Tan

Hong Kong-based Ultratech Mold Design & Mfg. Co. Ltd., for example, saw its business plunge 50 percent in the financial crisis that began last year, as the overseas multinational customers it sells to saw demand plunge.

But Ultratech has since partially recovered, and sales now hang at about 25 percent of pre-crisis levels, with orders in the last month “becoming hot,” said Simon Cheung, assistant general manager of sales and marketing.

Still, he said, it’s not clear if the recent activity is a sign of renewed growth, or more driven by rebuilding low inventory levels, he said in an interview at the Asiamold 2009 trade show, held Sept. 16-18 in Guangzhou.

Asiamold is sponsored by Messe Frankfurt and DeMat GmbH, organizers of the Euromold show in Frankfurt, Germany, and the Hong Kong Mould & Die Council.

Many companies interviewed at the event also reported sales drops in the same range as Ultratech, and also cautiously reported conditions were improving, even if they could not tell if the improvements are sustainable.

“We wonder did we really hit the bottom and are we rebounding, or do people need to restock,” Cheung said, noting that the company had dropped employment from more than 1,000 a year ago to about 800 now at its factories in China.

Ace Mold Co. Ltd. of Hong Kong saw the financial crisis put a halt to its previously rapid growth, with sales for the export oriented-firm dropping 10 percent, and employment falling from just over 2,500 to about 2,300, said Chief Executive Officer Jack Yeung.

He said sales appear to have leveled off, and markets seem more rational than in the immediate aftermath of the crisis period, when no one seemed to understand what was happening: “We are slightly more predictable now. Customers are giving us more forecasts. Hopefully their forecasts are right.”

The firms are looking at a variety of strategies, including a greater focus on automation to be more competitive and deal with shortages of skilled labor, a bit of a paradox coming so soon after the massive job cuts of the last year.

Some companies said they were looking at putting more emphasis on China’s growing internal market, but others Hong Kong-based firms at the exhibition expressed skepticism that the very cost-conscious domestic Chinese market offered opportunities for Hong Kong, which has traditionally focused on the more demanding and more expensive export markets.

Ace’s Yeung said his firm is making serious plans for the mainland Chinese market.

The market for the higher-quality, higher-cost goods it makes for North America and Europe is not big in China at the moment, but there are opportunities if the company can revamp its production to lower costs and produce “reasonably quality” goods for the large numbers of rising Chinese middle class consumers, he said.

“It is a good opportunity but you have to rethink” the business model, he said.

Other Hong Kong companies were less sure of China’s domestic market, arguing that they lacked networks and understanding of mainland Chinese business culture, or suggesting that Hong Kong firms, which have traditionally focused on world markets, would not be cheap enough.

“The competiveness of the Hong Kong industry is not very strong in the local market,” said Alfred Au, managing director of Inmold Technology Ltd. and vice chairman of the Hong Kong Mould and Die Council. “We are very strong in the foreign markets.”

Still, he said his firm is trying to find ways to lower prices for the mainland market and “integrate the latest technology in a cheaper way.”

One mainland Chinese mold maker, which does the vast majority of its business with other mainland Chinese firms such as telecom equipment maker ZTE Corp., said it only noticed a slight slowdown from the economic crisis.

“It is ok for us, because 80 percent of our market is localized in China,” said Olive Kan, in the overseas sales department with Hanking Plastic Manufactory (Shenzhen) Co. Ltd. “We seldom worry about orders.”

She said the company is now starting to target foreign markets, and will exhibit at Euromold in December in January.

Singapore moldmaker Amura Precision Tooling Ltd. Pte. said business in its Xiamen, Fujian province facility has switched from focusing on export sales to seeing more than 60 percent of sales target the local Chinese market.

The company is also “80 percent” sure it will build a new US$2 million toolmaking plant in Ho Chi Minh City, Vietnam next year, capable of making about 20 molds a month, to meet demand for higher-quality molds there from automotive and other customers, said A.T. Tan, marketing director.

Others firms, such as Hong Kong-based mold maker Century Step Precision Molds Ltd., have focused efficiency.

Century Step has reduced employment 30 percent at its Dongguan factory, while investing in automation and better pre-production equipment to boost its utilization rate of its production machines from 55 percent to 85 percent, said Edward Lai, president of the company and past president of the Hong Kong Mould and Die Council.

“The key word today is competitiveness,” said Lai. “We cannot compete with local Chinese mold makers in normal commodity molds.”

Some of the firms said they are cautiously starting to hire again.

Hoyu Digital Tooling (HK) Ltd. executive Colman Wong, however, said he expects shortages of skilled mold makers in South China to increase in coming years, and once the current economic troubles pass, the 10 percent annual salary increases of recent years to return.

China’s growing domestic automobile industry, for example, is increasingly hiring technical people, he said.

One mold industry consultant who buys tooling in China and Portugal for the American market said he thought China’s tooling industry will remain strong, but he said Chinese firms will have to focus more on product development skills, working in collaborative partnerships and adding value, rather than competing on price.

That change is happening, said Manuel Pilar, a director of Auburn, Maine-based Cridex Tooling.

“The Chinese suppliers are not always price driven — sometimes they are quality driven and value driven,” he said. “There is less talk only about price.”