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Looking at German Industrial Mobility from the Mould Industry

update:21-01-2020
abstract:

There are several reasons for the migration of manufact […]

There are several reasons for the migration of manufacturing in Germany. The first is that they have a very attitude towards work.
Working for Germans is not just a means of earning a living, it has to be something they like to do. Take mold manufacturing as an example. Whether industrial parts are plastic or metal, they are processed and manufactured by molds, so molds are called the mother of industry. However, the working environment of mold processing is arduous, and the working process is boring. This is not an easy job, so fewer and fewer Germans are willing to do this job. The lack of workers is not the biggest problem. It is really impossible to subcontract business overseas. The biggest problem facing German mold making is the lack of bosses, because there is no way to outsource business management.
Most companies in the European mold industry are family-owned. With the increase of job opportunities in other fields, it is difficult for business managers to find suitable successors unless they are cultivated from an early age. As a result, many mold companies in Germany and even Europe have no one to be the boss.
At the same time, the lack of bosses is even more urgent due to the aging of Germany. European companies that do business with us rarely see young bosses, and the younger generation is unwilling to take over. Those old people can only work until they enter the hospital. I did a little research. German entrepreneurs in the industry are basically 55 or older. Many entrepreneurs are still working in their 70s. The 3 companies I have recently contacted in succession are 70-year-olds.
Fortunately, the European machining industry is relatively stable, and the net profit can be maintained at least above 5%, which is an ideal corporate profit in Europe. So some successors look at the face of money to make it difficult for them to succeed.
Many companies that have no successor can only sell, or simply shut down. There are many such companies in Europe now, and we bought a medical device company.
In addition to the lack of bosses, there are also cost factors. For example, automobile parts are manufactured through molds, and many products need to be assembled. Many of these processes must be handled manually. The more labor needs, the more advantageous the domestic manufacturing industry is.
Adequate labor and sufficient hardships are the characteristics of Made in China. Although the Germans are dedicated, they cannot work as hard as Chinese workers. If a mold is made in China for one month, they need two months. Because they do not work at night, China can work in two shifts, so many things can only be done in China.
Industry is calm and calm
Even so, it does not mean that the German mold industry is declining, because the high-end business with high technical difficulty and profit is to be done in Germany.
The original set of the first mold has the highest technical content and the highest profit, and its pricing is at least three times that of the duplicate mold. At present, German mold companies only do the design and development of the first set of molds, and outsource molds to Chinese companies.
The first set of molds requires in-depth research and development. The Germans have a rich library of molds. They can modify similar new products on similar products before. They do not need to go to the production line to test molds after the products are molded. They only need to simulate the verification on a computer. And then directly mass-produce. The strongest companies in China's mold industry have also developed the first set of molds. If anyone can test the molds and mass-produce them after two or three times, that is already the top level.
The reason for this is that our engineers lack the theoretical level and experience. Most of the mold engineers in China are not from class and have not studied mold design systematically. Basically, they are brought up by the master in the factory. They do things by experience rather than theoretical calculations. They design molds based on experience first. Although the design work was completed in less than a week, a large number of trial and error modifications were needed, which eventually led to long production periods and high costs.
The German company's main task in making molds is to do a lot of calculation to make the design. It takes one month to design a set of molds. After that, it can be mass-produced by simulation verification on a computer. So from design to mass production, the efficiency is much higher than domestic.
Beyond the level of technology, Germans are far more productive than us.
In China, one machine is operated by one person on average, and in Europe, only one worker is required to operate seven machines; for a die casting machine below 1600T, one machine in China requires an average of 1.5 people, and one worker in three European machines; CNC (NC Machine tool) 1 person for 2 domestic machines and 1 person for 4 European machines.
Although domestic workers can make up for the efficiency gap by working overtime, overall, there is at least a three-fold gap in production efficiency between China and the EU.
We can find ways to catch up with the above gaps. The Chinese can endure hardships. The equipment of Chinese enterprises is also quite good now. However, it is difficult to catch up with the gap in materials, and the biggest gap between our profitability and Europe also comes from materials.
For example, the main consumables in the industry are plastics and engineering materials, which are basically monopolized by European and American countries. They are sold at home one-third more expensive than European and American countries for their own use, and some special materials even reach more than double the foreign price. The tax-included price of a material used in the European market in Europe is about 4-4.3 euros / kg, and the tax-included price of this material in the country is 65 yuan / kg, which is twice as expensive as in Europe. Many more, this is still a certain amount of preferential prices. Why is there such a big gap? The import tariff of this material is only 15%. The problem lies in the agency's monopoly on this raw material. In addition, the domestic capital cost is also relatively high.
The cost of materials in our industry accounts for 40% ~ 60% of the total cost. The profit of materials is the largest profit of the industry, so Chinese companies can only earn a little processing fees.
Taking these factors into account, the Germans don't have to worry too much about the transfer of the mold industry.
What have we learned
According to their own circumstances, the Germans seek and cultivate low-end manufacturing alternative capabilities around the world. In the Chinese market, the Chinese's learning ability and hard work are easy to impress them.Although at the beginning our technical capabilities and equipment could not keep up, but their requirements for outsourcing companies were not high, as long as they could do things properly. .
Ten years ago, Eurostar of the European high-speed rail had a spare parts outsourcing project, which required 20 million yuan of products per year, which lasted for ten years.
I didn't have my own factory at that time, only a trading company, we still won the project. When we leased a factory in China and achieved stable delivery, I dared to ask the Germans that we could not do this business with our strength then, and you also know our strength. Why did you outsource the order to us?
The other party said, I know you are a trading company, but ask you questions, you did not cover up and conceal them, you answered honestly, and you are serious and responsible in doing things, so I leave the order to you. Because this order is not a high-tech product, as long as you can do things seriously, we can do a good job of technical guidance.
In their opinion simple things, we still encountered many technical difficulties in doing it. However, as long as we are unsure about the problem in time, the German side will send engineers to guide it. Their principle is that they must speak out if they have any difficulties, and they will help. Once we made a set of gear molds, the precision of the gear required 0.01 mm, the precision of the mold must reach 0.005 mm, all the parameters are correct, but how can not be done, the delivery time is really too late, we have to tell each other. They immediately sent two engineers over, and they got it for us in one go. It turned out that one of our small operations was improper, which caused errors. Later, they gave us a class to standardize the entire design and production process.
The Germans really help us improve our technology. The technical guidance they sent over will be one or two months for large projects and two or three days for small projects. As long as the products produced for them teach us technology for free. At the same time, they will also let us send technicians to Europe for further studies, and every year we deploy staff to Germany for further studies. Many of the factories in the domestic counterparts will not show you, but as long as you are a customer, foreigners will teach them by hand. What are the main points of the process, where are easy to make mistakes, and which detours do they go through? Teach us. They think very clearly that we have improved and saved costs, that is, they save costs.
The deeper you interact with the Germans, the more you have to learn. Some things have gone beyond the production process. They are taught by our principles of doing things. Once we quoted a product from German Volkswagen and they sent us the product standard. After we read it, we gave them our estimate. I quickly received a reply from the German, "Are you sure that this price can make such a product?" Then the product standards were re-listed again, and we hurriedly re-reviewed the materials. VW's product requirements are very strict, and the product standard alone has dozens of pages.
When we first checked the price, we only translated the key points, and we didn't pay attention to the details. After we carefully looked at the details, we found that the previous quotation could not be made at all. The first quotation was 4 euros, and after the re-evaluation, it was 8 euros. The other party replied that the price is reasonable now. Of course, sometimes they are too high, and after removing a reasonable profit, they will ask us why the offer is so high, is there any misunderstanding, and we need to make a cost list. So German companies don't seem to like windfall profits. In fact, they know it's not a long-term business.
Without comparison, we do not know the gap. Some domestic car companies make extensive products, and sometimes there are no or missing product standards because the factory itself does not know the technical requirements of the parts. Ask us to find industry standards by ourselves, and refer to the samples for testing. But often the test is not finished, the other party is anxious to request bulk delivery. Fortunately, China has made rapid progress in recent years. Enterprises such as Geely, Zotye, and Great Wall have made great progress. When they place orders, like German companies, they will have product standards; if there are special standards, they will definitely comment.
summary
Judging from our industry experience, the process of mold manufacturing in Germany and Europe is moving to China. They continue to lead the development of the industry. We learn from them technology and operations, and have accumulated funds for upgrading. Especially in the current situation where the general environment is getting worse, the Europeans do things in a regular way and generally do not owe money.
At the same time that European industries have moved in, we are also moving outward. Vietnam is a hotly-received migration destination. We went there to investigate. The results were not ideal. The industrial chain was almost non-existent, and the workers' skills and hardship were not as good as ours. After all, we have more than ten years of technology accumulation, our engineers have already achieved a considerable standard, and the integrity of the industrial chain and market capacity are beyond their reach.
Therefore, the relocation of our industry is generally from the southeast coast to the central and western regions.For example, we moved from Dongguan to Xianning, Hubei.Although the local supply chain was incomplete at the beginning, many upstream and downstream companies followed in the past two years. The industrial chain is gradually rebuilding, so we basically don't think about relocating factories overseas.

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