A new report from the Center for Automotive Research (CAR) highlights a growing concern for the North American manufacturing sector: the region’s tooling supply chain has become increasingly dependent on overseas sources, while the domestic tooling industry faces significant challenges related to workforce, investment, financing and competitiveness.
The report, “Rebuilding North American Tooling: Risk, Resiliency, and a New Economic Model,” argues that strengthening North American tooling capacity is critical not only to automotive production, but also to the broader manufacturing, aerospace, defence and energy sectors.
A Shrinking North American Tooling Base
CAR’s research shows that the North American tooling industry has experienced decades of decline. In the U.S., metalworking machinery employment has fallen 46% since 1990, while special die and tool employment has declined 56% since 1997. Tooling establishments have also decreased by approximately 15% since 2014.
At the same time, reliance on imported tooling has increased. U.S. imports of metalworking machinery reached approximately $16 billion in 2025, with imports accounting for 37% of U.S. domestic consumption—up from about 20% in 1989.
For Canadian manufacturers, these trends are particularly relevant because Canada and the United States operate as an integrated manufacturing ecosystem. CAR specifically notes that Canadian tool-and-die, mould, engineering and supplier capabilities have historically played an important role in North American automotive production.
The Challenge Goes Beyond Cost
The report identifies several structural challenges that make it difficult for North American toolmakers to compete with lower-cost international suppliers:
- Long payment cycles that require toolmakers to finance materials, engineering and labour well before receiving payment.
- Limited access to affordable capital for equipment and working capital.
- Skilled labour shortages and an aging workforce.
- Customer-specific specifications and inconsistent requirements.
- Sourcing decisions that often prioritize the lowest initial quotation rather than total lifecycle cost.
- Uneven investment in automation, technology and digital manufacturing.
CAR notes that these factors can limit a company’s ability to reinvest in equipment, workforce development and production capacity.
What Can Be Done?
CAR argues that rebuilding North American tooling competitiveness will require changes across the entire supply chain—not simply increased domestic sourcing.
Among its recommendations are:
- More competitive payment terms, including progressive payments tied to verified project milestones.
- Longer-term commitments from customers to qualified North American suppliers to provide the confidence needed to invest in capacity and technology.
- Evaluating suppliers based on total lifecycle cost and supply risk, rather than the initial quoted price alone.
- Greater standardization of specifications, quoting requirements and tooling information where possible.
- Mapping critical tooling capabilities and identifying backup suppliers in Canada and the United States.
- Increased investment in automation, advanced manufacturing technology and workforce development.
The report also emphasizes that capital, technology and workforce development must be addressed together. Investing in new equipment is less effective if companies cannot find the skilled workers needed to operate it, while workforce development is difficult to sustain when margins and demand are unpredictable.
Why This Matters to Canadian Manufacturers
For CTMA members, the report reinforces the importance of maintaining and growing Canada’s tooling and advanced manufacturing capabilities.
A resilient North American supply chain will require competitive Canadian companies that can design, manufacture, repair, modify and replace critical tooling and components. It will also require continued investment in skilled trades, automation, technology and the next generation of manufacturing workers.
CAR concludes that rebuilding this capacity will take time, but that action needs to begin now. The report calls for greater collaboration among manufacturers, suppliers, toolmakers, financial institutions, industry associations and governments to strengthen the North American manufacturing ecosystem.
For Canadian manufacturers, the message is clear: strengthening domestic and North American manufacturing capacity is not simply about reshoring—it is about ensuring the skills, technology, suppliers and infrastructure needed to remain competitive and resilient for the future.
Source: Center for Automotive Research, “Rebuilding North American Tooling: Risk, Resiliency, and a New Economic Model,” October 2026.
You can read the full report here: CAR-Rebuilding-North-American-Tooling-Oct-2026.