Feb 10 2008

THE BONE YARD: Where olde moulds go to die

Published by at 10:57 am under Uncategorized

Too many customers use their supplier base as a free warehouse for older or obsolete tooling.  Many molders are also equally guilty of having a Bone Yard of old tools rusting away in a back corner.  Here’s how to clean house. 
Every shop has a place where old, tired, worn out molds, go to die (rust away into a pile of dust that is blown to the Four Winds).  What is interesting is that when the mold is new and shiny, we keep a mountain of records, purchase orders, mold qualifications etc. etc. but these documents also end up going to the place where obsolete documents go.

Then somebody wanders into the dark caverns on the shop and finds all these old rust bucket molds.  What do you do with them?  Unless you’re a captive molder all or most of your tooling is consignment tooling:  You’ve got it, your customer owns it, but you’re liable for it.

Not only do you have these rust buckets but probably on some nearby skids could be a series of ultrasonic welding fixtures, shrink fixtures, end of arm robot tools and other jigs, fixtures, toys and gadgets used in the production of these long forgotten parts.  The problem with this pile of stuff is that you may have constructed the jugs and fixtures independently to assist your productivity without the knowledge/consent of the customer.  So who owns it?  Who’s allowed to dispose of it?  Where and how do you dispose of it?

With all of the above said and understood, you wander back up to your office, call in Joey (the currently abusable Work-Study Intern) and tell him that his project is to locate the owners of the tools and get rid of them or put them back into production.  It’s as though you’ve sent Joey on a quest for the Holy Grail.

With a great deal of work, research, dust and documents; you can probably come up with a listing of those tools, jigs and fixtures that have not run in production of a minimum of three years.  SPI’s standard practice says if a mold has been out of production for three or more years it is to be considered retired.  Armed with your list of these retired molds you then must contact the companies that own them.  Most people don’t realize how many companies go out of business either through business failure or merger and acquisition.  You quest for the tools original owners will usually come up with some orphaned tools with no contactable owner. Here a very expensive phone call with your lawyer will guide you as to the deposition of an Abandoned Tool.

When you contact the customers who actually own these tools the purchasing, legal, and production departments will immediately go into a tizzy – First of all, because of employee turnover and product life cycles; many people won’t even know what product/part number you’re talking about.  Second if they do know what you’re talking about, someone will bring up the concept of a ‘Lifetime Service Inventory’ which is the amount of spare parts they’ll store in the warehouse until they officially declare the product retired.  Third, when talk of disposing of tooling or returning it to the customer comes up, the Legal department will jump into the dance.  “What if there’s a product recall/product liability action and we’ve destroyed the tooling or some designer can incorporate an old part into a new product thus enjoying a considerable tooling savings. . . . . “  These guys blather on until their tongues dry out.  A second form of tizzy they go into is the “what???” approach.  Here they aren’t too sure who owns the mold or whatever the product was it produced.

Regardless of this silliness usually it comes down to the customer asking for an original purchase order, a tooling construction PO, part numbers, qualification costs, tooling cost on construction and amortized salvage value as of today and other picky and difficult to find documentation.  In a high percentage of cases this request doesn’t even pass the Laugh Test.

In many cases neither you nor your customer have all of this ‘required documentation’ or even a few pieces of it.  This does not mean that this mold should be held in limbo forever.  A simple letter from the customer to you is all it takes (so long as you don’t object) to establish ownership.  With ownership you can now establish disposition of the tooling.

Tooling can be:
(1)    Returned to the customer
(2)    Sold as scrap metal
(3)    Remain stored at your facility (at your liability but now stored for a charge/month/mold)
(4)    Donated as a tax write-off/contribution – trade schools and colleges love this.  However intellectual property issues may arise from the production of parts.

The vehicle you’d use for this would be a disposition of inactive tooling letter.  Go to the FREE RESOURCES section of the site, and then click on Additional Free Resources.  You will find a section of the e-book POLICY MANUAL FOR INJECTION MOLDERS which is the disposition letter.  Feel free to run it under the nose of your legal beagles, cut and paste it onto your letterhad and make it your own. Keep in mind, however, I’m a consultant and not a lawyer.

Ideally every mold in your shop should represent an active production job that brings in money on a regular basis.  This keeps the maintenance program on track and avoids the Snipe Hunts that routinely occur when an order is placed for a seldom run mold.

Some molders have gone to the storage locker rental folks and parked their retired molds on a set of shelves.  It’s off site, secure, and under lock and key.  Other molders have a building or surplus freight container on their property for this purpose.  Still others have dusty skids high on shelves where unknown molds lurk.  Being a mold storage facility doesn’t make any money for you unless you charge rent to store the molds.  Since you’re in the molding business, this second occupation is probably a waste of time.

= = = = = = = = =

This article is virtual. You have the saving grace of knowing if you ignore your retired or orphaned molds long enough they’ll end up as a pile of rust.  Or, you can read this article and clean house scaring your customers to how much junk they have that probably could have been retrofitted into new products if they knew the tooling existed.  Even better, there are trade schools and universities out there anxious to give you a letter showing an excessive tax deductible contribution to their institution in exchange for obsolete tools. OR, you can ignore this article and let somebody else worry about it.

Your Choice.

3 responses so far

3 Responses to “THE BONE YARD: Where olde moulds go to die”

  1. Walter Burton 12 Feb 2008 at 7:18 pm

    Thanks for addressing this issue in an article. We have had endless wrangling with clients over this issue before setting a policy in place which is close to your guidelines, but without the sell for scrap metal / donation.

    We have a clause in our terms and conditions as follows:

    “Tooling dormant for more than twelve (12) months from last ship date is subject to maintenance charges at customer expense, or release BRC to recycle the tool.”

    We use master list of all tooling which shows the last production data and can sort by the tool. For clients with ongoing business / production on new tools we do not charge storage & maintenance.

    Clients with dormant tools and no active projects get a letter with a check box and sigature line asking for permission to:

    1) Recycle the tool (in which case we waive storage and close the project out, and move the tools onto steel mountain r&d pile)

    2) Pay for storage and maintenance for the year since the last production run. Rack rate for dormant tools is $25 per tool per month. Then they can
    a) Collect the tools ex works our plant (we will quote delivery worldwide as prepay service)
    b) Have us continue to store and maintain tools

    The intern time is I think best spent on calling those clients and getting a clear response on these issues.

    Having expensive tools under the roof to maintain and insure is a huge liability. Thanks for pointing this out.

    Best,

    Walter Burt
    Managing Director

  2. Ray Burnson 13 Feb 2008 at 6:32 am

    Bill,
    You might also look into Mold Lien and Retention legislation that has been enacted in numerous states for this specific purpose. I believe SPI has some information on this in their web site. I know it is in place in states where our plants are: VT, NC and SC.

  3. Brenton 10 Mar 2008 at 6:28 pm

    Mentor,

    So very true. We are going through this process now.

    Brent

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