Different payment standards for U.S. and China: Being larger, Chinese tooling firms have more leverage in their payment terms and receive up to 90% of their payments when the goods are shipped—and before the 18-step Production Part Approval Process is complete.

Meanwhile, U.S. suppliers can typically wait three to six months after PPAP until they are paid. The study described delayed payments as the most urgent structural difference for U.S. policymakers and industry leaders to address. Researchers recommended that government and industry collaborate on benchmarking U.S. Department of Defense payment structures to develop a blueprint for tooling payment rules.

Inconsistent pricing standards: Chinese firms bid roughly one-third of North American prices for small dies, and 25-30% below American prices for large dies, the report states. Yet the lower bids do not reflect total lifecycle value—leaving out tariffs, freight, risk, engineering changes and other costs. The industry needs standardized specifications for quotes, say the researchers, while the U.S. must improve customs data and enforcement “so tooling imports reflect full dollar value, origin, classification and route into North America.”

Unavailable subsidies: Chinese tool-and-die suppliers, unlike their U.S. counterparts, benefit from government support and subsidized, low-interest loans that encourage investment in equipment and advanced engineering teams. Growth leads to better bargaining leverage with customers.

Currently more than 100 Chinese tool-and-die shops are over 750,000 square feet, employ at least 1,000 engineers and have the capacity to produce 800 medium and large dies each year, Martinrea CEO Pat D’Eramo told the CAR researchers. Less than five shops in the U.S. have more than 300 employees and a capacity for 150 dies per year.

Shortages of workers and materials: Despite increased productivity, tooling orders in the U.S. can take 15 weeks or longer—the same as in the 2010s. Contributing to delays are a lack of specialized workers to fill available jobs and, with trade-tightening, a reduction in imports to the U.S. of needed materials, particularly P20 tooling-grade steel for mold-making.

The report noted that Canada should be part of any collaboration to improve the U.S./North American tooling industry. Canada’s tool-and-die capability “has been historically significant to North American automotive production” with automotive manufacturing in both countries relying on that integrated cross-border capacity.