Annual ISRN Conference, Vancouver BC, May 13-15, 2004

Introduction
Structure and composition of the automotive parts industry in Windsor-Essex
‘core’ automotive parts
- machinery, tool, die and moulds
Innovation in the Windsor-Essex automotive industry
Windsor-Essex tool, die and mould (TDM) cluster
- origin and evolution
- learning and innovation
Challenges facing the Windsor-Essex TDM cluster
Conclusion
Annual ISRN Conference, Vancouver BC, May 13-15, 2004

OEM ASSEMBLY
‘CORE’ AUTO
PARTS
Plastic parts
Metal parts
Stampings
Subassembly
Other parts
TO ASSEMBLY
FIXTURES
TO AUTO PARTS
PRODUCTION
AUTOMATION/
CONTROL
SYSTEMS
DESIGN/
PROTOTYPING/
TESTING
TOOL & DIE
ENGRAVING &
POLISHING
MOULDS
MTDM

Many tied to OEM assembly plants in Detroit/Windsor
Older and larger (90-400 workers)
Segments



OEM captive plants
Leading Tier 1 TNCs (e.g. Lear, Magna, Siemens,
Krupp Fabco)
Canadian-based Tier 2 suppliers
Annual ISRN Conference, Vancouver BC, May 13-15, 2004

OEM

DCX and Ford links to University of Windsor
‘Core’ Auto Parts
 variant of entrep ôt model


R&D takes place elsewhere in TNC intra-firm and OEM-firm knowledge transfers
 incremental process innovation at plant level
MTDM


 a classic regionally embedded cluster incremental product and process innovation importance of informal/tacit knowledge over patenting
Annual ISRN Conference, Vancouver BC, May 13-15, 2004

Dense network of more than 300 small and medium sized firms developed over last 40 years
Importance of ‘lead’ firm – International Tool Ltd. and skilled European immigrants in cluster formation
Global reputation for innovation and quality
Majority of output exported outside the region
Strong entrepreneurial culture
High-skill, high-wage, non-union
Incremental innovation dependent on tacit knowledge
Importance of informal networks and worker circulation for transfer of tacit knowledge
Annual ISRN Conference, Vancouver BC, May 13-15, 2004

“Many expressive words can be used to describe
Windsor mould makers. Workaholic … ultra competitive
… secretive … egocentric … eccentric … fiercely independent … scholastically uneducated … jet setter
… rich … extravagant. But two words sum them up.
THE BEST.”
(Halberstadt, 1990, p. 8).
Annual ISRN Conference, Vancouver BC, May 13-15, 2004

[T]the best part of it [ITL] was in this engraving room we were in - we had some of the top engravers from
Germany, from Holland. These were immigrants after the war ….those were the guys that trained us. When Pete
[Hedgewick] had the business he would go to Germany
….he literally found the best that were in that trade and brought them over. They ended up training the Canadians here who picked it up. You couldn’t have asked for a better training ground
(Interview, Mould Maker, Windsor, 13 August, 2003).
Annual ISRN Conference, Vancouver BC, May 13-15, 2004

There are a lot of mould shops which started off because a guy working in a shop decided to try it himself. So he gets a small shop and gets some machinery and he can get some work as a subcontractor. He makes some money and he borrows to get some more equipment. So he might have worked in a shop that had forty or fifty people, and 5-6 years later he had twenty or thirty of his own.
(Interview, Senior Business Advisor, Ontario MEOI, Windsor, 13 August,
2003).
Annual ISRN Conference, Vancouver BC, May 13-15, 2004

Firms Spun-off from International Tool Ltd. Prior to 1990
PETER HEDGEWICK’S FAMILY TREE
CANAM TOOLS CENTER TOOL WINDSOR TOOL & DIE
INTERNATIONAL TOOL
MANGER ENGRAVING
J & J TOOL & MOLD
MICHAEL TOOL & MOLD
CMI CENTOCO
ALPHA CATERING
PETER ANTHONY DESIGN
ARNOLD MANUFACTURING
YOGEN FRUZ CAFÉ
KIRBY TOOL & MOLD
REKO TOOL & MOULD
LENS TOOL & MOLD
HALLMARK TOOL
REDOE MOLD
J.F.J. MOLD
R & R TOOL & MOLD
CAVALIER TOOL & MFG.
MIDWEST PRECISION MOLD
REGAL TOOL & MOLD
BERNARD MOULD
ENDRE TOOL & MOLD BINDER TOOL & MOULD
FAUST TOOL
MODERN MOLD
DOUBLE M PLASTICS
FAUST DUPLICATING
TRI-MI MOULD
ACTIVE MOLD & DESIGN
KADEM TECHNOLOGY
WYNANT’S DUPLICATING
UNIQUE TOOL & GAUGE
TECH CENTRE
B & B TOOL & MOULD
LAVAL TOOL & MOULD
WILL BINDER MOLD
Source: Halberstadt, A., 1990, p. 9
Annual ISRN Conference, Vancouver BC, May 13-15, 2004

…. If there’s a 100 shops here - employees – you know - move from one shop to another…they are taking trade secrets with them. Now you can look at that in a negative sense but you can also say that the [new] employees that we are hiring will all have the benefit of the knowledge pool … my new employee to me will be a benefit to me just like the guy I lost will be a benefit to one of my competitors. The synergy there is something that’s really difficult to measure …but easy to imagine, because every time someone may move ...they have a new potential for learning ... because of the different environment … that’s something that a college can’t provide.
You know, in a town that has only say two different shops to go one from the other - you are not going to get that overall increase in not just knowledge but also confidence to attempt to do new things.
(Interview, Mould Maker, Windsor, 8 October, 2003).

There is a lot of capital equipment we don’t have to invest in. We invite time on other people’s machines so there is potential for sharing that kind of capital cost. It goes on a lot, perhaps even to the level of global uniqueness, because we found that the American firms we deal with are amazed [by it]. In Windsor, it is nothing for us to call up someone who competes with us for our own customers and say, “Can you ruffle this block or wirecut this?” The relationship is not adversarial ... we can advance our technology by using our neighbouring shops advanced technology rather than investing in the whole package ourselves.
(Interview, Mould Maker, Windsor, 8 October, 2003).

[there’s] incredible competitive intelligence in the area. If you were from this region and I had a conversation with you, by tomorrow morning half of Windsor would know about it
(Interview, Senior Business Advisor, Ontario MEOI, Windsor, 13 August,
2003).
… its like a network or brotherhood, they have all grown up together and they know who is in the business.
(Interview, Manager, Machine Tool Firm, Windsor, 13 August, 2003).

Increase in global competition - especially China
Changes in OEM’s supply chain practices


Cost-cutting
Cash-flow problems – PPAP

IP issues
HR issues


Ownership succession
Supply and retention of skilled workers

CNC, CAD/CAM and tacit skills
Slowdown in new firm formation
Annual ISRN Conference, Vancouver BC, May 13-15, 2004

[I]n a lot of cases our customers are now taking a lot of our intellectual property and giving it to our competitors to see what they can build it for. And the competitors in many cases, especially the offshore ones, have not made the investments … and not paid for the experience that has created the innovation…I heard of one case just recently
… the business owner said that they had just got a $50 million contract from GM on a stipulation that … half the work be done with the sharing hired partner overseas. So
… after doing that, and spending about $400,000 of design work, GM brought the purchase order, paid them a cancellation fee for the design work - and it all went to
China
(Interview, Mould Manufacturer, Windsor, 8 October 2003).

Now a lot of other shop owners were saying, “That’s not right, that’s short term vision. Do they want you to dispose of all your manufacturing capacity and just provide them with the design experience which is a direct result of that manufacturing experience”. And if you think about it and if you would do that, eventually your design logic would no longer have a manufacturing focus and that very benefit that you would be providing would be lost. Even our original ideas would slow downbecause original ideas are driven from the needs of manufacturing, which you understand because you are a manufacturer. These guys [the OEMs] are congratulating each other for short term gains, but in the long term they don’t realize that they are eroding their own foundations”.
(Interview, Mould Maker,Windsor, 8 October, 2003).

The black magic that was needed to make a mould function, there is still little processing techniques, secrets, know-how that they bring to the party. But this is basic science and physics. There isn’t anything that goes on in that mould or that stamping die that couldn’t be defined with an equation. People don’t want to accept that. They still want to think of it as that old black magic, that art, that “only I know how to do it.” There is still some of that. It’s more in the processing.
(Interview,
Mould Plant Manager, Windsor, 14 August, 2003)
The craftsmanship is being diluted. Troubleshooting, and the concept of machining – how things need to be done. They know how to do it mechanically – program this in, this file goes in. But if something happens, what do they do next?
(Interview, Plant Manager, Tool and Die Company, Windsor, 13 August,
2003).

The business model is broken. Previously, MTDM was a craft industry. The ability to engineer, design and build tools was the formula for success. But now in a market characterized by hyper-competition and over-capacity, business strategy is becoming a more important success factor. I’m not sure how well equipped the small operations are to deal on a new playing field.
(Interview, Windsor City Official, 11 August, 2003).