Rethinking Globalization The World of Tooling – An Overview of Emerging Markets
14.09.2023 Prof. A guest post by Dr.-England. Wolfgang Buss, Garrett Lucas, Bernd Haase, Julian Triszono, Thomas Aberius Reading time: 6 minutes
In a rapidly evolving global landscape impacted by events such as the COVID-19 pandemic and rising protectionism, it is more important than ever for companies to understand the dynamics of the tooling industry. The World of Tooling 2022 study by the WBA Tooling Academy Aachen provides a comprehensive analysis of international tooling markets, highlighting key players and emerging trends.
With data from multiple trusted sources, including the world’s largest tooling database, the study aims to equip industry participants with the insights needed to make strategic decisions.
Tooling companies need to proactively adapt to disruptions in their supply chain and structure to meet the needs of their customers. A building block in responding appropriately to potential disruptions is knowledge of the tooling markets and how they are evolving. For example, the collapse of supply chains due to the COVID-19 pandemic led to an economic downturn, especially in 2020. More generally, increasing protectionism and a new critical perspective on interdependence in global supply chains have changed the pace of globalization. Although globalization will not be reversed, there is a tendency to focus more on regional supply chains. To shed light on this development, the article focuses on three tooling markets that have improved their performance in recent years. The WBA Tooling Academy based its analysis on three studies from the World of Tooling series. The focus is on three countries in three different industrial sectors due to their positive developments – the Czech Republic for Eastern Europe, Mexico for North America and Thailand for Southeast Asia.
In-depth guide based on robust data and expert analysis
The World of Tooling (WOT) study series provides companies and people in the tooling industry with well-founded statements on the performance of the international tooling markets. The 2022 WoT study presents the most relevant markets in detail and compares them in terms of market size, tooling capacity and growth potential. In addition to established tooling markets such as China, Germany and the United States, emerging markets that are not directly involved in tooling such as Thailand and Brazil are also presented. Description and evaluation are based on various quantitative and qualitative evaluation principles. These include expert interviews, benchmarking data, economic indicators and personal travel experiences. Benchmarking data is taken from the world’s largest tooling database. This joint database of the Machine Tools and Production Engineering Laboratory (WZL) and the Fraunhofer Institute for Production Technology (IPT) currently contains more than 1,000 benchmarking data sets dating back more than five years from German tool shops and more than 3,000 evaluated international tool shops. . , This database is enriched with data from publicly accessible databases and portals such as Comtrade, Eurostat and the International Special Tooling and Machining Association (ISTMA), as well as data from the Federal Statistical Office and the German Engineering Federation (VDMA).
Market volume and trade flow of focus markets in 2020
(Source: WBA Tooling Academy)
Beyond China and the United States: New frontiers unveiled in the tooling market
World of Tooling Radar provides an overview of all the markets considered and summarizes the results of the study’s analysis. It reflects the current and future relevance of the most important tooling markets. Relevance is measured in terms of production volume and existing tooling capacity. Furthermore, the growth potential of each market is assessed. Four market groups can be identified that share common characteristics in terms of their market performance, namely Allstars, Established, Rookies and Rising Stars. This article focuses on three markets that have seen improvement since the previous edition of the study and are believed to have further potential.
For the third consecutive time, the Czech Republic has shown positive growth and is now included in the group of established markets. After a period of economic stagnation following the 2008 financial crisis, the Czech economy is growing, with the manufacturing sector growing by nearly 20 percent since 2015. The Czech Republic benefits greatly from its central location in the European Union, has a common currency with its neighbors and salary levels are lower than many of its competitors. This makes it an attractive destination for German FDI, despite low labor availability. The strong connection with the German economy is also evidenced by the fact that Germany is the Czech Republic’s largest importer and exporter of injection molding, sheet metal and concrete forming equipment. With an educated workforce and a growing economy in the middle of Europe, the tooling industry in the Czech Republic is seen as having a positive future with high potential for growth.
Geopolitical shifts are reshaping North America’s tooling trade landscape
Mexico’s positive performance can be partly attributed to the thaw in US-China relations and the strengthening of already close trade ties between Mexico and its northern neighbor following the election of US President Joe Biden. With decisive gains in labor costs, the Mexican economy has been able to take advantage of these gains. Mexico overtook China as the US’s largest trading partner as early as 2023. Despite some progress and setbacks due to political circumstances in recent years, the economies of the two countries have long been closely linked, as has the Texas-Mexico automotive supercluster extending to the north. In the US from Mexico to Texas. Many automotive companies continue to invest in the sector, putting pressure on the development of the Mexican tooling industry, as in the past almost all tools needed for the automotive sector were imported. As a result, equipment imports into Mexico in the sheet metal and concrete manufacturing equipment category have declined by 23 percent. Meanwhile, Mexican equipment companies are unable to meet demand for equipment due to a lack of skilled workers. Overall, the industry is not as developed as the size of the automotive industry would suggest. Its development is hindered by problems of infrastructure, education, crime and corruption. All of these issues need to be addressed to unlock Mexico’s potential and attract additional foreign direct investment. In conclusion, given the level of economic activity in the north of the country, the Mexican tooling industry is expected to grow positively from the current low level. This dynamic development also led to rookie rankings.
Stand Vom 23.03.2021
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Development of focus countries from 2015 to 2022
(Source: WBA Tooling Academy)
Thailand, which is included in the World of Tooling study for the first time in 2022, has also benefited from China’s growth. The Thai economy has experienced strong growth in recent decades, moving from a low-income to an upper-middle-income country. Despite being incorporated for the first time, Thailand’s tooling industry boasts the ninth largest market size and ranks fourth in terms of capacity. While Thailand has strong political ties with the US and NATO, it also has close relations with China. The political situation in Thailand is tense, partly due to the military coup in 2014 and increasing protests since 2020. Nevertheless, the Thai economy is expected to grow steadily in the coming years and has significant potential in terms of workforce. The Thai government supports and promotes the tooling industry. The main export markets for tools are the countries of the Asia-Pacific region, with Japan, Vietnam and India leading the way. As Thailand still has a large import surplus for tools, there is significant potential for the tooling industry as more manufacturing companies, particularly from Japan and China, invest in the Southeast Asian country.
The results of the study show that despite difficult economic conditions and related uncertainties in international trade, many tooling markets have developed positively. The tooling markets of Mexico, the Czech Republic and Thailand have demonstrated their ability to evolve and take advantage of opportunities in the face of current events and changes in the global economy. To proactively develop and strengthen your strategic position, detailed knowledge of both the status quo and relevant developments is essential. This is where World of Tooling 2022 helps in knowledge building and informed decision making. Further information on the international tooling industry can be found in the World of Tooling 2022 study published by the WBA Tooling Academy Aachen in October 2022. The study can be downloaded for free from the WBA website.
WBA Tooling Academy Aachen