Continental Tapping Taiwan Manufacturing Prowess For Brake Caliper Parts

Continental AG of Germany recently held a meeting in Taiwan with over 30 local auto-parts makers-its first such--to evaluate qualified suppliers of brake-caliper parts and components.

Zou Bo' chief of Continental's Asia procurement office' which is located in Shanghai' says that his office plans to procure about 50 million euros worth of caliper parts from Taiwan in the initial stage' and expects to extend its wish-list of items to include anti-lock brake systems (ABS) and both suspension- and steering-system parts in the future if cooperation with the selected local suppliers runs smoothly. Related fasteners will also be procured. According to sources' Continental will seek cast-iron' cast-aluminum' rubber' and plastic items.



Continental is the world's No. 1 supplier of brake calipers' supplying about 40 million pair annually to big-name international automakers such as GM' Ford' DaimlerChrysler' Volkswagen' BMW' Toyota' and Peugeot-Citroen.

Zou stresses that brake calipers are key to ensuring auto safety' adding that Taiwan suppliers possess greater competitiveness than rivals in this line from mainland China due to higher-precision manufacturing and superior end-product quality.

The Taiwan External Trade Development Council (TAITRA)' which acted as mediator in setting up the meeting' says that Continental has targeted Taiwan as one of its procurement sources due to local makers' global renown for auto parts of high grade made available at competitive prices.

According to a TAITRA spokesperson' Continental is Germany's largest manufacturer of tires for cars' trucks' bicycles' and agricultural machinery. The firm sells its tires under the Continental' Uniroyal' and General brands to such automaker-industry marquee names as BMW' DaimlerChrysler' Nissan' Toyota' Volvo' Peugeot' Ford' and Porsche. Through its ContiTech Division (specialist in rubber and plastics technology)' Continental also produces components for power-transmission systems' engine and suspension mounts' and vehicle interiors. Another division' Continental Teves' makes electronic brake- and traction-control systems.

Continental has recently acquired a controlling interest in Temic' DaimlerChrysler's automotive-electronics business. Many of Continental's auto-parts items are No. 1 in their respective sectors of the global market in terms of sales volume. The firm has 121 production bases and employs about 69'000 people worldwide' and had 2003 revenue of 11.5 billion euro. It is currently the world's No. 1 supplier of auto-steering' suspension' and brake-system parts' No. 2 supplier of auto-electronic parts (trailing Bosch of Germany)' and No. 4 tire maker.

John Tang' a specialist in TAITRA's market-development department' says that his organization has arranged a number of visits for Continental's procurement officials with local parts makers. If all goes according to expectations' he adds' those suppliers that make the grade can expect orders that number in the millions of units per placement.

TAITRA says that Continental started executing its policy to outsource from lower-cost nations in 2004' setting up its Asia procurement office in Shanghai. The office's officials first made formal contact with Taiwan makers when a promotional delegation from the island visited China in September last year. The group included representatives of Lio Ho Machinery Works Co.' a leading supplier of casting parts and aluminum wheel rims' Ji-Ee Industry Co.' Ltd.' maker of water pumps and other items' and Jui Li Enterprise Co. Ltd.' a producer of sheet-metal body parts. This exposure' according to TAITRA' did much to burnish the officials' image of Taiwan-made auto parts and their creators.

According to Tang' Continental generally has 12 standards for evaluation in selecting qualified companies for its supply chain' including quality control' production technique' product technology' experience in automobile-related businesses' logistics ability' financial status' English-communication ability' business aggressiveness' understanding of expectations with Continental' price competitiveness' and regional economic/political conditions.

Any company chosen' Tang says' is expected to begin shipments as soon as one-and-a-half years after acquiring related certifications for product development and production.

Huang Wen-rong' director of TAITRA's market-development department' points out that most big international auto-parts conglomerates' including Continental' have large-scale and complicated division-of-labor procurement schemes as well as stringent qualification processes in regard to the selection of suppliers. This can make it difficult for Taiwan's parts makers' most of which are small-to-medium-sized enterprises (SMEs)' to become part of their supply chains.

In a bid to link local auto-parts makers and big foreign buyers' TAITRA invited many big international names to the island in 2004. A total of 23 meetings were held' and a total of 1'569 local companies participated. According to TAITRA' ranking procurement officials from such brands as DaimlerChrysler' ZF' Delphi' TRW' Kia Motor' Honda' MG-Rover' Takata' and Valeo came together with local parts makers' and numerous big international automakers and parts brands have already begun placing orders with Taiwan makers. (Dec. 2004)