Output of Taiwan’s Fastener Industry Expanded Strongly in Q2

With the global economy warming up, the Taiwanese fastener industry has accelerated its recovery over the past year and is expected to see its annual output return to pre-recession levels this year.

Statistics compiled by the Industry & Technology Intelligence Service (ITIS) show that the industry’s total output was worth NT$28.2 billion in the second quarter of this year, up 17% from the first quarter and equal to more than 35% of last year’s annual total of NT$75.8 billion.

The industry also increased its exports in the second quarter, to NT$25.5 billion. Exports have now grown steadily for four consecutive quarters, beginning when global economic prospects began brightening in the second half of 2009.

ITIS statistics also indicate that during the first five months of this year, 35% of all exports of Taiwan-made fasteners went to the U.S., 8% to Germany, 5% to Japan, and 4% each to the Netherlands and China. These top five overseas markets together absorbed over half of all shipments.

In quantity, Taiwan’s exports to the U.S. increased 46% year-on-year during the second quarter but were still 18% less than the figure for the same period of 2008. Shipments to the EU however, soared over 80% to a total that was 19% higher than the same period of 2008. This growth, ITIS explained, was driven mainly by the EU’s policy of imposing punitive tariffs on Chinese fasteners, a move which has prompted some importers to turn to Taiwan as an alternative source of supply.

Meanwhile, the industry’s imports were valued at around NT$900 million in the second quarter, almost equal to the corresponding figure for the first quarter, with 52% of the total coming from Japan, 15% from the U.S., 11% from China, 6% from Germany, and 3% from Vietnam. This indicates, to some extent, that although Taiwan ranks among world’s top five fastener producers by output and has managed to go upmarket for years, the island still has to import top-end fasteners from advanced countries such as Japan.

ITIS reports that the fastener industry’s production value for the first half of this year surged by 51% year-on-year to NT$52.3 billion. Exports and imports for the first half were worth NT$47.3 billion and NT$1.9 billion, respectively, representing growth rates of 51% and 27%. Sales of fasteners in Taiwan’s domestic market expanded by 44% during the first six months to NT$6.9 billion, reflecting the strong vigor of the island’s recovering economy; according to a projection by the Directorate-General of Budget, Accounting and Statistics, economic growth for the year as a whole will reach 8,24%.

Integration of Industry Resources
Driven by a desire to help local fastener makers go upmarket amid increasingly intense global competition, the China Steel Corp., Taiwan’s largest steelmaker, midwifed the formation of a cross-industry alliance aimed at bringing industry insiders together in a bid to upgrade to higher-end fasteners and related technologies.

The alliance was inaugurated on Dec. 15, 2009 in Kaohsiung by China Steel president Y.C. Chen, Metal Industries Research & Development Centre (MIRDC) chairman C.C. Huang, and Taiwan Industrial Fasteners Institute (TIFI) chairman Joe Chen.

In addition to China Steel and the MIRDC, members of the alliance include seven sizable fastener and equipment makers: Chun Zu Machinery, Chong Cheng Fastener, Ho Hong Works, Fong Perng Industrial, Jinn Her Enterprise, Te Hung En Enterprise, and MetCoat Technology.

As the only domestic supplier of steel rod wires for the fastener industry, China Steel has worked hard to help Taiwanese manufacturers with technological upgrading in recent years. For example, the steel maker teamed up with the MIRDC and several suppliers to develop auto fasteners from 2006 through 2008, engaging in the joint development of special value-added materials to upgrade product specifications, performance, and manufacturing efficiency. The target materials include sulfurized steel, which makes fasteners less prone to filing contamination and effectively raising lathing efficiency.

Believing it is synergies such as this that have pumped momentum into the industry, China Steel and the other alliance members have decided to work closer with each other to boost the industry’s profile in the global supply chain during the next few years.

Strengthening Taiwan’s Global Presence
TIFI is preparing to hold Taiwan’s first specialized trade fair for fasteners and equipment—the Taiwan International Fastener Show (TIFS)—on Oct. 19 and 20 in Kaohsiung in cooperation with the Taiwan External Trade Development Council (TAITRA) and the Bureau of Foreign Trade. With exhibit categories covering buckles, clamps, screws, bolts, nuts, rivets, washers, pins, anchors, turnbuckles, nails, studs, hooks, staples, fasteners molds, and related parts, TIFS will help to build a more distinct image of Taiwan as one of the world’s best sources of fasteners.

Aside from its large variety of exhibits, the inaugural show will also feature the “buy-and-see” business model—buyers will be able to source products as well as personally visit shortlisted OEMs right away. This is a reasonable strategy, since over 80% of Taiwan’s fastener makers are clustered in and around Kaohsiung. The inauguration of this specialized trade event will help boost the industry’s growth in the coming years, and, above all, will put Kaohsiung’s fastener industry on the global map.

ITIS believes that 2010 will mark the beginning of years of continuous growth for Taiwan’s fastener industry, especially in view of the International Monetary Fund’s July prediction that global GDP will growth will reach 4.6% this year and 4.3% in 2011.

With the promising outlook for the world economy, ITIS predicts that Taiwan’s fastener industry will achieve an increase in production value of around by 43% to NT$108.5 billion this year, compared with NT$75.8 billion in 2009, and a growth in export value of 43% to NT$98 billion, up from NT$68.4 billion. Import value is expected to inch upward 6% to NT$3.6 billion, up from NT$3.4 billion last year. ITIS also expects this year’s export volume to return to the pre-recession level of 1.25 million metric tons this year.

Output of Taiwan’s Fastener Industry Unit: NT$ billion
	2008	2009		Q2, 2010	First Half of 2010		2010 (estimated)
	Value	Value	Growth Rate	Value	Value	Growth Rate	Value	Growth Rate
Output	111.4	75.8	-32%	28.2	52.3	51%	108.5	43%
Exports	99.9	68.4	-32%	25.5	47.3	51%	98.0	43%
Imports	4.7	3.4	-28%	0.9	1.9	27%	3.6	6%
Size of Domestic Fastener Market	16.2	10.8	-34%	3.7	6.9	44%	14.1	31%

Value Unit: billions of NT dollars
Source: ITIS