The Tool and Die Industry: Contribution to U.S. Manufacturing and Federal Policy Considerations

Bill Canis
Specialist in Industrial Organization and Business

Tools, dies, and molds are fundamental to durable-goods manufacturing. Tools are used to cut and form metal and other materials. Dies are metal forms used to shape metal in stamping and forging operations. Molds, also of metal, are used to shape plastics, ceramics, and composite materials. Tool and die companies, typically small businesses staffed by skilled craft workers, make it possible for their customers to manufacture innovative products, from auto parts to household appliances to fighter planes.

Since 1998, over one-third of U.S. tool, die, and mold establishments have gone out of business, closing at twice the rate of manufacturers in general. Employment has fallen by nearly half. Some of that decline is due to the introduction of new technology that has reduced the need for highly trained toolmakers and die makers. About half of toolmakers’ work is for the motor vehicle industry, and the steep downturn in U.S. vehicle production was a significant factor in their decline. In addition, the industry has lost ground because of the shift of major U.S. customers abroad, especially to China, where U.S. manufacturers generally use local toolmakers. Compounding that trend is the expansion of foreign auto manufacturers in the United States, some of which reportedly retain ties to tool, die, and mold makers in their home countries.

The health of tool and die makers is likely to be of concern to Congress, because they are a small but critical part of durable goods manufacturing. Congress has long shown special concern for the industry because of the highly skilled nature of the jobs it provides and because of its importance to manufacturing. The issues facing the tool and die sector are a microcosm of the challenges facing policymakers as they seek to promote high-value manufacturing in the United States.

In addition to global competitiveness issues, the tool, die, and mold industry may face a skills shortage. The average age of a toolmaker is 52, and many experienced toolmakers are expected to retire in the next few years. Managers of tool and die companies say there is a lack of workers with sufficient training in mathematics and in technology applications to replace workers as they retire.

The industry’s prospects are closely tied to the outlook for durable-goods manufacturing in general. The revival of auto manufacturing and the domestic expansion of other durables manufacturers in the United States may offer new opportunities for firms that have survived the tool and die industry’s long slump. On the other hand, contraction of defense procurement spending could hurt tool and die makers, and the increase of Chinese auto parts imports may pose new challenges.

Federal policy options include support for worker training and technology programs, extension of tax incentives for purchasing new equipment and greater scrutiny of alleged subsidies of foreign tool and die makers.


Date of Report: March 16, 2012
Number of Pages: 20
Order Number: R42411
Price: $29.95

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