January 23, 2006
MiBiz West
Karen Gentry

MUSKEGON — All businesses in Michigan’s beleaguered tool and die industry are not down for the count. Muskegon-based Streamline Tooling Systems Inc. is thriving and expects future growth.

Since purchasing an existing Muskegon tool and die business — Sargent Specialty Co. — in 1999, Scott and Danette Sherman have more than doubled sales through diversification and leveraged Scott’s more than 25 years of tool and die experience.

“In the tool and die industry, we’re not all dead. We’re alive and well and one company that is making it,” Danette Sherman told MiBiz.

The Shermans have grown the business from $900,000 in annual sales to $2 million in sales. Their goal is to hit the $3-$5 million range.

“We came in with one job on the floor, 11 employees and $2,000 in accounts receivables,” Danette said.

Scott believes Streamline Tooling has thrived because of its size.

“It’s a lot easier to get $2 million in business than $50 million,” he told MiBiz.

Since buying the company the Shermans built an addition two years ago and now operate in a 12,000-square-foot facility on Laketon Avenue. They invested $300,000 for office renovation, new equipment, windows, a heating system, a 350-ton press, two CNC machines and a wire burner.

The Shermans have lessened their dependence on the automotive industry from 90 to 60 percent. Streamline Tooling is currently a Tier 3 supplier exclusively for the New Domestics including Honda, Toyota, Nissan, Mitsubishi and Mercedes. Twenty percent of its business is with of the office furniture industry, and 10 percent and rising for the medical industry, with the rest in miscellaneous services.

Streamline Tooling’s forte is progressive dies. The company also offers transfer, draw and rollforming dies. It does assembly, welding and fixture checking as well as prototyping, special machines and CNC machining.

Streamline Tooling Systems has 18 employees and plans to add four or five more. The trouble is the Shermans can’t find the workers they need.

“We are struggling to find qualified tool and die makers, CNC programmers and die designers,” said Danette, who handles sales and marketing but has also learned to make parts and run machines. She laments the fact that despite unemployment rates of more than five percent, most of the unemployed don’t have the needed qualifications.

The Shermans have been helped by Bill Ross, apprenticeship coordinator and material science instructor for Muskegon Community College. Through MCC’s apprenticeship program two female students were recently placed with Streamline Tooling as a tool designer and a pattern maker.

The elimination of industrial arts programs at the high school level has led to fewer students seeking out tool and die and other manufacturing careers, according to Ross.

“When you eliminate industrial arts programs, students don’t have exposure to it (manufacturing processes),” Ross said. He noted that high schools have kept their drafting programs but have eliminated hands-on classes. Muskegon Community College offers two tool and die classes as part of its machine technology program.

A trend in the industry, according to Scott, is the use of computers for tasks that used to be done manually, and increased demand for perfection. Part tolerances down to a couple thousandths of an inch have become the industry standard.

Streamline Tooling works with other die shops, which has helped the firm a great deal.

“Ten years ago we were competition. We didn’t share work or information,” Scott said. “We’ve all got the same customers.”

“We’ve learned to rely on each other,” said Danette.

This spirit of collaboration in the tool and die industry is where it’s at, according to Chuck Hadden, vice president of government affairs for the Michigan Manufacturers Association. He said businesses making up collaboratives in the state-designated Tool & Die Recovery Zones are talking about job sharing and working out agreements. Companies located in recovery zones are exempt from the Single Business Tax, local personal property taxes and other taxes for a period of up to 15 years if approved by local governments.

There are currently 20 Tool & Die Recovery Zones with room for seven more after new legislation was passed in late December. That legislation changed the number of employees in a company eligible to be part of the zones from 50 to 75. Existing collaboratives will also be able to merge together.

“For this to work we need bigger consortiums,” Hadden told MiBiz. “I think we’ll see more collaboratives formed next year. People are on waiting lists that want to join.”

Although the industry has gone through significant downsizing with a lot of companies going out of business, some diversified tool and die businesses are thriving, Hadden said.

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This article appeared in the January 23, 2006 issue of MiBiz, read by upper management executives in West and Southwest Michigan. Print subscriptions are free to qualified individuals who do business in West and Southwest Michigan. For further information about MiBiz Network, visit www.mibiz.com.