Some things are very exciting. For example, our manufacturing group is working with a number of tool and `die companies--a group of eight--for two years now. These companies are very large and important to our economy. Typically tool and die companies are very small, but the group of eight has come together to work collaboratively with themselves and their customers and found that they have been able to reduce their business costs by 40 percent.
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| Our manufacturing group is working with a number of tool and `die companies to increase success. (Photo: General Motors of Canada) |
As we go through this business model transformation in the industry, what is really astounding to me is the magnitude of cost reduction that is achievable once you decide to do what you need to do.
Q: Wasn't the tool and die industry hit hard during the past decade?
Cole: It has. They had to change the way they did business and it doesn't mean going to China. They had to rethink their business to look at where there is waste? Where are there things that don't need to be done? What can they do to have a higher level of specialization?
In general, this is happening not just in the tool and die industry. The business model transformation that is occurring across the auto industry is very profound. As an observer it's very exciting to watch. What we can do as observers and researchers of the industry is to try to understand what is really happening.
If you look back historically, we've had a very cyclical industry of high volumes and high profits and low volumes and low profits. And now, we find high volumes and low profitability, so that tells you that high volume is not going to heal the industry. You have to rethink what you do. It is the argument between reengineering versus continuous improvement.