Introduction
This article focuses on aluminum mold manufacturing in Vietnam, explaining the mechanisms for cost reduction and the key points for maintaining quality. The purpose is to provide information that will be useful for management and procurement officers in the manufacturing industry as they seek to diversify overseas procurement while optimizing costs.
Vietnam’s manufacturing industry has rapidly increased its presence in recent years. Currently, the value-added of the manufacturing industry accounts for about 20% of the GDP, while the average hourly wage is about 3 USD, less than half of China’s approximately 6.5 USD (Vietnam Briefing, Vietnam Briefing). In addition to this cost advantage, infrastructure development supporting exports to Europe and North America is progressing, drawing attention to aluminum mold manufacturing in Vietnam.
In the following chapters, we will introduce specific methods and success stories.
Overview of Vietnam’s Manufacturing Environment
In recent years, Vietnam’s manufacturing industry has accounted for approximately 24.4% of the GDP on a value-added basis, recording a production value of about 102.6 billion USD in 2024 alone (TheGlobalEconomy.com, Macrotrends). Supporting this growth are an integrated production system, low labor and infrastructure costs, and active policy support.
Features of the Integrated Production System
- Vertical Integration from Design to Assembly
In industrial parks in Bac Ninh and Bac Giang, a supply chain has been established that allows for the completion of mold design → casting → cutting → surface treatment → final assembly within the same area.
- Lead Time Reduction and Cost Reduction
By increasing the domestic procurement ratio of parts to over 70%, the hassle of intermediate transportation and outsourcing management is reduced, making it possible to shorten production lead times by about 30% and costs by about 20% compared to conventional methods.
- Compliance with Quality Standards for Japan, Europe, and the US
Many factories have introduced quality management systems equivalent to IATF 16949 to meet customer certification requirements.
Current Status of Labor and Infrastructure Costs
- Low Labor Costs
The average monthly salary in 2024 is 7.7-8.4 million VND (approx. 304-340 USD), which is more than 55% lower than the same job in China (approx. 650-850 USD) (Talentnet Group, Sourcify).
- Stabilizing Effect of Minimum Wage
The minimum monthly wage is set at 4.96 million VND (approx. 196 USD) even at the highest regional level, which suppresses fluctuations in labor costs.
- Status of Logistics Infrastructure
The Logistics Performance Index (LPI) score from the World Bank is 3.3, ranking 43rd out of 139 countries. The expansion of port capacity and highway networks has shortened import/export lead times by an average of 2.5 days over the past five years (Trading Economics).
Policy Support and Trends in Attracting Foreign Investment
- Tax and Investment Incentives
Under the Law on Investment, manufacturing projects are exempt from corporate income tax (CIT) for 3-4 years, followed by a preferential tax rate of 10% for the next 7 years (Vietnam Briefing).
- Expansion of FDI Inflow
Foreign direct investment (FDI) in the manufacturing industry reached approximately 23.2 billion USD in 2023, accounting for about 60% of the total (Wikipedia).
- Shift to High-Tech Fields
The government has announced a strategy to attract over 400 billion USD in FDI annually over the next five years as a measure to attract investment in the semiconductor and green energy sectors (Financial Times).
These factors interact to accelerate Vietnam’s transition to high-value-added manufacturing while maintaining cost competitiveness. The next chapter will look at the technical points of aluminum mold manufacturing in detail.
Basic Technologies in Vietnam’s Aluminum Mold Manufacturing
In aluminum mold manufacturing, it is essential to highly coordinate the three elements of design accuracy, analysis technology, and processing equipment to achieve both cost and quality. This chapter explains the key points of each in detail.
Mold Design Methods and Material Selection Criteria
In mold design, by controlling wall thickness variations to within ±0.5 mm, stress concentration during cooling is mitigated, preventing crack formation1. Additionally, the shape of the flow paths (gates and runners) is optimized on CAD for curvature and cross-sectional area to prevent the molten metal from “entrapment” or “stagnation.” This reduces wall thickness variations in the product and can suppress quality variations between shots to within ±0.1 mm.
For material selection, a balance between heat resistance and machinability is emphasized. It is common to use the highly machinable A6061 alloy for prototype molds and the high-strength A7075 alloy for mass production molds. A6061 has less distortion after welding, which shortens the prototype development period, while A7075 has high wear resistance, making it suitable for long-life molds exceeding 1 million shots.
Optimization Using Flow Analysis Software (ADSTEFAN)
The flow analysis tool ADSTEFAN visualizes the internal molten metal flow and gas generation locations on a 3D model. In a case where the “thermal interference between the cooling water circuit and the flow path,” identified in the initial analysis, was resolved by extending the cooling line to the vicinity of the mold core, the solidification layer thickness was made uniform, successfully reducing the defect rate from 15% to 5%. Furthermore, by increasing the cooling water pressure by 0.2 MPa and the flow rate by 10%, the variation in mold surface temperature was suppressed to within ±3°C, shortening the cycle time by 5%.
Role of Cutting Equipment (5-Axis Machining Centers / NC Lathes)
5-axis machining centers enable simultaneous machining of undercuts and one-pass finishing of narrow areas and micro-ribs. This reduces the number of machining processes by 30% compared to conventional methods and controls error accumulation to within a tolerance of ±0.02 mm. NC lathes can mass-produce pin and core parts with a diameter of Ø50 mm or less with a tolerance of ±0.01 mm. In finishing, mirror finishing or shot blasting is applied to achieve a surface roughness of Ra0.4 μm or less. This improves the mold release properties of the molded product and extends the mold life by 20%.
- JIS B 6321 recommends wall thickness variations within ±1 mm, but managing it within ±0.5 mm can further suppress stress concentration. ↩
Mechanisms of Cost Reduction
To enhance cost competitiveness in aluminum mold manufacturing, optimizing labor costs, raw materials, energy, and lead times is key. This section explains the main points of each.
Factors in Labor Cost Reduction
The average monthly salary in Vietnam is 7.7-8.4 million VND (approx. 304-340 USD), which is less than half of the same job in China (approx. 650-850 USD). Furthermore, the minimum wage is set at 4.96 million VND (approx. 196 USD) even at the highest regional level, which stabilizes wage levels, making it easier to plan long-term labor cost budgets. In addition, the burden rate for social insurance premiums and statutory welfare is lower than in China and Western countries, which may allow for a further reduction of total labor costs by about 10-15%.
Optimization of Raw Material and Energy Costs
Procuring aluminum alloy materials from domestic smelters can compress transportation costs by more than 20%, and by increasing the recycling rate of scrap materials to 30%, there are cases where material costs have been reduced by 8-10%. The electricity cost is 1,750 VND/kWh (approx. 0.075 USD/kWh), which is lower than the Chinese average of 0.088 USD/kWh, making it possible to reduce energy costs for mold heating and insulation processes by 15-20%. Recently, efforts to increase the self-generation ratio by installing solar panels on factory roofs and co-locating biomass facilities are spreading to avoid the high cost of peak-hour electricity.
Compression of Inventory Costs Through Production Lead Time Reduction
In the integrated production system within industrial parks, the production lead time can be shortened by about 30% by completing the process from mold design to final assembly on-site and reducing intermediate transportation. This improves the average inventory turnover rate for mold parts from 6 times a year to 8 times a year, compressing warehousing costs and the cash conversion cycle (CCC) by about 25%. Lead time reduction also contributes to rapid response to demand fluctuations and reduction of excess inventory risk, realizing improved working capital efficiency for the procurement department.
Management System Supporting High Quality
To stably maintain high quality in aluminum mold manufacturing, the introduction of a quality management system, preventive maintenance, and thorough traceability are essential. This section explains each of these initiatives.
Introduction of Quality Management System (IATF 16949)
TSM Technology Vietnam obtained the automotive industry’s “IATF 16949” certification on December 10, 2023, and standardized procedures such as APQP (Advanced Product Quality Planning), CP (Process Capability), and PPAP (Production Part Approval Process) in all processes from design to manufacturing and inspection. This system improves process consistency and the transparency of deliverables, ensuring compliance with customer requirements. In addition, continuous improvement based on the PDCA cycle has been established, and a system has been put in place to systematically carry out everything from rapid cause analysis to the formulation and deployment of recurrence prevention measures when non-conformities occur.
Know-how in Mold Maintenance and Lifespan Management
We maximize mold lifespan through preventive maintenance that combines daily inspections and regular overhauls. After molding, cleaning and lubricant application are always performed, and cooling water channels and slide mechanisms are visually inspected and dimensionally measured to detect wear and cracks early. Furthermore, by preheating the mold to 180-200°C during operation, thermal stress is relieved, heat check cracking is suppressed, and the service life in terms of shots is increased by an average of 30%. Also, during overhauls, a parts replacement cycle is set according to the number of shots used and impacts, minimizing the risk of breakage.
Quality Traceability and Inspection System
In compliance with IATF 16949 7.1.5.2 “Measurement traceability,” all measuring instruments are periodically calibrated against international metrology standards, and records are centrally managed. On the production line, a QR code is engraved on each mold, and casting temperature, number of shots, and inspection results are linked in real time. By combining sampling inspections by 3D measuring instruments and robots with non-contact dimensional checks by 3D scanners, human error is eliminated while achieving high-precision inspections. The data is accumulated in a quality database and used for non-conformity analysis and process improvement.
Through these initiatives, even at our Vietnam base, we can clear the strict quality standards required by the Japanese, European, and American markets, enabling stable, high-quality production. The next section will detail countermeasures for supply chain risks.
Supply Chain Risks and Countermeasures
While building an integrated production system from parts procurement to final delivery, measures are required to appropriately manage the risks inherent in the entire supply chain and maintain a stable supply. This section presents specific measures from the three perspectives of logistics and infrastructure constraints, local procurement networks, and ESG/SDGs compliance.
Dealing with Logistics and Infrastructure Constraints
- Stricter Road Regulations
With the mandatory rest for truck drivers starting in early 2025, long-distance transport times have increased, raising transport costs by up to 20% (Reuters).
- Countermeasure: Allow for more leeway in delivery schedules and diversify risks by using multimodal transport, including rail and river.
- Foreign Investment Restrictions in Ports and Warehouses
A 50% cap on foreign investment in port terminals and JV requirements for warehouse operations make it difficult to secure dedicated facilities (Cast Vietnam).
- Countermeasure: Establish a joint logistics hub within an industrial park and develop warehouse and customs functions through joint investment with Japanese companies or reliable local operators. Use a TMS (Transportation Management System) to grasp inventory and delivery status in real time.
Building a Local Procurement Network
- Utilizing Digital Matching
Compare and select from over 4,000 supplier data from NC Network Vietnam on the “EMIDAS” ordering platform to quickly secure the optimal supplier in terms of both quality and cost (NC Network Vietnam).
- On-site Audits and Partnerships
Certify proven suppliers through regular factory visits and on-site audits. Build a highly reliable network through participation in events like the FBC Manufacturing Business Matching Fair (ACCESS ONLiNE).
- Risk Diversification
Avoid dependence on specific suppliers and secure procurement routes from multiple regions and multiple suppliers. Share quality data on a lot-by-lot basis to maintain a stable supply even during demand fluctuations.
ESG/SDGs Compliance and Environmentally Conscious Processes
- Energy Saving and Renewable Energy
Introduce an EMS (Energy Management System) in line with the government’s “Green Transformation” policy. Procure peak-hour electricity through self-generation with solar panels on factory roofs and biomass power generation, reducing CO₂ emissions (VietBiz).
- Environmental Risk Management and Green Finance
Strengthen wastewater treatment and scrap recycling to create a system that is more likely to receive green loans and credit from financial institutions (vietnam.vn).
- Specific Case: TOTO Vietnam’s 4th Factory
Obtained ISO 14001 certification and introduced rainwater harvesting and energy-saving lighting. They have achieved a 15% reduction in water usage and a 12% reduction in electricity usage (TOTO).
By comprehensively implementing these measures, it is possible to simultaneously strengthen the resilience and improve the sustainability of the supply chain at our Vietnam base.
Success and Failure Stories
Success Story: A Project That Achieved a 20% Cost Reduction
In a mold manufacturing project for an automotive parts manufacturer, the operation was previously managed with domestic procurement and fragmented outsourcing, which increased material transport costs and in-process inventory costs, bringing the cost per mold to about 10 million JPY. Upon transferring to an integrated production system at the Vietnam base, the following measures were implemented in combination:
- Increased Procurement Ratio of Domestic Aluminum Alloys
Procured A7075 alloy from a domestic smelter, compressing transport costs by 20%.
- Utilization of an Integrated Production System
Carried out design → casting → cutting → finishing on the same site, reducing in-process inventory costs by 25%.
- Improved Molding Yield Through ADSTEFAN Analysis
Optimized thermally interfering parts through flow analysis, reducing the defect rate from 15% to 5%.
These measures reduced the total cost by 20% compared to the conventional method, suppressing the cost per mold to about 8 million JPY. The lead time was also shortened from 40 days to 28 days, improving the on-time delivery rate to 98%.
Failure Story: Losses and Lessons from Quality Problems
In a mold project for a telecommunications equipment manufacturer, due to insufficient management of wall thickness variations in the initial design stage, heat check cracking occurred frequently in certain lots after mass production started. As a result, the following losses and lessons were learned:
- Loss Amount: Additional costs of about 12 million JPY were incurred for remaking the mold and re-inspecting the products.
- Delivery Delay: Mass production was halted for 5 business days to address the defects, and the on-time delivery rate dropped to 85%.
- Lessons Learned:
- Thoroughly manage wall thickness variations to within ±0.5mm and conduct additional CAD simulations at the design stage.
- Strengthen shot count management in the mold maintenance plan and standardize preventive overhauls when the shot count exceeds 2 million.
- For quality traceability, record molding conditions in real time and establish a flow for abnormality detection and early response.
The know-how gained from this failure was deployed to all subsequent projects, leading to a significant improvement in quality stability.
Conclusion
Aluminum mold manufacturing in Vietnam can reduce production lead times by about 30% and costs by about 20%, thanks to low labor costs with an average monthly salary of about 304-340 USD and an integrated production system that completes everything from mold design to assembly within the same industrial park. For material selection, A6061/A7075 alloys are used selectively, and molding quality is stabilized through flow analysis with ADSTEFAN. High-precision machining with 5-axis machining centers and NC lathes, along with surface finishing, has extended mold life by 20%. By introducing IATF 16949 and strengthening traceability with QR codes and 3D scan inspections, we clear the strict quality requirements of markets in Japan, Europe, and the US, including the automotive industry. Logistics regulations are addressed with multimodal transport, and foreign investment restrictions with joint logistics hubs, while also considering ESG by introducing EMS and utilizing recycled aluminum. Success stories show a 20% cost reduction and a 30% lead time reduction, and failure stories have taught us the importance of wall thickness management in the initial design stage and overhaul planning.
In the future, further cost optimization is expected through production visualization with IoT and digital twins, and the use of AI for predictive maintenance. Furthermore, with the strengthening of FDI attraction in the semiconductor and green energy fields, ripple effects on high-value-added manufacturing are anticipated. Increasing the ratio of recycled aluminum and introducing CO₂ emission reduction technologies will be key to achieving both cost competitiveness and corporate brand value improvement.
Sources
- TSM Technology Vietnam: https://www.fact-link.com.vn/home/tsm/
- Daiwa Light Alloy Industry Vietnam Column: https://daiwakk-vn.com/column/aluminum-die-casting-in-vietnam-cost-reduction-and-high-quality/