2000 Top 25 Diemakers

Feeding the Beast

On the surface, the 10th annual survey of North America's diemakers shows an industry growing its revenues. Beneath that facade, however, are individual companies struggling to remain technologically and financially in the black.

by David Luttenberger, Consulting Editor

Trends identified and either feared or embraced during the past several years continue to shape the cutting edge of the diemaking industry. Technologies that turn the craft of diemaking into science; more efficient, less manually intense and cost-effective machining and rule processing capabilities; and, industry consolidation continue to be harbingers of further change in a segment already deeply enveloped in transition.

"A lot of diemakers fear they will be quickly left behind if they don't embrace [new technologies], regardless of the long-term implications on their business," says die industry veteran Nick Crabtree, technical and educational facilitator for the International association of diecutters & Diemakers (IADD). The rub, and where the revenue-to-profit ratio is being lost, is diemakers feel they have to grow at least 10 percent annually. To achieve that goal, contends Crabtree, they spend $300,000 they don't have on new equipment in hopes it will give them the capability to reap that 10 percent increase. What they neglect to calculate out, he says, is whether that extra 10 percent in revenue is going to pay for that $300,000 machine or system and still return a profit for the business.

With the exception of the largest diemakers, most are only attaining that "extra" 10 percent by undercutting a competitor's price, which eats away at margins. During the past three years alone, the average pre-tax profit margin of a Top 25 diemaker has shrunk from 8.4 percent to 7.9 percent. One leading diemaker this year reported margins as slim as 1.4 percent.

"It has to come down to diemakers willing to work at cost just to pay their bills and stay in business," laments Crabtree, who himself sees many diemakers being unwittingly caught in a downward spiral.

"They buy the technology to be more efficient and produce more," he explains, "then they begin to see an increase in unused capacity." For instance, he points to lasers capable of burning 90 inches or more of board a minute--"that's a hungry beast in more ways than one," contends Crabtree. To fill capacity diemakers then cut their price. Because they cut their price, they experience a decrease in profits, and are convinced the only way to increase profits is to buy more technology to be more productive.

The only factor belying the notion that some diemakers are slowly losing their shirts is a steady increase in revenues--up more than $31 million over 1998, and more than $66 million since 1995. "It's not like the '80s and early '90s when 30 percent or higher profit margins were common, but it was still a very good year overall," says Crabtree.

One reason it was a good year is that some diemakers have been willing to concede not-so-profitable or non-core business units. Those businesses were acquired or absorbed by other diemakers with a more concentrated niche interest.

Another factor contributing to the higher revenue totals/lower profits trend is the superior, high-speed tools the new technologies can produce. While they do fetch a premium price, they can be very costly to produce if diemakers don't keep careful tabs on their "total cost to produce," adds Crabtree.

Along these dielines, Crabtree suggests diemakers look at the value of what's going out the door rather than trying to control what's coming in "on the cheap." He believes many diemakers would do well to consider whether it is more prudent and profitable to spend $5 to make $7, or spend $6 to make $9--a lesson he says U.S. diemakers could learn by taking the lead of their top European counterparts.

2000 Top 25 Diemakers**

1. Container Graphics, Cary, NC

2. Atlas Die, Elkhart, IN

3. DieGraphics Group, Holland, OH

4. Diebec, Montreal, Quebec

5. Bernal Technologies, Richester Hills, MI

6. DiTech Group, Richmond, VA

7. SouthEastern Die, Decataur, GA

8. Avis Roto-Die, Los Angeles, CA

9. Apple Steel Rule Die, Milwaukee, WI

10. Chicago Cutting Die, Northbrook, IL

11. AccuDie, North Tonowanda, NY

12. Converting Technology, Elk Grove Village, IL

13. Jonco Die, Minneapolis, MN

14. Mathias Die, St. Paul, MN

15. Owosso Graphic Arts, Owosso, MI

16. Carolina Steel Rule Die, Greensboro, NC

17. Lasercam, Ridgefield, NJ

18. Allied Gear & Machine, St. Louis, MO

19. Pacific West Coast Dies, Modesto, CA

20. Action Rotary Die, Addison, IL

21. NorCal Design, San Leandro, CA

22. Adko, Ft. Smith, AR

23. Dieknowlogist, New York, NY

24. Precision Rule Die, Sharon Center, OH

25. Stafford Cutting Dies, Indian Trail, NC

**Rankings in packagePRINTING's 10th annual Top 25 Diemakers survey are based on annual sales of die manufacturing exclusively for the package printing or converting industries. Participation is voluntary.