T-Team Powers Up Taiwan's Hand Tool Industry

Alliance aims to boost Taiwan's profile as world's manufacturing base of top-caliber hand tools

With an active push from Corporate Synergy Development Center (CSDC), the T-team has brought together leading local hand tool makers with the goal of making Taiwan a global sourcing base of hand tools, as well as enhancing the industry's images and capability in the global supply chain.

In this effort, the T-team hopes to replicate the success of the A-team, a strategic alliance consisting of Taiwan's leading bicycle manufacturers, such as Giant and Merida, as well as major supporting companies. The T-team was inaugurated on July 22, 2009, in Taichung County, by 14 hand tool companies, including King Tony Tools Co., Ltd. and A-Kraft Tools Manufacturing Co., Ltd. and smaller-sized players such as Torque-Tech Precision Co., Ltd., Win Sam Industrial Co., Ltd., Quan Tian Tools Co., Ltd.

After a year of hard work and coordination, the team members have built up a chemistry to effectively tap synergies and sharpen their respective competitive edges. This form of cooperation has been seen as a positive model for the industry, mainly because most insiders are small or medium-sized enterprises (SMEs) and therefore lack sufficient resources to upgrade production or explore overseas markets independently.

To Reorganize Value Chain
King Tony Group's CEO Mark Wu has been inspired real-world cases where global distributors and box-type wholesalers have succeeded in developing brands by farming out production to their partners and paying attention to their core business. He urges Taiwan's hand tool makers to embrace this strategy of focusing on core value components, rather than wasting effort in non-core areas.

Wu believes that the team members should analyze their value chain, phase out inefficient operations, and completely focus on core business to create value. He also stresses the importance of resource integration among members. This means working closely and unselfishly with each other.

Over the past year, King Tony and A-Kraft have been the core companies in the alliance. The two companies have shared their cutting-edge management measures and technologies with other members to improve their organizational efficiency and help them to refine and revamp their core businesses. Their commitment has helped to create a cooperative atmosphere in the alliance, while also leading the group on a course of sustainable development.

King Tony and A-Kraft also have reached agreements on inventory sharing, joint purchases of raw materials, and joint tenders for shipping services and related insurance. These measures have helped them to reduce operating costs and also consolidate their partnership.

Addition of the Third Core
Inspired by T-team's success, Machan International Co., Ltd., a veteran supplier of tool boxes in Taiwan, added its subcontractors to the alliance in July this year.

Founded in 1975 in Taichung County, Machan develops and produces professional-caliber toolboxes, including tool chests, roller cabinets, service carts, workbenches and stations, magnetic parts for display stands, and related accessories. The company is Taiwan's largest toolbox exporter, and its BOXO-branded products have achieved solid footholds in world markets.

With Machan and its subcontractors, T-team's membership has increased to 16 firms. In addition to the three core members (King Tony, A-Kraft, and Machan), the alliance is joined by 11 other tool makers, including Quan Tian Tools, Torque-tech Precision, Chang Loon Industrial, Shuter Enterprise, Tang Zhen Industry, Gong Maw Enterprise, Te Wei Industrial, William Tools, Toong Lih Enterprise, and Re-Dai Precision Tools, and two forging manufacturers.

Under the alliance framework, smaller members can access technological support and more contract orders from the core members. The "big three" also can share resources and contract with each another more efficiently. By cooperating, each member can focus on their most competitive business and thereby create value for the entire T-team supply chain. The alliance's success is also attracting broader attention in the local hand tool industry.

Three Stages of T-team's Development
Giant Chang, project manager of CSDC's Department of Central Region Industry Service in Taichung, said that the T-team also aims to boost Taiwan's profile as world's manufacturing base of top-caliber hand tools.

Chang indicated that the members have just completed the first stage of their cooperation after going through a break-in period, during which members swapped notes on marketing and practices through benchmark learning and exchanging real-world experience. The alliance has also focused on quality, cost and delivery (QCD) and management and production upgrades with CSDC's assistance to sharpen their core competitiveness over the past year.

Cooperation moved into the second stage this year. Chang noted that the three core companies will collectively start stepping up global promotion of OEM (original equipment manufacturing), ODM (original design manufacturing) and OBM (original brand manufacturing) businesses, participating in global exhibitions to boost the presence of the T-team, and exploring new customer sources.

The members also will coordinate marketing strategies to avoid conflicts caused by market overlap. Chang says that members are required to keep improving production capability and efficiency, and to periodically examine performance to ensure member products and services continually improve on quality, delivery speed, and pricing competitiveness.

The team members currently can provide a wide range of products, from wrenches, sockets, and pliers to screwdrivers, scissors and toolboxes. More products will be added as membership increases.

The T-team also aims to build links with well-known store and distributor brands, including Snap-On, Facom, USAG, Koken, Draper, and Unior, to strengthen its global presence. The CSDC also will help members to tap government resources to support this work.

When the T-team enters its third stage of development, Chang noted, it will be replaced by the Taiwan Tool Elite League (TTEL) to improve the group's image and capability in the global market, and to represent Taiwan in worldwide professional exhibitions. Also, stricter, more explicit criteria will be stipulated then for TTEL's membership and organizational operations. He concluded that the ultimate goal is to help Taiwan to build an irreplaceable position in the global supply chain of top-end hand tools.

Building a Distinctive Profile
At an event held to induct Machan and its subcontractors into the T-Team, J.H. Su, president of CSDC, stressed that the rise of Chinese competitors and global economic downturn have intensified concerns in Taiwanese hand tool industry about being replaced in the global supply chain. These worries reflect the fact that Taiwan was squeezed out of list of the world's top two hand tool manufacturers in 2008.

"Being replaced by emerging countries seems inevitable for traditional manufacturing industries in Taiwan," Su said. "However, we can also refresh the industry through proper repositioning strategies." Citing Taiwan's bicycle industry, he noted that the sector had been watching its business shrivel with the emergence of Chinese makers, with exports sharply shrinking to under 3 million units. This trend was reversed however when industry made a concerted push to go upmarket and churn out higher-end bicycles targeted for the leisure and sports market.

The T-Team hopes to replicate this success through partnerships and collectively competing against global rivals by developing unique competitive positions, Chang said. "I believe the three-core T-team will be more capable of providing professional-caliber hand tools and value-added one-stop shopping services to customers, helping the industry to create a 'Blue Ocean' future."

Time to Take Action
King Tony's Wu reiterated importance of the establishment of the T-team, which will enable Taiwanese hand tool makers to carve out niches in the increasingly challenging global market. "It is time for us to take action to redefine Taiwan's position as the world's No. 1 sourcing place for top-end hand tools."

With more than 25 years of experience in branding, Wu knows well that only enterprises with excellent distribution capabilities and diverse distribution channels can win markets. Branding, however, may be ill-suited for Taiwanese manufacturers to secure sustainable business development, especially when most of the companies have been used to competing independently and without sufficient resources.

"With larger-sized rivals popping up all over the world, individuals competing solely on price or quality will be replaced at the end," he said. "To outdo rivals nowadays will require more partners involved to collectively compete on the basis of an integrated supply chain." Thus, the T-team aims not only to reorganize the industry value chain, but also to accelerate supply chain integration, enabling Taiwanese companies to satisfy global store and distributor brands with one-stop manufacturing services, according to Wu.

Louis Chen, chairman of A-Kraft, one of Taiwan's leading OEMs in the line, said his company has shared its cutting-edge computer technologies to help the other members to fully computerize their operations and production management over the past year.

Chen also has praised the CSDC for its assistance and consultancy support to alliance members. He said that that the center has paved the way for alliance members to enhance their competitiveness during the break-in period. "With more members joining, I am confident that the T-team will be increasingly recognized as a model for other industry peers," he said.

Although Machan has joined in other alliances in the past, the company found the groups to be dysfunctional and abortive. Company chairman C.L. Chang, however, has greater optimism about the success of the T-team. "Led by CSDC and King Tony's CEO Mark Wu, each member plays a specific role to exert its influence in the alliance. So we decided to take part. Machan will dedicate itself fully to the team."

Available Product Category of T-team
Category		King Tony	A-Kraft	Machan
Socket	Air sockets		√	√
	Sockets			√
	Socket handles		√
Wrench	Socket wrenches	√		√
	Torque wrenches	√		√
	Ratchet wrenches	√	√
	Adjustable wrenches		√
	Hex-key wrenches
	T-shaped socket wrenches
Screwdriver	Screwdrivers	√
	Ratchet screwdrivers		√
	Screwdriver bits	√
Pliers	Combination pliers			√
	Diagonal cutting pliers
	Universal pliers			√
Scissors	General scissors
	Workshop scissors		√
Tool Box	Plastic tool boxes	√		√
	Metal tool boxes
	Tool cabinets	√	√	√
Metalworking Process	Forging	√
	Lathing
	Heat treatment