Rubber Industry

ARPM Rubber Manufacturing Blog

The ARPM Rubber Manufacturing Blog allows members to rapidly communicate with each other. Post both questions and answers to questions that other ARPM members have about any industry topic from material and process issues to R&E Tax Credits and other business issues.

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Posted:  29 Apr 2014 12:45
As we quote new business we typically meet the piece price target but exceed the tooling budget. Do many companies amortize tooling to reduce the upfront cost?   Any advice on sources for affordable tooling either overseas or domestic?

Thank you in advance for your feedback,
John Bellett
Sales Engineering Manager
Custom Rubber Corp
Posted:  29 Apr 2014 14:53
This is Jim Meagher at Delta Rubber Co.
Your experience isn't unusual. We do amortize tooling as well as absorb all or a part of the cost to stay in the game.Our overseas experience has been horrible.From our experience you need "feet on the street" to manage foreign suppliers and we simply can't afford to do that.Buyers are sometimes willing to pay a bit more for the pc. price if they don't have to lay out the capital for a tool.Domestic pricing is pretty consistant on standard tooling.Do you mix your own compounds? If so, that should offer you a lower price point to recover tooling.
Best Regards,
Jim Meagher
Posted:  29 Apr 2014 18:44
We are in a similar situation.  We usually charge for tooling prior to the start of production and separately from the part cost.    We have no experience buying molds from oversea suppliers, but we have received quotations from several vendors in China and Taiwan on specific projects.  The problem for us was all of the quotes we received insisted on 50% with the order and full payment at time of shipment, which is risky since you wouldn't have much recourse if the mold is not made correctly.  I would be interested in hearing how others have dealt with that issue.

Daniel Baker
Posted:  01 May 2014 22:56
What we sometime do is amortize the full tooling cost on the quantity of parts expected in the first 3 years and offer price reduction after. For example if a part will cost $0.50 and the tooling cost is $12,000 with expectation of 20,000 units/year; we take $12,000 divided by 3 x 20,000 or 60,000 pcs = $0.20 + the $0.50 = $0.70 for the first 60,000 parts (no matter how long it takes them to buy it) after which the price goes down to $0.50. Over time you only revise price on the $0.50 portion.

Bernard Gregoire