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Taiwan Machinery Export Falls Short of Expectations in 2014 on High NT-Dollar-to-Greenback Issue

2015/01/29 | By Ken Liu

Throughout 2014, both Taiwan's machinery industry and machine-tool industry delivered fewer machines than originally ordered due chiefly to the higher NT-dollar-to-greenback ratio than that between the U.S.-dollar and the Japanese yen and South Korean won.

J.C. Wang, president of the Taiwan Association of Machinery Industry, points out that the island's machinery builders actually delivered on average US$1.7-1.8 billion of machines a month last year although government statistics show they were booked to build US$1.9-2.0 billion of machines a month.

In December, the deliveries totaled only US$1.88 billion, lower than the association's projected US$1.9-2.0 billion in spite of an increase of 4.7% from the same month of 2013, Wang says. In the same month, the island's machine-tool sector shipped US$321 million of machines, only 90% of the US$350 million of machines on order books but representing a 1.3% growth from December of 2013.

Throughout 2014, Taiwan's machinery industry exported US$20.88 billion of machines, a gain of 5.7% from 2013, with machine-tool makers delivering US$3.75 billion of machines to register an annual growth rate of 5.8%.

Industry executives say price gaps between Taiwan-built and Japan-built machines have narrowed to within 10% from 25-30% since the yen-to-greenback ratio has fallen to 120 from 80, making Japan-built machines more inexpensive.

They note that the weaker yen has prompted Japanese machine makers to cancel custom orders to Taiwanese makers, and European and American buyers to haggle over prices depending on currency fluctuations before asking for deliveries.

Mainland Chinese buyers postponed delivery dates mostly because of stretched cash flow, which left them hard pressed to make downpayment for the machines they booked with Taiwanese makers.

Wang points out that in 2015 there are upsides and downsides for Taiwan's machinery makers, with the advantages including the recent devaluation of NT-dollar and continuing decline in crud oil prices, and the disadvantages including the Free Trade Agreement between mainland China and South Korea, the decelerating economic growth of mainland China, and impact of the possible Greece's exit from the euro zone, a scenario predicted as unlikely by experts on global TV news channels. With the new leftist, anti-austerity prime minister Tsipras having won office, Greece's credit rating has been put on watch list for downgrade. The new PM would be courting disaster to consider leaving the EU when it owes billions in bailout loans. 

Pessimists forecast exports of both Taiwan's machinery and machine-tool industries to rise 10 percent year on year in 2015 while cautious executives put the growth rate at 6-7 percent.

(KL)