10 MAJOR THREATS FACING THE EUROPEAN TOOLMAKING INDUSTRY

10 Major Challenges for the European Toolmaking Industry

1. Managing Globalization: Balancing Opportunities & Risks

• The COVID-19 crisis disrupted long-term supplier relationships, creating raw material shortages.
• Toolmakers that can integrate both material supply and processing into their services will have a competitive advantage.
• Europe’s limited natural resources and rising costs are pushing market share toward other regions, making global supply chain management more complex.

2. Active Participation in Global Manufacturing Processes

• Supply chain integration is now more important than ever.
• Companies that only serve local markets (e.g., German toolmakers relying solely on their domestic market) will struggle to compete.
• Firms without strong sales & marketing strategies will face difficulties attracting new customers.

3. Shifting from Competition to Collaboration

• In countries like Turkey and Portugal, toolmakers collaborate in clusters to enhance competitiveness.
• However, in German-speaking countries, toolmakers view competitors with suspicion, making it harder to overcome industry challenges together.

4. Changing Industry & Customer Demands

Sectors are evolving rapidly. For example:

• E-mobility in automotive is changing powertrain components, reducing demand for traditional parts.
• Industry 4.0 is revolutionizing manufacturing, emphasizing data automation and real-time connectivity.

Toolmakers must adapt or risk losing market share to companies better integrated into digital workflows.

5. Lack of Optimization & Industry Benchmarks

• Cost structures within the toolmaking industry lack standardized performance benchmarks.
• New data collection efforts are helping, but toolmakers lack a clear method to compare global competitiveness.

6. Increased Time & Cost Pressures

• OEMs are launching products faster each year, forcing toolmakers to accelerate their timelines.
• Many highly skilled toolmakers are struggling to maintain profitability.
• The era of double-digit profit margins is over—toolmakers must adapt to lower margins while remaining competitive.

7. New Materials & Advanced Processing Technologies

As product requirements change, new materials are being introduced. This is impacting sheet metal and plastic processing, requiring:

• Advanced expertise in new material handling
• Stronger collaboration with research & development teams
• Joint knowledge-sharing platforms

8. Automation & Digital Transformation

• CNC machines and tooling equipment are designed for maximum precision, but higher precision also means higher costs.
• In German-speaking countries, machines operate an average of only 2,000 hours per year, far below their potential 8,760 hours.
• To remain competitive, toolmakers must increase machine utilization through:
  • In-house automation
  • Partnerships with automation specialists

9. Cash Flow Management & Investment Planning

• Automotive OEMs have long relied on toolmakers for financing support.
• However, working with only a few major clients is risky—many toolmakers went bankrupt during the pandemic.
• Agile companies that diversified their customer base survived, while those that failed to adapt shut down.
• Companies with modern equipment, smart financial planning, and strong cash flow management will stay competitive.

10. Shortage of Skilled Workers

Like many industries, toolmaking is facing a severe labor shortage. The sector lacks visibility, making it unattractive to young professionals. However, toolmaking offers exciting career opportunities in:

• Digitalization
• Design & creativity
• Teamwork & innovation
• Competitive salaries

To attract new talent, toolmakers must:

• Improve industry branding
• Showcase career growth potential
• Deliver on salary & work-life balance promises