemakers feel they have to grow at least 10 percent annually. To achieve that goal, contends Crabtree, they spend $300,000 they don't have on new equipment in hopes it will give them the capability to reap that 10 percent increase. What they neglect to calculate out, he says, is whether that extra 10 percent in revenue is going to pay for that $300,000 machine or system and still return a profit for the business.
With the exception of the largest diemakers, most are only attaining that "extra" 10 percent by undercutting a competitor's price, which eats away at margins. During the past three years alone, the average pre-tax profit margin of a Top 25 diemaker has shrunk from 8.4 percent to 7.9 percent. One leading diemaker this year reported margins as slim as 1.4 percent.
"It has to come down to diemakers willing to work at cost just to pay their bills and stay in business," laments Crabtree, who himself sees many diemakers being unwittingly caught in a downward spiral.
- Companies:
- Chicago Cutting Die
- Container Graphics
- Places:
- North America