GAAP Paves Way For Auto Parts Exporters
May 25, 2005 Ι Industry In-Focus
Ι Auto Parts and Accessories Ι By Quincy, CENS
The Taiwan External Trade Development Council (TAITRA) recently kicked off its Global Aftermarket Auto Parts Promotion (GAAP) project during the 2005 Taipei Int'l Auto/Motorcycle Parts & Accessories Show (Taipei AMPA '05). The show, staged May 13-16, is a key channel for major international buyers to meet directly with local suppliers.
TAITRA Market Development Department director Huang Wen-rong says that international automakers and top-tier parts suppliers are outsourcing a growing portion of their parts to cut costs. Many are turning to Asian suppliers, and Taiwan is leading the pack in the region.
In addition to boosting sales of Taiwan-made aftermarket (AM) auto parts, TAITRA is helping local suppliers secure original equipment manufacturing (OEM) business with top-tier global parts suppliers. The council has invited many international auto-parts buyers to Taiwan to link up with potential suppliers.
Hwang Wen-fang, chief of TTVMA's business section, is confident that Taiwan auto-parts exporters will benefit from the global outsourcing trend. He notes that Taiwan's auto-parts exports were NT$120 billion (US$3.83 billion at US$1: NT$31.3) last year, and exports in the first two months of 2005 reached NT$17.9 billion (US$0.57 billion), up 5% from the same period of last year.
The rise of the local auto-parts sector is also attracting the close attention of the government. When the Bureau of Foreign Trade (BOFT) under the Ministry of Economic Affairs (MOEA) recently commissioned TAITRA, which is a quasi-government entity, to carry out an e-commerce trade-promotion program, the first industry chosen for the initiative was the auto-parts line. TAITRA secretary general Chao Yung-chuan says that the council will develop a customized e-commerce platform for the user-friendly use of big foreign auto-parts procurers, and will build channels for local makers to link up with foreign customers. At least two big foreign companies, Delphi and an as yet unnamed e-marketplace firm, have already promised to join the project, Chao adds.
Big Buyers Showing Interest
Delphi Automotive System's Brazil subsidiary recently sent two procurement officials to Taiwan to find qualified contract partners on the island, procurement manager Ricardo Ambrosini and marketing manager Alexandre Didone.
Didone says that his company has decided to first procure US$7 million worth of AM-parts products from local suppliers. The value is expected to expand in the future. He praises Taiwan parts makers for their prompt market response, fast development, flexible manufacturing, and on-time delivery. According to Ricardo, Delphi's Brazil subsidiary plans to procure several AM parts items such as fuel pumps, brake systems and parts, auto-electronic parts, and ignition coils, and the subsidiary expects to introduce Taiwan-made products to other Delphi affiliates in future.
Kirchhoff Kutsch GmbH of Germany, which has been supplying metal structures and related parts for the automotive industry for over a century, has also sent two procurement officials to Taiwan to find qualified suppliers of special welding fasteners used on the company's products.
According to Klaus Lawory, Kirchhoff procurement manager, Kirchhoff plans to set up 14 automotive-part plants in mainland China next year and find qualified suppliers of special welding fasteners. The prices of Japan-made fasteners, he says, are too high, though the quality is good, and that of Chinese-made fasteners is low but the quality is not up to par with Kirchhoff's requirements. Klaus says his company therefore hopes to find automotive fastener suppliers in Taiwan that can meet both quality and price requirements.
The Kirchhoff Group, he states, procures about nine million special welding fasteners per year, mainly from the U.K., but Taiwan suppliers can generally undercut European prices by about 25%. Kirchhoff's new automotive metal frame plant will supply parts to Ford's China plant for the new Fiesta sub-compact car scheduled to be locally produced in 2006. Ford Europe will also produce the Fiesta in 2007 with the same parts supplied by Kirchhoff's European facilities.
Klaus adds that the global overcapacity of automobile production could benefit top-tier parts suppliers as automakers reduce in-house production to cut costs. This means more business for outside supplier and, indirectly, for second-tier Asia suppliers as well.
Arvin Meritor of the U.S., a leading tier-one auto parts supplier, is also increasing its procurements from Asia. The group currently procures about US$2.2 billion worldwide and plans to place about half of its orders with suppliers in Taiwan, mainland China and India in the future. The group plans to procure automotive exhaust systems and parts, fasteners, microcontroller switches and other items from Asia.
Special Seminars Spread the News
As part of the GAAP project, TAITRA held eight procurement seminars for major foreign buyers during the Taipei AMPA show. A total of 326 local companies participated in the seminars.
Keith Bird, procurement manager of Repco Australia, the largest reseller in the Australian automotive aftermarket, was pleased with the seminars, which he reports helped him contact about 80 local suppliers for discussions on possible future cooperation ties. Repco supplies automotive replacement parts and accessories, as well as auto-related tools and equipment, to trade and retail customers through a network of stores and reconditioning workshops.
Table:
Source: TAITRA
TAITRA Market Development Department director Huang Wen-rong says that international automakers and top-tier parts suppliers are outsourcing a growing portion of their parts to cut costs. Many are turning to Asian suppliers, and Taiwan is leading the pack in the region.
In addition to boosting sales of Taiwan-made aftermarket (AM) auto parts, TAITRA is helping local suppliers secure original equipment manufacturing (OEM) business with top-tier global parts suppliers. The council has invited many international auto-parts buyers to Taiwan to link up with potential suppliers.
Hwang Wen-fang, chief of TTVMA's business section, is confident that Taiwan auto-parts exporters will benefit from the global outsourcing trend. He notes that Taiwan's auto-parts exports were NT$120 billion (US$3.83 billion at US$1: NT$31.3) last year, and exports in the first two months of 2005 reached NT$17.9 billion (US$0.57 billion), up 5% from the same period of last year.
The rise of the local auto-parts sector is also attracting the close attention of the government. When the Bureau of Foreign Trade (BOFT) under the Ministry of Economic Affairs (MOEA) recently commissioned TAITRA, which is a quasi-government entity, to carry out an e-commerce trade-promotion program, the first industry chosen for the initiative was the auto-parts line. TAITRA secretary general Chao Yung-chuan says that the council will develop a customized e-commerce platform for the user-friendly use of big foreign auto-parts procurers, and will build channels for local makers to link up with foreign customers. At least two big foreign companies, Delphi and an as yet unnamed e-marketplace firm, have already promised to join the project, Chao adds.
Big Buyers Showing Interest
Delphi Automotive System's Brazil subsidiary recently sent two procurement officials to Taiwan to find qualified contract partners on the island, procurement manager Ricardo Ambrosini and marketing manager Alexandre Didone.
Didone says that his company has decided to first procure US$7 million worth of AM-parts products from local suppliers. The value is expected to expand in the future. He praises Taiwan parts makers for their prompt market response, fast development, flexible manufacturing, and on-time delivery. According to Ricardo, Delphi's Brazil subsidiary plans to procure several AM parts items such as fuel pumps, brake systems and parts, auto-electronic parts, and ignition coils, and the subsidiary expects to introduce Taiwan-made products to other Delphi affiliates in future.
Kirchhoff Kutsch GmbH of Germany, which has been supplying metal structures and related parts for the automotive industry for over a century, has also sent two procurement officials to Taiwan to find qualified suppliers of special welding fasteners used on the company's products.
According to Klaus Lawory, Kirchhoff procurement manager, Kirchhoff plans to set up 14 automotive-part plants in mainland China next year and find qualified suppliers of special welding fasteners. The prices of Japan-made fasteners, he says, are too high, though the quality is good, and that of Chinese-made fasteners is low but the quality is not up to par with Kirchhoff's requirements. Klaus says his company therefore hopes to find automotive fastener suppliers in Taiwan that can meet both quality and price requirements.
The Kirchhoff Group, he states, procures about nine million special welding fasteners per year, mainly from the U.K., but Taiwan suppliers can generally undercut European prices by about 25%. Kirchhoff's new automotive metal frame plant will supply parts to Ford's China plant for the new Fiesta sub-compact car scheduled to be locally produced in 2006. Ford Europe will also produce the Fiesta in 2007 with the same parts supplied by Kirchhoff's European facilities.
Klaus adds that the global overcapacity of automobile production could benefit top-tier parts suppliers as automakers reduce in-house production to cut costs. This means more business for outside supplier and, indirectly, for second-tier Asia suppliers as well.
Arvin Meritor of the U.S., a leading tier-one auto parts supplier, is also increasing its procurements from Asia. The group currently procures about US$2.2 billion worldwide and plans to place about half of its orders with suppliers in Taiwan, mainland China and India in the future. The group plans to procure automotive exhaust systems and parts, fasteners, microcontroller switches and other items from Asia.
Special Seminars Spread the News
As part of the GAAP project, TAITRA held eight procurement seminars for major foreign buyers during the Taipei AMPA show. A total of 326 local companies participated in the seminars.
Keith Bird, procurement manager of Repco Australia, the largest reseller in the Australian automotive aftermarket, was pleased with the seminars, which he reports helped him contact about 80 local suppliers for discussions on possible future cooperation ties. Repco supplies automotive replacement parts and accessories, as well as auto-related tools and equipment, to trade and retail customers through a network of stores and reconditioning workshops.
Table:
| Kirchhoff (Germany) | German tier-one automotive metal-frame and other
parts supplier, with annual procurement value of about 175 million euros. |
Automotive fasteners, etc. |
| Delphi (Brazil) | The largest auto-parts maker in South America,
with revenue of US$640 million. The company plans to procure about US$180 million worth of auto parts this year. |
Fuel pumps, brake systems and parts, electronic
parts, etc. |
| Inter Cars (Poland) | A leading Polish importer, with annual procurement
value of US$180 million. |
Steering-wheel covers, compressors, children
safety seats, etc. |
| Repco Australia | The largest reseller in the Australian automotive
aftermarket, with 480 sales points. |
Compressors, generators, steering-wheel covers,
etc. |
| Air International Seating (Australia) | A top-tier supplier to the four biggest automakers
in Australia, with annual procurement value of about US$280 million. |
Electric motors, plastic parts, automotive
switches, locks, etc. |
| IA Auto (United States) | Internet auto-parts seller with plans to set
up a warehouse in Taiwan. |
Clutch and parts, tires, seat covers, etc. |
| Johannes J. Mattthies (Germany) | A leading AM parts reseller in Germany. | Mirrors, headlights, etc. |
| Air International Thermal (Australia) | A leading Australian automotive air-conditioner
system maker. |
Condensers, heater assemblies, radiators,
evaporators, etc. |
| Arvin Meritor (United States) | Global-leading tier-one auto-parts supplier
to Big Three in the U.S. |
Sheet-metal body parts, microcontrollers,
flexible printed circuit boards, springs, etc. |
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