Taiwanese Hand-tool Makers Inventively Cope With Downturn

Patented mechanisms help to leverage global competitiveness

Hand tools, both for DIY and professionals, are products whose demands are as certain as economic volatility these days. After all, how many DIYers are going to budget for more hand tools when their jobs are threatened; while professional-grade tools certainly are deprioritized for replacement when business sags and orders are merely trickling. The post-meltdown downturn in 2009 did not spare Taiwan's hand tool industry, when its annual output and export dropped over 20% in the year. Promising news is that the situation has not worsened this year, without easing the minds amid Taiwan's hand tool sector, whose players know to invest more in R&D to develop innovative products to sharpen competitiveness during the unsure recovery.

Likely due to practical reasons, professional auto repair tools is a very popular category for Taiwan's tool makers, albeit calling for stricter manufacturing standards, who can expect to reap relatively higher margins than DIY tools. So auto repair tools as wrenches, sockets and drives have become increasingly important export growth drivers. For instance, wrenches contributed US$289.06 million to the industry's total export of US$1.33 billion as the second-largest category last year.

Four Taiwan-based hand tool makers share insights, opinions and experiences from 2009 through 2010, revealing glimpses of real-world hand-tool making in the post-meltdown market, one that is upset by off-and-on recovery, the recent EU debt crisis, rising raw material prices, and influx of smaller rush orders.

Torque Wrench Expert
William Tools Co., Ltd. is a maker of torque wrenches whose R&D capability puts it ahead of competitors globally.

Since its establishment in 1999 in Taiwan's central city of Taichung, William Tools has surprised the sector by gaining ground fast, via focusing on R&D. The maker supplies ratchet wrench drives, torque multipliers and wrenches in any standard or specification, with torque and durability even exceeding those required by ANSI and DIN. Producing over 2 million units a year, the company is a well-known torque wrench expert among buyers from the U.S., Japan and EU.

Attributing corporate success to mainly product differentiation, company president William Chiang says, “We effectively kept sales decline at only around 10% amid the global downturn last year,” adding that buyers place orders for they associate William Tool with professional torque tools, which is no hype for company is one of Stanley and Facom's most important ODM (original design manufacturer) for torque tools. William Tool is also the exclusive metallic parts supplier to Eclatorq's digital torque wrenches, whose Eclatorq brand is Taiwan's largest for digital tools. William Tools' revenue for the first five months of this year has topped 70% of that in 2009.

Improved Mechanism
Showing the newest Screen Torque Wrench as example of product differentiation, Chiang says the improved torque setting mechanism embedded in the handle, so-called Quick Torque Setting and Safety Setting Mechanism, achieves easier adjustability.

Besides the handle of nontoxic PP (polypropylene) and ergonomically designed for firm grip, the mechanism allows easy adjustability of torque by turning the rear-mounted knob. Besides, a magnifying lens over the torque setting displays clear, precise reading in digits. Typical counterparts still use torque scales that are hard to read and imprecise.

The wrench also has a safety lock to avoid inadvertent torque changes, as well as an easy correction mechanism allowing convenient, precise torque adjustment with a kit that takes only a few minutes. With the head of the highest-grade chromium molybdenum steel, the wrench is rated for up to 200n/m.

“Despite being priced three to four times more than competing models, Screen has been a sought-after product since its debut at the International Hardware Fair Cologne this March for incredible accuracy along with a torque tolerance of 2.5%, which has been tested by a German institution and is much better than 4.0% required by ISO standards,” says Chiang.

First in Taiwan
Chiang also confirmed his company's launch of Taiwan's first digital power tool at the end of this year. The torque wrench, developed jointly between Chiang and Industrial Technology Research Institute's electromechanical engineers, calibrates torque with strain gauges and assures maximum torque of 200n/m at tolerance of only plus and minus 1.0%, with the launch to definitely put the company on the global map of digital tools.

Despite the recovery slowdown in the second half of 2010, Chiang says the original plan to move into a new office building and expand will be completed by the end of the year, apparently unfazed by the uncertainties in the line.

LED-integrated Auto Repair Tools
Already a global-class LED supplier, Taiwan has exported various LED chips, LED-backlit LCD TVs and consumer electronics, LED lighting and large outdoor LED signage. It was only a matter of time before someone in the hand tool sector integrated LEDs into auto repair tools, showing a degree of innovation in Taiwan's auto-repair-tool making line.

Shin Yeuh
Shin Yueh Hand Tool Co., Ltd. in Taichung County, central Taiwan, is a 32-year supplier of auto repair tools, as well as notable for building LED modules into its products.

Originally a metalworker for local hand tool makers, Shin Yueh then diversified into production of auto repair tools, and has exported wrenches, box wrenches, combination wrenches, ratchet wrenches, extenders, adaptors, and wrench sets to Russia, Europe and the U.S.

Sales manager H.W. Lin invented building LED modules into hand tools, tapping cross-industry advantages. The idea simply sprang from casual complaints from mechanics who struggled with working in dark, narrow spaces. Lin brainstormed to devise a way to build suitable, economical light sources into auto repair tools, finally succeeding with LED modules.

Patented Invention
According to Lin, the LED module, patented as invention in the U.S., Germany, Taiwan and China, has a 3mm LED chip capable of up to 5,000 lm in brightness, and an electric rather than mechanical circuit for dust-resistant durability, as well as capable of three different light patterns to last two to three hours with several button batteries. Lin also designed a breaker into the module to prevent shorts due to extended disuse.

“We've installed the module in various adaptors, some of which already are shipped to Canada and Australia, where users are very satisfied regardless of their higher prices. And we are working on extenders and universal joints, which will be launched soon,” say Lin.

Despite setbacks in the past few years as downturns in the global auto industry and economic fallouts, Lin says his company will continue focusing on LED-integrated products, value-added process and design like karat-gold electroplating. With lightweight, smaller hand tools already a growing trend, to build micro LED modules into adaptors with diameters ranging from 8 to 19 inches will surely help achieve a faster turnaround, he says.

Tang Zhen
As a partner of Shin Yueh in development of LED-integrated tools, Tang Zhen Industry Co., Ltd. has also launched its LED extenders as a niche item amid market uncertainties.

Founded in 1989 in Taichung County, the company has quickly grown into a top-notch supplier of socket wrenches, extenders and socket adaptors with three factories in Taiwan and mainly as OEM (original equipment manufacturer). Especially proud of its production capability and integration, this maker claims over 70% of in-house manufacturing, achieving higher quality than competitors to gain solid recognition among domestic and foreign buyers.

C.H. Liu, company chairman, is well-known for inventing the quick-lease named Push, which is patented in Germany, the U.S. etc. and widely used in the company's extenders and adaptors. “It is the invention that has leveraged our company to exceed others though we have been only making professional auto repair tools for less than six years,” Liu says. The company's quick-release products have been hot sellers in the U.S., Europe, Japan and Russia over the past five years.

Mechanical Engineering Expertise
Liu, backed by mechanical engineering expertise, also played a key role in working with Shin Yueh to develop extenders with LED lights.

“Incorporating the LED module into extenders and adaptors with quick-release was more difficult than expected due to tiny volume of the shank. To integrate both functions into an extender without designing for structural strength would have compromised structural integrity to render the tool useless in terms of torque,” says Liu, who did extensive R&D to optimally balance structural strength and limited volume. “Another problem was tooling dimension for even one millimeter was precious, a hindrance finally overcome by redesigning the original mold in components,” says Liu. The extenders with LED and quick-release have become one of the company's hottest-sellers to help offset declines due to the global meltdown last year.

Chieh I Sheng
Also sharing a slice of the action, Chieh I Sheng Enterprise Co., Ltd. has developed a ratchet handle integrated with LEDs in Taiwan.

Headquartered in Taichung County in central Taiwan, this maker has been dedicated to production of sockets for over 30 years with factories in Taiwan and China, supplying sockets, wrenches, socket wrenches, impact wrenches and air sockets.

Another First
Also inspired to make mechanics' work easier in the dark, company president C.T. Liao began developing such products many years ago, and successfully debuted Taiwan's first LED-incorporated ratchet handle in 2003. Liao admitted that widely available LEDs in Taiwan and global LED emergence were reasons he chose such light source. Customers have been impressed by the company's excellent R&D after seeing the innovative ratchet handle unveiled.

The ratchet handle adopts an LED module jointly developed by Chieh I Sheng and a local high-tech company, with the head being of the finest chrome vanadium steel and the soft grip of nontoxic, RoHS-compliant PVC (polyvinyl chloride), says Liao. Despite containing sophisticated components, the ratchet handle is surprisingly impact-resistant and rated for 30% higher torque than ANSI standards. “Available in three different specifications, over 100,000 units of the ratchet handle have been shipped worldwide last year despite the higher unit prices,” Liao says.

Admitting to being buffeted by last year's downturn, Liao says sales had plummeted. But due to the global economic recovery as well as strong demand in China, corporate production value in the first five months has doubled from a year earlier; while shipment of the LED-incorporated ratchet handle will very likely fuel growth starting in the second half, as Liao confirms an European client looks set to place a 70,000-unit order.

But it is not time yet to pop open champagne for most insiders concur that the market outlook is still unsure after July, with orders to dry up and steel prices to rise. “But we believe the professional auto repair tool segment will remain stable, so we focus on exploring new markets globally. Meanwhile we've developed another new ratchet handle that should drive business along with the LED handle,” says Liao.