Even with the industry rushing to develop electrified vehicles and new automakers considering North American manufacturing strategies, the amount planned for automotive tooling in the region — seen as a barometer for industry health — is falling.
A big reason: Automakers are playing it conservative on vehicle redesigns as they wait to see what they will be called on to bring to market in the way of EVs.
North American automotive tooling spending is expected to drop to $6.8 billion in 2020 from an estimated $8.7 billion this year, according to a forecast released last month by Harbour Results, a suburban Detroit auto manufacturing consultancy.
Harbour Results, along with forecasting firm LMC Automotive, estimates there will be 45 vehicle launches in 2020 and 47 in 2021. That is down from 57 programs in 2019. And the majority of programs in 2020 and 2021 will be face-lifts, which require less tool spending, said Laurie Harbour, CEO of the consultancy.
“Companies are doing a little more face-lifting in order to do the major redesigns in the future five to 10 years for electric product,” Harbour said. Such face-lift work, she added, represents only about one tenth of the total dollars spent on new tooling because full model redesigns require far more parts and their production dies to be changed.
Harbour Results forecasts that the reduced volume of tooling work will be the norm for the next three to five years. In recent years, the work has represented $8 billion to $10 billion annually in orders. The new norm will be $6.5 billion to $8 billion.
A drop also occurred in 2018. Forecasters had expected project spending to total $9.7 billion for that year — it came in at $6.6 billion instead. Delayed launches accounted for some of that, with 2018 projects pushed into 2019. One delay was the Jeep Grand Cherokee, which required about $1.6 billion in tooling orders.
Tooling orders typically go out about 18 months before a new model’s production launch.
Harbour said tooling activity could be helped by the arrival of new automakers in North America. There were 15 in North America last year.
“But if I fast-forward to 2026, there will be 23 OEMs in the North American market, with plants, sourcing tooling and building vehicles,” Harbour said. “This is actually a good story for toolmakers if they can capture some of these new OEMs.”
The number of models on sale in the U.S. also is expected to grow, Harbour noted, citing IHS Markit data. IHS forecasts there will be 133 EV nameplates on sale in 2026, with sales of 9,600 each on average, for a total volume of 1.28 million. And it forecasts there will be 420 internal combustion engine vehicles on sale then.
“It’s not like the [battery-electric vehicle] market is taking over the world. But I need tools and I need components to make those,” Harbour said. “When I combine it, I have 553 nameplates in the market with dramatic complexity — not just at the toolmaker level, but every supplier and OEM that has to produce these vehicles and the parts for them.”