Major U.S., European Auto-parts Makers Look for Taiwanese Suppliers

On a mission to find qualified suppliers of high quality, competitively priced products in Asia, ranking purchasing officials from two international auto-parts makers, Trico Products Corp. of the U.S. and C. Rob. Hammerstein GmbH & Co. KG (CRH) of Germany, recently visited Taiwan at the invitation of the Taiwan External Trade Development Council (TAITRA).

The goal of the procurement officials from the two major auto-parts makers, like that of many other buyers, was to find suppliers in Asia that could supply high-quality, reasonably priced parts and components for their plants in mainland China. The procurement officials from both Trico and CRH expressed their willingness to purchase products from Taiwanese companies, regardless of whether their plants are in the mainland or in Taiwan, but their top criteria are quality and price.

Many Taiwan-based companies have developed production facilities on the both sides of the Taiwan Strait, enabling them to provide high-quality products with highly competitive prices. An industry source points out that while more and more foreign auto-parts makers will set up production plants in mainland China, many will also find working with Taiwanese partners to be a crucial part of doing business there. Taiwan-based manufacturers in the mainland combine the advantages of Taiwan' s higher level of credibility and quality with the mainland' s lower production costs.

Ares Chen, project manager of the International Sourcing Center (ISC) for the mechanical and chemical industries section of TAITRA's market development department, points out that TAITRA has become more aggressive in assisting big foreign companies to procure products from local auto-parts makers.

Trico

Trico Products is a worldwide leader in developing and manufacturing wiper systems and electronics, and supplies products to more than 67 countries. The company is part of Tomkins PLC, a US$8.5 billion organization with 67, 000 employees. Trico Products has 6, 000 employees at 10 locations worldwide.

Trico is a major manufacturer of both original equipment (OE) and replacement automotive service parts. The company ships products, including front and rear motors and linkages, wiper arms, wiper blades, and plastic arms and blades, to more than 100 assembly plants around the world, including more than 60 in North America, and has overseas operations in the U.K., Mexico, and Australia.

Tony Rosales, global purchaser for Trico, says that Trico just started mass production at a new plant in Suzhou, Jiangsu Province, mainland China. The plant' s current products are wiper blade and linkage assemblies, and manufacturing of painted products and arm assemblies will begin in the first quarter of 2007.

"Trico wants to find qualified parts suppliers in Asia that can provide high-quality, reasonably-priced components that can be shipped to our new Suzhou facility for final assembly, " Rosales points out. "We do not care about where those potential suppliers run their plants, but we do care about the quality of their products."

Currently, Rosales adds, Trico procures about 3.2 million wiper blades yearly from five Taiwan-based companies. Trico also plans to begin procuring aluminum die-cast items, including key parts for wiper arms and motor housings, from Taiwanese companies in 2006.

For Rosales, Taiwanese companies hold several advantages over their mainland China counterparts. According to the procurement chief, Taiwan companies often have better language capability, which makes communication much easier. In addition, Rosales adds, his company appreciates the effort Taiwan companies have devoted to promoting their businesses at almost all of the auto-parts shows around the world.


Rosales has met many representatives of local auto-parts suppliers at procurement-policy seminars held by TAITRA. The procurement chief says that Trico' s qualified suppliers must have QS-9000 or ISO/TS 16949 certifications to assure their quality and management standards.

Supplying parts to Trico' s supply chain has many advantages for Taiwanese suppliers, Rosales notes. After a company begins supplying parts to Trico, Trico normally expands the volume of parts procured from them. Trico can also help the parts supplier to enter into Trico' s global procurement system, increasing orders even more.

CRH

CRH develops and manufactures high-grade complete seat structures, adjuster systems for seats, steering columns, and interiors. System suppliers and auto manufacturers in the midrange and premium sectors of the market rely on products supplied by CRH. CRH now runs eight production locations and development offices in Europe, North America, and South Africa.

CRH is actively constructing a new plant in Kunshan, Jiangsu Province, mainland China, which is scheduled to begin production in February or March 2006.

Heiko Wischott, lead buyer for CRH corporate purchasing, points out that the mission of his trips to Taiwan is to find qualified companies that can supply related parts and components for the company's seat adjustment systems, including precision parts for motors and other mechanisms, for assembly at the new Kunshan plant. The products produced at the Kunshan plant will be delivered to some tier-one suppliers in China.

Wischott says that he is very impressed with the level of quality, prompt delivery, and superior corporate management of Taiwanese companies.

In the initial stage, Wischott says, the key motor parts and components for finished products at the Kunshan facility will be shipped from original suppliers in the U.S. and Hungary. However, in the near future, these parts are expected to be increasingly supplied by qualified makers in Asia because of their quality and price advantages.